Bush Pushes; Will Oil Costs Budge?

President Bush prodded Saudi Arabia's Crown Prince Abdullah on Monday to help curb skyrocketing oil prices, and the White House expressed hope that the kingdom's plans would ease U.S. gasoline prices that have shot above $2.20 a gallon.

"A high oil price will damage markets and he knows that," Mr. Bush said of Abdullah, the de facto leader of the desert kingdom.

Asked whether pump prices would drop, Bush said that would depend on supply and demand.

"One thing is for certain: The price of crude is driving the price of gasoline," Mr. Bush said. "The price of crude is up because not only is our economy growing, but economies such as India and China's economies are growing."

Saudi Arabia has outlined a plan to increase production capacity to 12.5 million barrels a day by 2009 from the current 11 million limit. Saudi Arabia now pumps about 9.5 million barrels daily. If necessary, Saudi Arabia says it will eventually develop a capacity of 15 million barrels a day.

But pumping capacity might not be the problem to any lack of gasoline in America. CBS News Correspondent Anthony Mason reports that Saudis say if they produced more, the United States wouldn't have the capacity to refine it.

"It will not make a difference if Saudi Arabia ships an extra million or two million barrels of crude oil to the United States if you cannot refine it," Adel Al Jubeir, Saudi spokesman, said. "It will not turn into gasoline and that will not turn into lower prices."

Mason reports that while building more refineries might seem like an easy solution, due to environmental regulations, one has not been built in the United States for more than 30 years.

In other oil-related developments:

  • The average price for all grades of gasoline nationwide has fallen nearly 4 1/2 cents per gallon in two weeks because of a drop in crude oil prices and slightly lower demand. The average retail price for all three grades dropped 4.46 cents to $2.27 per gallon between April 8 and Friday, said Trilby Lundberg, who publishes a survey of 7,000 gas stations around the country.
  • Crude oil futures dipped on Monday. Light, sweet crude for June delivery fell 82 cents to settle at $54.57 a barrel on the New York Mercantile Exchange. Heating oil futures fell 2.7 cents to $1.5181 a gallon, while unleaded gasoline fell 0.13 cent to $1.6510 a gallon.

    Oil-market employees are watching the pumps and Mr. Bush's meeting even closer than consumers.

    "The President is asking the Saudis, 'hey, I don't know how much excess oil you have, but if you have more, you should be pumping it,'" Alaron Trading Energy Analyst Phil Flynn told Mason.

    National Security Adviser Stephen Hadley said the plan could be seen as positive news by financial markets.

    "The problem in the oil market now is a perception that there is inadequate capacity," Hadley said. Reassurance that can be given to the market on available supply, he said, should "have a downward pressure on the price."

    On another economic issue, the United States and Saudi Arabia are on the verge of a bilateral trade agreement that would allow the Gulf nation to join the World Trade Organization, "god willing by the end of the year," said Abdullah's foreign affairs adviser, Adel Al Jubeir, told reporters.

    Other pressing issues, including terrorism, prospects for peace between the Israelis and Palestinians, Syria's future role in Lebanon and democratic change in the Middle East filled the leaders' meeting and discussion over lunch. They agreed to set up a high-level committee, headed by Secretary of State Condoleezza Rice and the Saudi foreign minister, to deal with strategic issues.

    Spreading democracy is a second-term goal that could affect Bush's legacy, yet high gas prices are a drag on his popularity right now.