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Thursday, March 11, 2004


From Ed Lasky at The American Thinker: At last, a specific explanation for the economy's lack of job creation that directly connects to the Bush administration.
How have the Saudis acted to destroy George Bush's political career? By using the "oil weapon" to torpedo the American economy over the next eight months, and thereby weaken electoral support for George W. Bush's candidacy in November. ...

By restricting OPEC output since the end of hostilities in Iraq, the Saudis have forced oil prices up over the past several months. The American economic recovery is being slowly, almost imperceptibly, throttled. From a low of $23.61 per barrel in May, 2003, average crude oil prices have risen rather steadily, to $31.03 last month, up nearly one-third in eight months. If this rate of increase continues over the next eight months, the economic consequences for America will be grim.

Jobs are not being created at the expected rate, and increasing voter dissatisfaction with the President is shown in public opinion polling, with jobs and the economy heading the list of concerns. Additionally, the Saudis may have been reducing their holdings of petrodollars and converting them into non-dollar denominated assets. This has hurt the value of the dollar. Money flows are difficult to follow, and currency manipulation may have unintended consequences, but a proxy for the Saudi desire to hurt America may be seen in the increasing number of oil field contracts going to non-US companies.
Think the Kerry campaign will actually use this argument, rather than the generic Bush bad? Of course, most voters don't understand economics (especially their target groups), so it might not really matter.

Long term, this is why it's so important to get Iraqi oil production up and running as quickly and strongly as possible, before the House of Saud house of cards starts tumbling down.

posted by Kelly | 4:14 PM link