Saudi's look to increase oil production

Looking at the effects upon global economic conditions and under pressure by the U.S., Saudi Arabia is looking at increasing production of oil.

With oil reaching a record of $140 a barrell and an increased push in the search for alternative energy sources and methods, King Abdullah of Saudi Arabia is rethinking his position taken in May after meeting with President Bush concerning oil production increases. Set to meet with oil producers and consumers in Jidda later this month, King Abdullah is expected to recommend an increase in production, hoping to stave off potential losses in the face of alternative fuel sources becoming more available.The U.S. has not been alone in pressuring for an increase in oil production, the other seven members of the G-8, France, England, Germany, Japan, Canada, Italy, and Russia, have been suggesting an increase in production as well, hoping to boost their economies.

Rising prices have shaken the world: Gas in the U.S. has reached as high as $4.43 a gallon and India, Indonesia and other Asian nations have cut fuel subsidies, creating anger and panic among drivers.

The kingdom produces about 9.45 million barrels of oil a day. The New York Times reported that the nation was considering raising that by about 500,000 barrels. Some economists believe that such a jump would cater to the West at the expense of Saudi Arabia, which has the world’s largest oil reserves.

Critics, however, object, saying that this jeopardizes Saudi oil reserves for the sake of western consumption. Others object to this line of thinking, saying that an $11 jump every day in oil prices is not in the best interest of oil producers, claiming that if it continues, interest in oil could very quickly be replaced by interest in alternative fuels. Such a situation would, in effect, cause oil producers to price themselves out of business. Some economists have speculated that an increased push for alternative fuels could hurt the economies of oil producing nations, particularly Saudi Arabia, in as soon as 10 to 15 years.