2004 Transcript

Adel Al-Jubeir on oil, interviewed by Fox

Crown Prince Abdullah's Foreign Policy Advisor Adel Al-Jubeir was interviewed on May 25, 2004 over a satellite link by Fox News 'Studio B'. Shepard Smith asked him about oil and the Kingdom's recent decision to increase production.

Mr. Smith: The accusation was that the Saudis were inchoates with the White House in someway, and in fact that the Saudis were going to manipulate the oil prices so that they’re high now and will come down in time for the elections.

Mr. Al-Jubeir: That’s pure fiction, Saudi Arabia’s history in terms of oil has been very clear. We’ve always sought to balance the markets to make sure the prices are at reasonable levels that don’t hurt our producers and don’t hurt consumers and that all benefit. We have always increased production when prices go beyond our price band and maintained prices when prices go below the price band.

Mr. Smith: Gas prices seem to go up conveniently each year for the Memorial Day weekend, but this started months ago and we’re all asking why are they going up now? There were no real reasons for such a thing, and then the president says he asked Saudi Arabia to raise output at that time, and Saudi said no, so where were you three months ago?

Mr. Al-Jubeir: We actually were producing more than our quota at that time. Whenever we see a demand for crude oil outstrips supply we produce more oil to satisfy…

Mr. Smith: Hold on, what you told our administration was that you see supplies increasing so that prices would go down and you wouldn’t be making your fair share of money off of it. The president expressed that’s not what’s happening. Did the Kingdom not say no?

Mr. Al-Jubeir: That’s not correct. We never say no whenever there’s a shortage in crude oil  - we always supply it. The problem in the US is a shortage of refining capacity. America hasn’t built a refinery in 25 years. The US also has a fragmented gasoline market, making it difficult to sell gas in the US market because of so many different brands. As a consequence, every year America will encounter a shortage of gasoline as the driving season approaches, and unless you build refineries…

Mr. Smith: You’re right about that .... We’re buying oil at $41 a barrel right now, and you have raised your oil target price.

Mr. Al-Jubeir: No we haven’t.

Mr. Smith: Based on the research in front of me, instead of $28-$35 a barrel, we’re paying $41.

Mr. Al-Jubeir: Correct, but we’re not determining the price of oil, because that’s determined by the market. What’s driving prices high are speculators who are taking massive long positions in putting upward pressure on the price of crude oil; concerns about geopolitics and instability in Iraq and other places; high gasoline prices which are pulling crude oil prices up, and that’s is a function of a shortage of refining capacity; massive demand from China, and India and other places around the world. We can satisfy the latter and we have by increasing production of crude oil and supplying the markets. We’ve informed our costumers that whatever crude they want, we will supply.

Mr. Smith: I thank you for being here, we are all out of time.