But this kiss-and-tell episode won't be the last one for an American president. That is if you believe Saudi Arabia's oil minister Ali Al-Naimi, who is arguably one of the most powerful people on earth, and as such, boasted in a recent 60 Minutes interview that oil as a major energy source wasn't going to cease anytime soon. "It's not going to happen today. It's not going to happen 10 years from now. It's probably not going to happen 20 years from now. It's not going to happen 30 years from now."
To prove its commitment to oil and underscore the U.S. reliance on black gold, the Saudis invited CBS correspondent Lesley Stahl and the 60 Minutes crew to the desert to show off its facilities designed to increase the country's oil capacity by two billion barrels a day.Whether Stahl or 60 Minutes realized it, the Saudi invitation was an astute public relations move by the Saudis to calm what Al-Naimi calls the "fear premium" in the market, which was the market's concern that the Saudi production capabilities had peaked. The mere possibility of that happening drove the price of oil to record levels. With oil now selling below the Saudi break-even price, the Saudis' main concern is to stabilize the market.
Without a doubt, the Saudis have our present administration on the hook, as well as some of the past administrations. (Why else would former President Clinton accept more than $10 million from the Saudis for his library?) Anyway, the Saudis will manipulate OPEC to keep the price of oil down, or at least keep it more predictable, which will lead to American consumers following the path of least resistance when it comes to the form of energy they favor. Just look at what has happened to hybrid vehicle sales in the last few months. Fewer motorists are willing to pay a premium for a green vehicle when they can buy gasoline models that are capable of getting 30-plus miles per gallon.
Interestingly, the Saudis are hedging their bets a little on the oil market with a new commitment toward solar power, which seems like a natural fit in a country with abundant sunshine. Al-Naimi says that the solar energy would supplement the country's oil industry. If the Saudis are successful in solar so that they can export electricity, and continue its oil dominance, this will put them in a position to continue to rule the world's energy policy. Inevitably, the Saudis will test President-elect Barack Obama early in his administration by cutting oil production. If Obama's anti-oil rhetoric turns out to be just rhetoric, there is only one thing for us to do. Pucker up. Larry Silvey is a 26-year veteran of the automotive aftermarket.