Saudis to World: Cut Fuel Taxes Source: Associated Press Publication date: 2000-09-06

NEW YORK (AP) -- Saudi Arabia's Crown Prince Abdullah says his oil-rich country is working to stabilize world oil prices but consumer countries must contribute to this effort by reducing fuel taxes. Speaking to American businessmen at a reception in New York on Tuesday night, the Saudi Crown prince also said his country is moving foward on an economic reform program designed to lure foreign investment and lessen the country's reliance on its main source of income: revenues from oil sales.

"Saudi Arabia will continue to make every effort to ensure equilibrium in the oil markets and to stabilize prices," said Abdullah, whose country is the world's top exporter of oil. "This requires the cooperation of all producing countries, whether they are members or non-members of OPEC."

But, Abdullah said, taxation by oil-consuming countries also puts pressure on prices. "These taxes, which bear heavily on consumers, should be reconsidered," he said.

Last month, Saudi Arabia said it would work with other members of the Organization of Petroleum Exporting Countries to increase output to stabilize oil prices, which have topped $30 per barrel.

Abdullah also called for a "constructive dialogue between producers and consumers to achieve an understanding that leads to stability" of oil prices.

He said low oil prices negatively affect the oil-producing countries and the size of its petroleum investment while high oil prices negatively affect global economic growth and the long-term growth of demand for oil.

Market experts say the 500,000 barrels a day of additional production that OPEC is expected to approve at its meeting in Vienna this weekend is not enough to meet heavy world demand.

Abdullah, who has been handling Saudi Arabia's affairs since King Fahd suffered a stroke in 1995, is in New York to attend this week's millenium summit at the United Nations. He also will discuss Mideast peace and oil with President Clinton.

He told businessmen Tuesday night that his country's economic reform program would continue.

"We realize that the path of economic reform will not be easy, but we are determined -- with the help of God -- to pursue this course and remove all impediments and achieve our goal of enhancing our economy's ability to interact positively with the current challenges and to meet such challenges with confidence and strength," Abdullah said.

Saudi Arabia passed a foreign investment law in April, offering foreigners full ownership of houses, land and companies. It also cuts business taxes and allows foreign companies to bring in workers without a local sponsor.

Abdullah said Tuesday that a law was issued recently to regulate litigation procedures and dispute settlement.

The Associated Press News Service

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-- Martin Thompson (mthom1927@aol.com), September 06, 2000

Answers

Since March I have been reading about OPEC debating or deciding to raise production, but I can't recall reading anywhere that they have actually done so, not even by allusion. For example, this article does not say, "Market experts say the 500,000 barrels a day of additional production--combined with the X.Y million barrels of increase since the March 27 OPEC decision .... "

*Has* OPEC *actually* increased output at all this year? I know there were a couple of times when the price fell below their target and made them ... ?decide not to increase? or cut back?

I have a sneaking suspicion that they are having troubles and *cannot* actually produce more.

-- L Hunter Cassells (lcassells@nsit.gov), September 06, 2000.

There are several OPEC and OPEC-price-fix countries that have not increased their deliveries at all since March. Norway, the world's number 2 producer, has not increased it's 3.3 million barrels per day, and annonced last week that it cannot. Mexico and Venezuela have likewise not increased production, and Nigeria, the 4th largest producer, and Indonesia, the 6th largest producer, have DECREASED output.

Yes, there is much more here than meets the eye.

-- JackW (jpayne@webtv.net), September 06, 2000.

I do look at a lot of articles and I agree that there have been no production increases for some time. I believe it has something to do with 'Market Manipulation'. Also called HOT AIR.

Martin

-- Martin Thompson (mthom1927@aol.com), September 06, 2000.