Tomorrow, global leaders will meet at an unprecedented meeting of oil producers and consumers convened by Saudi hosts in Jeddah. The Kingdom is reported to offer 200,000 more barrels of oil per day beginning in July to help stem the current price rise. Will this stop the longest rise in prices in historical record?
Well, Saudi Arabia pumped 300,000 more barrels of oil a few months back and it had little effect. Also, the news of 200,000 additional barrels of oil in the global market was dented today. In Nigeria, 120,000 barrels of oil stopped flowing from Chevron in the delta after Movement for the Emancipation of the Niger Delta (MEND) insurgents exploded a pipeline. And the President of OPEC, Libyan Shokri Ghanem, said that some producers may cut production to offset Saudi increases.
But what has been effective is when US demand fell in the first quarter of 2008. But that demand response has been tempered by increased consumption in oil producing countries and emerging economies such as China and India. But US citizens are shifting to mass transit much further than in the first quarter of this year as Amtrak ridership swelled to a record in May. The more efficient we get, the less $150+ oil will hurt our economy.
The Presidential candidates are bringing different policy responses to the oil price crisis. McCain is pushing greater exploration and production of offshore oil, which will have a negligible effect on prices until at least five years from now. Obama, on the other hand, is promoting further federal support for an expanded Amtrak service and efforts to help our domestic automakers quickly adapt to an efficiency revolution (while McCain has been an opponent to recent Amtrak subsidies). McCain has promoted climate change responsibility stronger than most Republicans, but Obama’s policies seem to be the most effective to co-mitigate high oil prices and climate change.