The saying goes: If you owe the bank $10 billion, the bank owns you. If you owe the bank $10 trillion, you own the bank. That is, you owe so much that if you default, the bank goes under too.
Since the USA consumes one out of every four barrels of oil produced in the world, we own the oil bank, so to speak. Or thought we did, maybe, until yesterday, when President Bush went to Saudi Arabia, met with King Abdullah, and asked him to please produce more oil or else the US economy would slow down and thus we would buy less of his oil.
Leave aside for the moment the absurdity of anyone giving the King of Saudi Arabia a lecture in Economics 101, and focus on what this means: Bush is saying “we buy so much, we own the bank.” The Saudi response? According to an article in the New York Times, the Saudi oil minister said that Saudi Arabia shared Bush’s concern that a recession in the US would have profound effects, but “Saudi Arabia would raise production only when the market justifies it.” In short: “No, Mr. Bush, actually the bank owns you.”
Quite understandable, from the Saudi point of view. Why invest money in additional infrastructure and sweat to pump a gallon of oil to sell this year at $100, when without any additional effort you can pump that barrel next year and sell it for $150? So what if the US goes into a recession and buys somewhat less oil? China and India are standing by, cash in hand. And the World Without Oil scenario continues, scarily, to become more real.