Friday, April 22, 2005

George and Ali Naimi do the Texas Two Step.

Though the Texas Two Step can look a little difficult at first, since all dancers know the moves in advance, everybody ends up dancing real nice like in the end.

From the Wall Street Journal [$]: Saudis Vow Action On Oil Demand.


Saudi Arabia, facing mounting pressure from the U.S. and others to step up output of oil and gas amid a surge in prices, plans to more than double its investment in energy development to $50 billion in the next five years from the previous five-year period.

Ali Naimi, Saudi Arabia's oil minister, also said the kingdom had tossed aside its production cap set by the Organization of Petroleum Exporting Countries and is willing to sell its customers every barrel of oil they want, up to its current capacity of 11 million barrels a day. The planned increase in investment, Mr. Naimi said, would boost the kingdom's oil-pumping capacity to 12.5 million barrels a day by 2009, a target Mr. Naimi had previously disclosed. Saudi Arabia also has said it was studying longer-term plans for capacity increases to about 15 million barrels a day.

While declining to identify a single "right price" for oil, the Saudi energy czar said that "in today's world, $50 a barrel [for the U.S. benchmark crude] is too high a price, and $15 to $20 a barrel is too low." A fair price, he said, would be one that is neither so high it hurts demand for oil nor so low it discourages companies from investing in finding new sources of fossil fuel. Mr. Naimi noted that some experts have suggested that investors in oil production could get the returns they seek if crude fetched around $35 a barrel for a basket of oil types sold by OPEC. That would work out to about $40 for U.S. benchmark crude. He cautioned that he didn't endorse that figure.

PS. Tossed aside OPEC production limits and suggesting we need to find new sources of fossil fuel? We really are in the Twilight Zone.