Editore"s Note
Tilting at Windmills

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October 14, 2009

THE SAUDIS WANT WHAT?.... To address the climate crisis, industrialized nations are obviously going to have to reduce carbon emissions -- and that necessarily means using fewer fossil fuels.

At least one major oil exporter is not only starting to worry, it's getting creative as part of a long-term financial plan.

Saudi Arabia is trying to enlist other oil-producing countries to support a provocative idea: if wealthy countries reduce their oil consumption to combat global warming, they should pay compensation to oil producers.

The oil-rich kingdom has pushed this position for years in earlier climate-treaty negotiations. While it has not succeeded, its efforts have sometimes delayed or disrupted discussions. The kingdom is once again gearing up to take a hard line on the issue at international negotiations scheduled for Copenhagen in December.

The chief Saudi negotiator, Mohammad al-Sabban, described the position as a "make or break" provision for the Saudis, as nations stake out their stance before the global climate summit scheduled for the end of the year.

"Assisting us as oil-exporting countries in achieving economic diversification is very crucial for us through foreign direct investments, technology transfer, insurance and funding," Mr. Sabban said in an e-mail message.

I see. So, Saudi Arabia's customers are expected to compensate oil producers when they want oil and should also compensate oil producers when they don't want oil.

The NYT report added that petroleum exporters "view any attempt to reduce carbon dioxide emissions by developed countries as a menace to their economies." That happens to be true -- if a country's economy is predicated on oil sales, and demand for oil drops as other countries hope to avoid a climate catastrophe, then a country like Saudi Arabia is going to be in some trouble.

But instead of subsidies for nothing, maybe some of these exporting countries could try forward-thinking diversification?

"It is like the tobacco industry asking for compensation for lost revenues as a part of a settlement to address the health risks of smoking," said Jake Schmidt, the international climate policy director at the Natural Resources Defense Council.

Steve Benen 3:25 PM Permalink | Trackbacks | Comments (45)

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Maybe if murderers could commit themselves to a higher suicide rate America could get rid of the death penalty?

Posted by: Vokoban on October 14, 2009 at 3:26 PM | PERMALINK

Sure, just give us Bin Laden's head.

Posted by: citizen_pain on October 14, 2009 at 3:27 PM | PERMALINK

Is there an Arabic equivalent of "chutzpah"? Sorry, guys, but the way you should have diversified your economy was by setting aside revenue for the purpose all along instead of blowing it on Rolls-Royces for 500,000 "princes". Have a nice trip on your way into the dustbin of history.

Oh, and al-Sabban needs to stop huffing crude oil. It's clearly causing massive brain damage.

Posted by: Steve LaBonne on October 14, 2009 at 3:29 PM | PERMALINK

This is a perfectly legitimate request on the part of the oil producers.

Change has costs. It's time liberals starting paying them.

Posted by: MatthewRQuarreler on October 14, 2009 at 3:31 PM | PERMALINK

Leave it to the free markets to find a way to destroy the earth and make a buck at the same time.

Oh wait...that's all they do.

Posted by: chrenson on October 14, 2009 at 3:31 PM | PERMALINK

Sadly, this isn't too far from the arguments that the copyright cartels make over things like CD sales... it's fast becoming a meme: My business is entitled to a certain revenue, even when conditions change.

Posted by: Bernard HP Gilroy on October 14, 2009 at 3:33 PM | PERMALINK

I wouldn't be too quick to belittle the Saudi position. Before there was China funding our national debt, there was Saudi Arabia. They hold a lot of America's debt. If we want the oil producing nations to continue denominating the price of oil in dollars, we may have to dance to this tune before the climate change treaties are concluded. This loss of independence is the price of our continuing dependence on foreign oil.

Posted by: Russell aboard M/V Sunshine on October 14, 2009 at 3:34 PM | PERMALINK

all saudi arabia has to do -- like the auto industry -- is somehow show that the oil exporting business is really a financial institution in need of a bail out.

"here, fill out these forms from the federal reserve -- we'll expedite 'cha"

"let me just give timmy and larry a buzz..."

Posted by: neill on October 14, 2009 at 3:35 PM | PERMALINK

Yeah, screw those guys! How dare they have oil! The Saudi people should be forced to endure a severe reduction in their standard of living!

