2004 Transcript

Adel Al-Jubeir discusses oil with CNN'S Paula Zahn

Crown Prince Abdullah's Foreign Affairs Advisor Adel Al-Jubeir was interviewed on May 25 by Paula Zahn on CNN concerning the oil situation


ZAHN:  The question tonight:  How much did it cost you the last time you filled up your car, van or SUV?  Well, more than the last time, no doubt. Fifteen percent of those responding to a new CNN-USA Today Gallup poll call rising gas prices a crisis;  49 percent say it is a major problem;  29 percent call it a minor problem;  56 percent say the price of gas will make them drive less this summer.  It makes tonight a good time to begin a series we call "Crude Awakening."   ……
The Lundberg Survey, an industry analysis that regularly tracks gasoline prices, says the average cost of a gallon of gasoline has risen by more than 14 cents in the past two weeks to $2.07.  That's a lot.  But when you factor in inflation, today's prices are not even close the average gas price in March of 1981.  In today's dollars, gas then cost $2.99.
Will we reach that price this year?  Well, there is no sign that gas prices are leveling off, so maybe.  The question is, who's to blame?  In 1973, OPEC cut off supplies to the US and created an oil crisis, with long lines at the gas pumps and gas rationing.
But is OPEC to blame today?  And how about recent events in the Middle East?  Is the Iraq war driving up oil prices? And what about us?  Less than five percent of the world's population is American, yet American drivers use 13 percent of the world's oil supply, as we continue to drive SUVs and other gas-guzzlers.  ……
And for the Saudi perspective on all this, I spoke a little bit earlier today with Adel al Jubeir, foreign affairs adviser to Saudi's crown prince.


ZAHN:  What responsibility does Saudi Arabia bear for the record high gas prices that we see today in the United States?

MR. ADEL AL JUBEIR (Foreign Affairs Advisor to Crown Prince Abdullah):  I don't believe we bear much responsibility.  We have been producing oil.  We have been seeking to moderate the oil markets.  We have been seeking to bring the price of oil down.  We have increased our production.  We monitor the markets very carefully.
We believe that the reason prices is so high is a function of several factors.  The first is the massive speculation on the part of hedge funds that's driving the price up.  A second factor is shortage in refining factory, which is driving the price of gasoline and other products up, which, in turn, is lifting the price of crude oil. A third factor is the geopolitical situation and concerns about instability in Iraq and other places of the world. And a fourth factor is a tremendous growth in demand in markets such as China and India.

ZAHN:  But sir, according to the US Department of Energy, the overwhelming factor here is crude oil prices.  And while the OPEC target price range was $22 to $28 a barrel, prices haven't been anywhere near that in over a year.

Mr. AL JUBEIR:  We are the largest--we are the country that has the largest reserves in the world.  Almost 30 percent of the world's oil reserves are in Saudi Arabia. We have no interest in seeing oil become a non-competitive source of energy.

ZAHN:  Is there else anything Saudi Arabia can do, at this point, to help bring down the cost of crude oil?

Mr. AL JUBEIR:  Yes.  We have been -- we have informed our customers that we will make available over 9 million barrels of oil for them.  We have also informed them that if they need additional quantities, they should just ask for them and we will make them available.  We have a capacity of up to 10.5 million barrels, possibly even close to 11 million barrels.  We will do whatever it takes to ensure that there are adequate supplies of crude oil.

ZAHN:  How long could you sustain a demand of 10.5 million barrels a day to 11 million barrels a day?

Mr. AL JUBEIR:  We can produce at that level for a fairly indefinite period.  In fact, we are engaging in projects now to increase that capacity even more, so that we can take care of future demand growth.  But the 10.5 million to 11 million level is sustainable almost indefinitely by Saudi Arabia.  Indefinitely meaning for a number of years.

ZAHN:  Sir, you no doubt know there was a controversy last month when author Bob Woodward suggested some kind of deal had been cut between the Bush administration and a member of the Saudi family to specifically help bring down the cost of oil before the election, the Saudi royal family denying that that ever was the case.  But what do you see happening between now and election time here in the United States?

Mr. AL JUBEIR:  We have a very strong relationship with the Bush administration, just like we had a strong relationship with the Clinton administration and every other administration going back to Franklin Roosevelt.  We will do whatever it takes to maintain balance at moderate prices in the oil markets.  Politics has nothing to do with it.

ZAHN:  And for folks who are scratching their heads tonight, still trying to figure out the formula, even at a time when you're saying you're trying to moderate supplies, and we have seen record high crude levels over the last several weeks, you're saying Saudi Arabia could not do more than it's doing now?

Mr. AL JUBEIR:  I believe what bothers consumers is the high price they pay for gasoline at the gas stations, and that, frankly, is a function, to a large extent, of the shortage in refining capacity in the US.  You have not built a refinery in America for, I believe, 25 years.

If it's a function of the various environmental regulations that make the gasoline market in the US so fragmented as to make it difficult for people to sell gasoline in the US from outside the US, our oil minister recently has indicated that Saudi Arabia would be willing to build one or two refineries in the US to help alleviate shortages of gasoline in the American market.

ZAHN:  Mr. Al-Jubeir, we got to leave it there this evening.  Thank you very much for your time.  We appreciate it. (END VIDEOTAPE)