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Bush and Saudi Arabia Make Oil for Nuclear Deal |
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Sunday, 18 May 2008 |
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Bush's trip to the Middle East had some positive outcomes, and a deal struck with Saudi Arabia will slightly increase the nation's oil exports. The downside is that increased production in the Saudi state will probably not effect world oil prices significantly, and critics say that the nuclear energy component of the deal undermines Bush's policy toward Iran. Actually, the nuclear fuel cycle is the key to understanding U.S. foreign policy in regards to nuclear proliferation.
Crude oil production has grown with consumption (sorry Malthusians,
peak oil wasn't in 2006 because new records were set in Q1 2008 and
indications are that volume will continue to grow). The bottlenecks
driving up prices are refining capacity relative to demand, and the
increased use of oil as an investment vehicle or currency alternative.
From this economic point of view (which is obviously up for debate) the
best way to address gasoline prices would involve conservative monetary
and fiscal policies such as balanced budgets, moderate & stable
interest rates, and low taxation.
So Bush got the extra oil he was after, but 300,000 barrels is just a
few percent of Saudi Arabia's daily production - it won't have a real
impact on global oil availability. Therefor, the most interesting
aspect of this deal is what Bush was willing to offer the Saudis for
such a literal "drop in the bucket." Reuters
hints at nuclear co-operation, but the WhiteHouse spells it out: "The
United States will assist the Kingdom of Saudi Arabia develop
civilian nuclear power." The key is providing enriched uranium so
the Saudis won't need to complete the fuel processing cycle themselves.
Would the same offer be then made to Iran? Would the U.S. provide Iran
with enriched uranium for civilian energy use? Tony Snow claims the
offer was already made, and
was on the table at least as of February 2007.
With this policy, the threat of nuclear weapons proliferation would
indeed be reduced as fewer states have access to the required refining
technology (and infrastructure) but it also grants the west and China
access to its own energy monopoly, backed by the IAEA and UN Security
Council. If you break the deals down to the core component, it is fine
if Saudi Arabia and Iran have nuclear power - as long as we get paid
some oil for the priveledge. I don't have any trade of my own to share that is so generous, but if you are looking for a hosting deal here's a list of discounts I can offer.
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Last Updated ( Monday, 28 July 2008 )
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