Saudi Arabia has been working to diversify their economy for several years now. But more importantly, why shouldn't there be money spent to soften the blow as this change takes hold in the world economy? It's potentially traumatic everywhere. Shouldn't there be funds to help ease the transition?

Jake Schmidt is going a bit too far with that comparison. Corporations are not countries. What Schmidt is saying is that if the employees of cigarette companies lose their jobs because of some settlement, they should be denied unemployment benefits or Medicaid because they didn't diversify their incomes when they should have.

Posted by: Mark on October 14, 2009 at 3:36 PM | PERMALINK

we gonna send helicopter ben to riyadh and git this bail out done...

Posted by: neill on October 14, 2009 at 3:37 PM | PERMALINK

Isn't glass made from sand?
Aren't solar panels made partially from glass?
Isn't there a LOT of sand in most petroleum-producing countries?

Get on it.

Posted by: slappy magoo on October 14, 2009 at 3:41 PM | PERMALINK

You mean... If we don't compensate them, they won't be able to afford coming here for their (best in the world) healthcare any more?

Posted by: exlibra on October 14, 2009 at 3:43 PM | PERMALINK

while we didn't provide revenue replacement for the tobacco companies, we did in fact provide revenue replacement after the tobacco settlement to the tobacco farmers. I'm not saying the Saudi's are right; they aren't. But their entitlement mentality is far from unique. Talk to any former local telephone monopoly, the smaller the better -- they all argue that sure, local competition is fine so long as there is some fund or revenue source to make up for what they lose through competition.

Funny world: everyone is perpetually entitled to life as one-way, risk-free ratchet where if things get better, the benefit is all theirs to keep and not share, but god knows there can be no downside risks, even for bad decisions or willful short-sightedness.

Posted by: zeitgeist on October 14, 2009 at 3:44 PM | PERMALINK

The Saudis should stop obsessing about what's under their sand and notice what's falling on top it. I believe the technical term is 'sunshine'. They could be a clean energy powerhouse for the rest civilization until the sun burns out.

Posted by: JoyceH on October 14, 2009 at 3:44 PM | PERMALINK

Maybe they could grow food in all those limousines they have.

Posted by: Speed on October 14, 2009 at 3:46 PM | PERMALINK

Canada just called. They're undercutting the Saudis and are offering to not send us oil for less. See, the free market does work.

This reminds me of the Marx Brothers routine.
Chico says to Groucho, "Three songs is 25 dollars. Two songs is fifty dollars. One song is a hundred dollars." Groucho asks, "What if you don't play at all?" "You can't afford it."

Posted by: Art Hackett on October 14, 2009 at 3:46 PM | PERMALINK

The Saudis really have nothing to worry about because Americans will refuse to buy in to climate change voodooism.

Posted by: Al on October 14, 2009 at 3:47 PM | PERMALINK

We should compensate health insurance companies for the money they will lose if a public option forces them to decrease their premiums.

Posted by: qwerty on October 14, 2009 at 3:52 PM | PERMALINK


I'm not sure you're reading this right.

I see the Saudi's saying: you want us to sign on to reducing our pollutants. It's going to be expensive for us, more expensive because that energy source we're all using right now is literally under our feet. Without some kind of assistance, we won't be able to make the change.

Taking a step back, "the change" is going to be hard for EVERY country in the world to make. It's going to be *especially* difficult, obviously, for the oil-exporting countries, who will see their energy costs go from tapping surplus exports (aka, "free" due to the artificial limits they often put on those exports to regulate pricing) to wholesale imports.

If we say, "tough luck, Saudis", it's not like Saudi Arabia (so far as I've read, anyway) is saying they'll say "then screw you: you now pay twice as much for our oil". They're saying that without assistance they'll just keep on burning the oil in their cars and factories, worsening the global climate situation by more than their fair share, and maybe someday switch to something "greener" when it's economically feasible.

It's not a very forward-looking stance, but it's also not as evil and extortive as it is being made out to be here.

Posted by: Tom Dibble on October 14, 2009 at 3:55 PM | PERMALINK

Ahhh... Cash for Crankers.

Posted by: ML on October 14, 2009 at 3:58 PM | PERMALINK

Naturally the Saudis are concerned about the fact that their oil fields are drying up and are going to use anything they can to try to replace that income they are going to lose regardless of this meeting..

