The Way We Were: Saudi Arabia and the USA.
Americans are used to effectivly setting the price of oil, not only by being able to control the dollar, but, especially by the fact that historically we are the largest consumers of oil. This thinking is pervasive and continues to go unchallenged. For example, 99% of people are convinced that if the US were to enter Recession, the price of crude would come down.
But while the US is still the largest consumer of oil in absolute terms, it is has watched its position as an oil consumer erode on relative terms with Asia.
Saudi Arabia has experienced something similar. It used to be so powerful as the swing producer, no other oil producing nation could ever hope to affect the oil price at the margin. Now that too has changed. Now countries like Nigeria, VZ, can affect the oil price, in a big way. Meanwhile, S.A. gets greeted with shrugs.
The USA therefore no longer control the price of oil, to the extent it once did, via the leveraging power of its demand. And S.A. no longer controls the oil price, to the extent it once did, via the leveraging power of its supply.
That's what has changed. The change is reflected in the crude futures strip.
When the S.A. prince meets Bush soon, I think the photo op will have the function of reassuring that nothing has changed for either country.
Again, the only thing that never changes are people's responses. What does change, however, is the world they face.
LP |
