The Kingdom's oil policy has been consistent for 30 years, and it remains so today. Our policy is to maintain balance in the oil markets to avoid disruptions or shortages. We believe that high prices hurt consumers (and in the long run producers by slowing demand and thereby setting the stage for a price crash), and that low prices hurt producers (and in the long-run consumers by accelerating demand and setting the stage for price spikes).
Saudi Arabia has taken major steps in the past to ensure stability in the oil markets: increasing oil production after the Iranian Revolution and the consequence drop in Iranian oil production, during the first Gulf War when Iraqi oil exports were halted, in the run-up to the second Gulf War when Iraqi exports dropped. And by supplying additional crude to the U.S. market after 9-11 to calm markets. Our record is clear and consistent.
I believe the current attention on crude oil is, to an extent, driven by higher gasoline prices in the U.S. Gasoline prices in America are, to a large extent, a function of American refining capacity (no new refineries have been built in the last twenty years), and environmental regulations which result in a large number of formulas for gasoline, which also vary from state-to-state and add to the cost at the gas-pump. Adding refining capacity and simplifying formulas would contribute to stabilizing costs at the pump.
With regard to crude oil, we believe that prices should be at a level that is acceptable to both producers and consumers. Currently that level is between $22 and $28 per barrel for the basket of OPEC crudes. Our policy, and that of the other OPEC producers, is to bring prices to within this band. There are a number of factors which have caused prices to rise recently, independent of the supply-demand fundamentals (speculation, political risk, etc.). But these are temporary factors. Eventually, prices will reflect the supply-demand situation, and come down to within the price band.
Every Administration over the past 25-30 years has been aware of our policy. We have been a reliable, secure and stable supplier of crude, and we intend to remain so. We do not use oil for political purposes; it is too important a commodity, and its impact on the global economy (of which we are a part) is tremendous. Saudi Arabia also does not interfere in elections.
It is natural for any Administration to discuss the status of oil markets when prices spike. In such situations, we reiterate our policy, which I have outlined above. If the spikes are a function of shortages of supply, we rectify it with the other producers. If they are a function of other factors, we try to deal with them accordingly.
Over the past 30 years, the Kingdom has sought to ensure adequate supplies of crude at moderate price levels that are acceptable to both producers and consumers. This policy is consistent, and independent of who is in power within consuming countries, including the U.S.
The allegation that the Kingdom is manipulating the price of oil for political purposes or to affect elections is erroneous and has no basis in fact.