Posted by: Matt on October 14, 2009 at 3:59 PM | PERMALINK

Send Max Bachus over to negotiate with them, he'll come back with higher gas prices and a subsidy!

Posted by: martin on October 14, 2009 at 4:01 PM | PERMALINK

I'm not a big supporter of Saudi Arabia, to put it mildly, but they and other oil producers often have other forms of useful energy. I would think that Saudi Arabia could lead the world in solar energy if they wished. Maybe it would make sense to subsidize them if they promised to use the money to create a solar energy infrastructure. Of course, Saudi Arabia has enough money to do that themselves

Posted by: Ken May on October 14, 2009 at 4:03 PM | PERMALINK

Frak the Saudis. Cut off oil money, and suddenly they have much less money to give to Osama bin Laden + his ilk. People keep forgetting: the Saudis are *not* our friends. They'll gladly take our money as long as we're hooked on their product, just like a drug dealer will, but don't mistake this for friendship.

-Z

Posted by: Zorro on October 14, 2009 at 4:05 PM | PERMALINK

This is really short-sighted thinking on their part. They control the oil and will always be able to charge whatever they want. Some day, a car will be able to go 200 miles on one gallon of gas, and that gallon will cost $50. They'll get paid no matter what they do.

On top of that, there are still many other uses for oil that won't be easily replaced. These guys are worrying over nothing.

Posted by: Doctor Biobrain on October 14, 2009 at 4:07 PM | PERMALINK

"Saudi Arabia is trying to enlist other oil-producing countries to support a provocative idea: if wealthy countries reduce their oil consumption to combat global warming, they should pay compensation to oil producers."

This is nothing new. Something very much like it has been done frequently in the US concerning electric utilities. Maybe that's where they got the idea. It's called stranded cost recovery. This means that long-time utility customers who wish to stop purchasing from their erstwhile supplier have to compensate that utility for its "investment" that will no longer be used to supply the customer. It's an awful idea, but it's not a new idea invented by the Saudis.

Posted by: RW on October 14, 2009 at 4:09 PM | PERMALINK

Every time Saudi Arabia pops up in conversation, I can think only of this, and from this, I conclude they will get what they want whenever they want it.

Posted by: doubtful on October 14, 2009 at 4:14 PM | PERMALINK

Look, the Saudis and the other oil-producing nations had to fight tooth-and-nail over the course of the 20th century to get something approaching a fair share of the revenue oil companies made from their oil. Iran does not have an oil refinery and has to import gasoline, ok? Mandating green energy to any former colonial nation (and China) is simply an attempt to maintain a neocolonial relationship unless international policy dramatically facilitates their adoption of green technologies.

Posted by: Ron Mexico on October 14, 2009 at 4:15 PM | PERMALINK

Saudi Arabia should should take a look at Abu Dhabi. They're getting into the green energy market. They realized that oil is limited, but the sun isn't (at least not for a very long time). When you make a lot of money, it's better to invest it than blow it on toys. Even Dubai is starting to go that way.

Posted by: fostert on October 14, 2009 at 4:23 PM | PERMALINK

I don't know. Is it any worse than Wall Street asking to be compensated for losing billions of dollars?

Posted by: Jay MacNamara on October 14, 2009 at 4:26 PM | PERMALINK

So when we outsource jobs to other countries, should those countries subsidize us for our loss of jobs? Same logic here.

Posted by: Jane on October 14, 2009 at 4:27 PM | PERMALINK

There's no chance that under even the most aggressive moves to address global warming that we will be reducing oil consumption for decades. Far too many people in China, India, etc. want cars for that. (If they want to spur oil consumption even more, they could let their women drive...just a suggestion.)

Given that, there's simply no justification for Saudi Arabia making this kind of demand. They can invest some of their likely continuing to increase oil revenue in Solar energy as well as education and other infrastructure, and they will have a country with a solid economy for the future.

Posted by: Fides on October 14, 2009 at 4:28 PM | PERMALINK
MatthewRQuarreler: "This is a perfectly legitimate request on the part of the oil producers. Change has costs. It's time liberals starting paying them."

Well, I have to give Republicans points for chutzpah, coming as this statement does from a GOP that rang up the greatest collective budget deficits in our nation's history over the past 28 years, and more than octupled our national debt in the process.

Thanks for the bellylaugh, Matthew.

