As the price of oil rises, the Obama administration is putting pressure on Saudi Arabia to increase its oil production. However, energy fellow Amy Myers Jaffe notes that Saudi Arabia is limited in how much additional oil it can make available to the global market and that geopolitical trends define the international price of crude oil.
In a May 2, 2011, blog post, Jaffe recalls Al Qaeda leader Osama bin Laden's attempted attacks on Saudi oil in the early 2000s. Resulting in the death of foreign oil workers, these attacks became linked to a "terror premium" that contributed to the rise in oil prices. Likewise, the current political unrest in the Middle East makes it essential that the Saudi government fulfill the energy needs of its citizens, which might mean fewer exports and higher global oil prices.
"It would not be surprising to imagine that the Saudi government would choose summer indoor cooling for its population over lower gasoline prices for Americans," Jaffe writes.
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