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Obama presidency unlikely to impact Gulf oil: experts - LRE - 11-06-2008 11:16 AM
Obama presidency unlikely to impact Gulf oil: experts
* US president-elect and defeated Republican rival John McCain repeatedly clashed over oil policy during presidential campaign
DUBAI: Barack Obama’s policy calling for reducing US dependence on foreign oil imports will not pose a significant threat to Gulf producers who pump nearly a fifth of global needs, experts said Wednesday.
Obama, the first African-American to win the presidential race, had vowed during his campaigning that within 20 years 85 percent of cars on US roads would no longer be powered by oil or gas-based fuels. He also eased his initial opposition to proposed legislation to allow offshore drilling in a bid to raise US domestic oil production, thus helping reduce dependence on foreign oil imports and bring down prices.
“There will be no problem for the Gulf countries in the foreseeable future even if Obama succeeds in implementing his policy,” said the head of the Saudi Al-Dakkak Economic Studies House, Ali al-Dakkak. “Whatever the United States does, it will continue to need foreign oil for a very long time,” Jeddah-based Dakkak told AFP. The United States would not be able to reduce the price of oil by increasing domestic output because production costs there are very high, he said.
The Gulf Cooperation Council (GCC) states, grouping OPEC members Saudi Arabia, the United Arab Emirates, Kuwait and Qatar besides Oman and Bahrain, produce 14-15 million barrels per day (bpd), just under 20 percent of global needs. The six nations, which sit on 45 percent of the world’s proven crude reserves, export around 13 million bpd of which only 10-12 percent goes to the United States, Kuwaiti oil expert Hajjaj Bukhdur said.
“The Gulf states will be unaffected by any new US energy policy because of their huge reserves, and their importance is bound to increase as production drops in other regions,” Bukhdur said.
Crude reserves in the GCC along with those in Iran and Iraq now account for 65 percent of global reserves and “in the medium term, they will become the main source of oil as production diminishes from other regions,” Bukhdur told AFP. Obama and defeated Republican rival John McCain repeatedly clashed over oil policy during the presidential campaign as oil prices peaked to over $147 a barrel in July.
Both however agreed that the United States, the world’s largest energy consumer and importer, should become less dependent on foreign oil especially that coming from the Middle East. In the past three months, oil prices have lost more than half of their value due to the global financial crisis.
While campaigning, Obama vowed that a top priority of his presidency would be to get the auto industry to create “highly fuel-efficient cars.” He said that transportation accounts for about 30 percent of total energy consumption in the United States and that “if we can get that right, then we can move in a direction” for energy independence.
Nevertheless, the analysts called on the Gulf states to be prepared for any possibility. “Gulf states should search for other options in case such election promises become somehow serious as oil income is extremely vital,” Dakkak said. Oil income accounts for more than 80 percent of public revenues in most GCC states.
GCC nations are estimated to have posted around two trillion dollars in oil income during the past six years and to have boosted their foreign investments to around $1.5 trillion. afp
http://www.dailytimes.com.pk/default.asp?page=2008%5C11%5C06%5Cstory_6-11-2008_pg5_15