Posted by: Donald from Hawaii on October 14, 2009 at 4:39 PM | PERMALINK

This is oil cartel propaganda/threats formulated by highly paid oil company publicists and advisers, many of them former Republican administration officials.
The oil company trolls commenting on this blog are repeating the talking points: action to address climate change is disruptive so it will cost a lot. It is all intended not to support reasonable and overdue action on climate change but, to appear to raise the cost and make action less appealing.
The sooner we eliminate oil as a strategic commodity the sooner we are free of this cancer on our socioecomonic and political existence.

Posted by: robert on October 14, 2009 at 4:48 PM | PERMALINK

It's just like farm subsidies,

Not enough rain? Here's a handout.

Too much rain? Here's a handout.

Locusts? Here's a handout.

Soil poisoned and lost from too much fertilizer and pesticides? Here's a handout.

Too much corn on the market? Here's a handout.

Didn't grow enough to pay the bank? Here's a handout.

Have your job shipped to China to make a leveraged buyout work? Take a hike buddy, this is the free market.

Posted by: The Pale Scot on October 14, 2009 at 4:50 PM | PERMALINK

devine right to things one doesn't deserve is not an unusual concept to monarchies.
.

Posted by: pleuge on October 14, 2009 at 4:57 PM | PERMALINK

NEWS FLASH: American pig farmers want Saudi Arabia to compensate them for lost pork sales in the Muslim world.

Posted by: CJColucci on October 14, 2009 at 5:13 PM | PERMALINK

strikes me the Saudis should have thought about this inevitable moment 50 years ago, and should NOT have put 3/4 of their population on what amounts to an oil-revenue dole. Not to mention the untold billions the extensive Saudi royal family has arrogated to itself over the years.

This is just an example of a pirate being caught with his pants down. He yanks 'em up as best he can, pulls out an unloaded pistol, and tries to brazen it out. One can only hope no-one actually takes the Saudis seriously. They need us more than we need them...since their oil is finite, and we will have to find something else to power our lives, sooner or later.

Posted by: LL on October 14, 2009 at 5:46 PM | PERMALINK

The Saudis just don't like change, period.

Posted by: Bob M on October 14, 2009 at 6:09 PM | PERMALINK

"Assisting us as oil-exporting countries in achieving economic diversification is very crucial for us through foreign direct investments, technology transfer, insurance and funding,"

Bud, we've been "assisting" you for decades. What happened to the money? What did you do with it? Why do you have nothing to show for it?

Posted by: Texas Aggie on October 14, 2009 at 6:56 PM | PERMALINK

Reminds me of what a caller said today on a wnyc npr program about the huge bonuses the financial industry is paying again already. He talked about how these employees had mortgages to pay etc. and needed the money. Yeah, mortgages on multimillion dollar mansions they bought when they were making millions of dollars a year while providing the valuable service of almost crashing the whole world economy, only prevented by billions of dollars of everyone else's money. Maybe the sheiks should save up a little of the millions they make by happening to have grandparents who happened to herd their goats on sand with oil under it instead of blowing it all on servants and Rollses and gold plated everything.

Posted by: emjayay on October 14, 2009 at 7:56 PM | PERMALINK

Donald from Hawaii: Thanks for the bellylaugh, Matthew.

That's from MRQ, not from MRM, whom MRQ sometimes likes to paraphrase. Although I do sometimes wonder whether liberals realize that they also, along with conservatives, are and will be paying for the greening of the US economy.

The Saudi request is ludicrous. They had a commodity to sell in the market, and they basically squandered all the proceeds.

Posted by: MatthewRMarler on October 14, 2009 at 10:12 PM | PERMALINK

Saudi Arabia could become a global leader in solar and wind energy. I would have no problem in sending over investment and assistance money to help them get there.

Really, there are worse compromises.

Posted by: Steve Simitzis on October 14, 2009 at 10:52 PM | PERMALINK

Although I do sometimes wonder whether liberals realize that they also, along with conservatives, are and will be paying for the greening of the US economy.

You would wonder something like that. The approximately 50,000 comments here from progressives who note that it will be more expensive, but that we have to do it, would never make it through your filter.

Posted by: Tom K on October 15, 2009 at 7:52 AM | PERMALINK

Is Steele consulting for the Saudis?

Posted by: ComradeAnon on October 15, 2009 at 9:57 AM | PERMALINK
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