Crude facts: The motives and impacts of the Saudi oil increase
By Wolf Blitzer
CNN
WASHINGTON (CNN) -- With oil prices going as high as a record $45 per barrel, Saudi Arabia -- as earlier promised -- announced Wednesday it is prepared to increase oil output by up to 1.3 million barrels a day.
The hope is to stabilize or reduce the cost of oil, which has dramatically increased in recent years and caused an enormous added burden on the U.S. and world economy.
The price per barrel during most of the 1990s, for example, was around $20.
This more than doubling of the cost not only results in record high prices at gasoline pumps, but also increased energy bills across the board.
It's one of the main reasons -- if not the main reason -- why the U.S. economic recovery has not been as robust as many economists had forecast.
In his best seller "Plan of Attack," released earlier this year, Washington Post reporter Bob Woodward wrote that President Bush was worried about the high price of oil and its impact on the presidential election.
"The ripple effect in the U.S. economy could be gigantic," Woodward wrote. "Saudi oil policy could be the saving grace. ... According to Prince Bandar [Saudi Arabia's ambassador to the United States], the Saudis hope to fine-tune oil prices over 10 months to prime the economy for 2004. What was key, Bandar knew, were the economic conditions before a presidential election, not at the moment of the election."
Last April, Prince Bandar offered this reaction to Woodward's book:
"When it comes to oil prices, Wolf, the Saudis always, as far as the media is concerned, damned if I do, damned if I don't. If the price is high, we are blamed for it."
Saudi foreign policy adviser Adel al-Jubeir insisted it's "pure fiction" to claim the increased production is due to a private deal with the White House.
He said the Saudi government is prepared to keep oil production at this new level "indefinitely."
