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President Bush, Saudi Prince Discuss Oil Prices

Concern is growing in the U.S. - about escalating world oil prices - which are pushing up the price of gas here. So, when President George Bush met with oil-rich Saudi Arabia's Crown Prince Abdullah at his ranch Monday, energy prices were at the top of the agenda.

Before Crown Prince Abdullah arrived at his ranch, President Bush told reporters the Crown Prince understands that it is very important to make sure oil prices are reasonable.

"A high oil price will damage markets. And he knows that. I look forward to talking to him about that, as well, you now, we'll talk about his country's capacity. It's an important subject," says President Bush.

After President Bush and Crown Prince Abdullah met, Adel al-Jubeir, Foreign Affairs advisor to the Crown Prince, said his country does have the capacity to produce more oil - which it has pledged to do. But he says that is not really the problem.

"We believe that the price of crude oil does not reflect the full dimensions of supply and demand. There is no shortage of crude oil in the world today. What we see is a shortage of refining capacity as well as shortages in infrastructures and so forth, that drive the price of product up," says Adel al-Jubeir.

He also said fear of instability in oil producing countries like Iraq also drives up the price of oil. As does tremendous growth in China and India - where energy demands are rising rapidly.

U.S. National Security Advisor Stephen Hadley said that and other supply and demand issues were addressed in the U.S. - Saudi talks. He also said the Saudi delegation came to the U.S. with a plan to improve the situation.

"It addresses the underlying issue you have when you talk about price, which is an issue of availability of oil and availability of capacity," said Mr. Hadley. "The importance, of course, expanding the capacity and the production capacity is that it makes the oil available and stabilizes the market at a price level which both the United States and Saudi Arabia agree needs to be one that provides adequate return for investment, but is also something which isn't so high that it damages markets and damages the world economy."

Former U.S. Ambassador to Saudi Arabia Walter Cutler, is not surprised the Saudis are being so cooperative. He says they have worked with the U.S. to keep prices stable for years.

"And I don't think this has, frankly, been recognized, the extent to which we have this mutual interest in a reasonable level of the price of oil." added Mr. Culter. "There the cooperation has been good."

And he says, he expects that to continue. But, Ambassador Cutler also blames rising fuel costs partly on Americans - for not curbing consumption.

"Here in this country, oil used for transportation is the major factor. And so far, we in this country are still in love with our S.U.V.s [Sport Utility Vehicles] and our pick up trucks," says Walter Cutler.

Those vehicles use much more fuel than most cars - which creates a greater demand for gasoline - further driving up the price of oil.