RIYADH, Saudi Arabia – Paying $4 a gallon for gas leads one to hunt for a villain. Instantly Saudi Arabia comes to mind.

And why not. It is the world’s biggest oil producer and exporter, supplying more than 12 percent of global oil needs.

Saudi Arabia also has the greatest capability to increase production levels, a move that normally would affect the petroleum marketplace where prices are in record territory.

The Saudis, however, contend American motorists’ anger is misplaced.

To begin with, global demand has climbed since 2003, particularly from emerging countries like India and China rather than from industrialized nations. At the same time, overall global supplies grew only slightly, which in turn led to a lowering of internal inventories in importing countries.

In part, the “just-enough” supply levels were a deliberate strategy by the Organization of Petroleum Exporting Countries, the cartel of 13 major producers led by Saudi Arabia, to keep prices from sagging.

Saudi Arabia hasn’t forgotten that only 10 years ago the nation was in dire economic straits. Oil was $10 a barrel – compared with today’s $140-a-barrel range – and the kingdom’s debts were the equivalent of 130 percent of its gross domestic product, mostly because it had financed the $60 billion-plus cost of the 1990-91 Gulf War to eject Saddam Hussein from Kuwait.

It was against this backdrop that Saudi Arabia decreased production beginning in 2006, to maintain oil prices, then around $50 to $60 a barrel. Then demand skyrocketed.

Today supplies are just covering demand but are not enough to allow inventory replenishment.

In such a tight market, any threat of disruption accelerates price rises. Count among those threats the attacks by anti-government forces on Nigerian oil facilities, uncertainty about the future of Iraq (which has the world’s third-largest oil reserves, after Saudi Arabia), and the possibility of an Israeli or U.S. military strike on suspected Iranian nuclear enrichment facilities.

So why not increase supplies? The only country with the “spare capacity” to cover such disruptions quickly and for a sustained period is Saudi Arabia, and it is doing so – somewhat.

Riyadh has announced a boost of 500,000 barrels a day, which will bring daily production to 9.7 million barrels by the end of July. But it is still constructing the necessary facilities in various oil fields that will allow it to tap more of its spare capacity.

If all these projects come on line as planned, they will boost Saudi Arabia’s daily production to 12.5 million barrels a day by the end of 2009. Saudi officials say they could increase to 15 million barrels a day if the demand is there.

But the Saudis don’t want to make the huge investments – tens of billions of dollars – to extract that oil only to find that demand, and with it prices, have shrunk dramatically, because of alternative fuels or conservation.

Another factor contributing to the months-long oil price surge is lack of enough refining capacity by importing nations, partly because of environmental restrictions. This is crucial because much of the petroleum Saudi Arabia will be exporting in the coming months is heavy grade crude, which requires complex refining techniques.

Finally, Saudi Arabia’s King Abdullah bin Abdul Aziz, like many private analysts in the United States, says some of the blame rests on market speculators. The “unjustified increase” in oil prices, he says, is due in part to “the frivolity of the speculators in the market (acting out of) selfish interests.”

King Abdullah made the comments at a recent summit of oil producers and consumers organized by Saudi Arabia in Jeddah. Some oil-consuming countries there backed up the king. India’s Finance Minister P. Chidambaram asked summit attendees: “How is it that oil prices were $70 a barrel in August 2007, and how is it that they have doubled when there has been no dramatic change in demand? The causes for the current pandemonium in oil prices lie elsewhere: in unregulated over-the-counter markets and futures trading in oil.”

The Jeddah summit was called by King Abdullah as a dramatic gesture to signal that the Saudis were no longer comfortable with the high price of oil, nor with the finger-pointing blaming them for the price hikes.

King Abdullah took on the accusations directly at the conference. Despite the fact “that OPEC has not issued a decision (on) pricing since many decades,” leaving it to the marketplace, he said, “yet we find some people accusing OPEC alone.”

U.S. Energy Secretary Samuel W. Bodman, who also attended the Jeddah conference, wasn’t buying it. “It is clear that financial markets have seen unprecedented movement of capital into commodities in recent years. This capital is following the oil market upward – not leading that movement,” he said.

He added that “fundamentally tight market conditions, in our view, are the main driver of price increases that we have seen over the last five years and particularly during recent months.”

If there is one word that has long described the Saudis’ oil policies, it is “stability.” They have prided themselves on being a reliable source of oil, in particular to the United States. As a result, they walk a delicate balance when it comes to price.

They want to maintain their clout within OPEC and not undercut its ability to manipulate prices upward through collective production quotas. Yet the Saudis don’t want to unduly aggravate regular customers like the United States.

“The Saudis always try to be more long-term oriented than other OPEC members,” according to Antoine Halff, deputy head of research at Newedge, a New York brokerage house. “They have always been more concerned about not compromising long-term gains for short-term profits.”

Right now, say observers, one of the Saudis’ greatest fears is a rapid drop in oil prices that would jeopardize their ambitious development projects, including the building of six new megacities.

As prices surged upwards in the past year, the Saudis rejected pleas from Washington to increase production in order to bring down prices. But somewhere around May of this year, they had a change of heart.

The unprecedented prices were backfiring. The Saudis, unlike most other OPEC members, began to see oil prices imperiling their own long-term interests and their reputation as a reliable producer. They also began to fear that sustained high prices would spur consumer countries to get serious about developing alternative fuels on a large scale.

The first signal of the Saudi change of heart was the announcement during President Bush’s mid-May visit here that the country would begin producing an additional 300,000 barrels a day in June. Shortly after, they let it be known that another 200,000 barrels a day would be exported beginning in July.

Then the Jeddah conference was organized as another sign that the Saudis knew there was a crisis at the American pump.

“This is a multifaceted and multidimensional problem and we need a collective will to address the issue,” Saudi Deputy Minister of Petroleum Prince Abdulaziz bin Salman told the conference.