White House Says Bush Won’t Push Saudis on Oil Prices
Reagan Administration officials Wednesday sought to dispel the notion that Vice President George Bush’s mission to the Middle East this weekend will be one of “beating up on the Saudis” to achieve oil production curbs.
As Bush was speaking Tuesday, contracts for May delivery of oil were plunging below $10 a 42-gallon barrel on the New York Mercantile Exchange for the first time since the mid-1970s. After word of his remarks hit the market, the price shot up to close at $11.27. The price rose to $12.25 on Wednesday but then slid to $11.52 at the close after Administration officials played down Bush’s remarks.
In Santa Barbara, White House spokesman Larry Speakes said that Bush instead “will emphasize the U.S. view that market forces should establish world oil price levels.”
And in Washington, another Administration official who agreed to be interviewed on condition of anonymity said: “We believe in the free market” and have no intention of pressuring the Saudis on oil-price policy.
Speakes said Bush also expressed this viewpoint in a news conference in Washington on Tuesday, but parts of his statements “were picked out that could have led to a misunderstanding of the vice president’s viewpoint and the President’s viewpoint.”
“When the vice president meets with King Fahd in Saudi Arabia on Sunday, he will emphasize the U.S. view that market forces should establish world oil price levels,” Speakes said.
Oil prices in the United States and Europe rallied after Bush said Tuesday that he will tell the Saudi government during his coming visit that plunging oil prices are hurting the U.S. oil industry.
The Administration official said that Bush’s remarks at a news conference may have been misconstrued in energy markets--and that the vice president had just been trying to point out both good and bad sides of plunging oil prices.
“I don’t think there is anything in that appearance of his that would lead one to believe he is being sent there on a mission to work with the Saudis to put a floor under oil prices or anything like that,” said the official.
Bush will arrive in Saudi Arabia on Saturday.
In two related stories, Standard Oil Co. of Ohio said it will cut in half its exploration spending for 1986 and Phillips Petroleum reported that it will lay off 2,000 to 2,500 employees by July 1 to reduce annual operating expenses by about $200 million.
Standard Oil said it will cut this year’s exploration spending 50% from 1985’s $915 million.
The company also said that production spending for 1986 will be about 10% more than it spent last year but down 20% from the firm’s previously announced 1986 spending plans.
Phillips employs 26,700 people worldwide, 6,100 of them at its headquarters in Bartlesville, Okla. About 1,000 of the planned layoffs will be in Bartlesville.
In meetings with employees Wednesday morning, Chairman C. J. Silas said plunging oil prices prompted Phillips’ first layoffs in recent history.
“The steps we’re taking in response to these lower prices are expected to trim our annual operating expenses by about $200 million,” Silas said. “A large part of that savings will be accomplished by reducing the work force and delaying merit increases.”