October 12, 2005

What Does It Mean to "Control" Iraqi Oil?

Of all the reasons for the invasion of Iraq given by the Bush administration, the one spoken of least, the one that was not a prevarication or an outright fabrication, was Iraqi oil. Some of the reasons (the presence of weapons of mass destruction and links between Hussein and Al-Queda) were Presidential lies.

Controlling and exploiting Iraqi oil production was a key strategic goal for the Bush administration. The administration's private vision was that the US would be able to take control of Iraqi oil production in an environment of relative calm. Rumsfeld, in particular, believed the people of Iraq would be so thankful for the American invasion and overthrow of Saddam Hussein, that a US occupation would be relatively problem-free.

Only after the Al-Queda, Sunni and Baathist insurgencies, accompanied by the religious and political backlash against the occupation, did the Bush administration come up with the concoction that we were creating a new front, away from our homeland, in the fight against terror. The line went something like this: "It's better to fight them over there than at home." It is an improvised fabrication in the face of an unpredicted reality. None of the reasons for this war have made any sense, so they keep trying on new ones.

Let us assume that all the other reasons for the invasion are lies, and that the real reason, all along, has been the imperial American design of taking control of Iraqi oil. Centrally locating troops, bases, and large resources like Halliburton and its corporate allies in Iraq, abutting Iran and Syria, challenging Saudi Arabia's oil dominance, giving OPEC the finger, and sending a message to the rest of the world that the United States will do anything to maintain its supply of oil for its globalized economy -- this enterprise, this target, this motivation makes sense.

So, this line of thinking assumes Bush wants Iraqi oil production to expand. Obviously, under this scenario, the realization is far from what they expected. Iraqi oil production is now below pre-war levels. The Iraqi government is not obtaining the large oil revenues it and the Americans projected. And we're not talking about a small amount less than before the war, we're talking about 25% less than what Saddam Hussein was producing. This one alleged strategic objective of the United States in Iraq has failed miserably. We cannot keep the pipelines safe; over 200 attacks have been recorded since 2003. We are having a hard time rebuilding Iraq's oil facilities because of outdated equipment and equipment breakdowns. One expert points out that Iraq is producing less this year than last year. In light of this, it's curious how US administration officials continue to claim progress in rebuilding Iraqi oil production.

But the question is this: Do Bush and Cheney want to expand Iraqi oil production or do they merely want to control it? Is there some possible good for them and their oil company buddies in not seeing an expansion of Iraqi oil supplies?

In a December 28, 2002 paper, the Global Policy Forum, a non-governmental organization with consultative status at the UN, offered this intriguing insight into possible US motivations, only a few months before the US invasion of Iraq:

In the event that Saddam doesn't set fire to the oil wells, the [US] hawks maintain that during a "transitional reconstruction period" the United States should supervise Iraqi oil to prevent future sabotage and avoid disruption of the oil market. Certainly a surge in production would do no one - except possibly Western consumers in the short term - much good. As one British oil-industry source pointed out, increased Iraqi oil production would be harmful even to the major U.S. oil companies, which would see their profit margins cut with lower prices.

As we all know, so far, there certainly has not been an increase in Iraqi oil production which has threatened the profit margins of the oil companies. In fact, all the oil companies are racking up huge profits at the expense of Western consumers -- for the time being, at least.

As it turns out, control or lack of control of Iraqi oil (depending on how one might look at it) has been a boon for the international oil cartel.

Here's what Global Policy Forum has to say about the future of Iraqi oil, in light of the US occupation:

Iraq has the world’s second largest proven oil reserves. According to oil industry experts, new exploration will probably raise Iraq’s reserves to 2-300 billion barrels of high-grade crude, extraordinarily cheap to produce, leading to a gold-rush of profits for international oil firms in the post-Saddam era. The four giant firms located in the US and the UK have been keen to get back into Iraq, from which they were excluded with the nationalization of 1972. They face companies from France, Russia, China, Japan and elsewhere, who already have major concessions. But in the post-war setting, with Washington running the show, the US-UK companies expect eventually to overcome their rivals and gain the most lucrative oil deals that will be worth hundreds of billions, even trillions of dollars in profits in the coming decades.

In an almost unnoticed and little covered part of the new Iraqi Constitution, there is absolute proof of the claim in the preceding paragraph. Here is how the Global Policy Forum describes it:

Despite noisy debates over Iraq’s draft constitution, references in the document to Iraq’s oil resources have evaded public comment. The interim government is already going ahead with a plan in which the state-owned Iraq National Oil Company (INOC) may only develop oil-fields that are already in production. Development of all other oil fields, the constitution specifies, should follow “modern techniques” and “market principles,” a code for Production Sharing Agreements with major firms such as BP, Chevron and ExxonMobil. At estimated reserve levels, that leaves 64% of Iraq’s oil open to foreign companies, casting a shadow on Iraq’s sovereignty and economic viability.

This pretty much sums it up. From the point of view of Bush and the oil companies, Iraq is the second-largest oil barrel in the world and needs to be controlled, one way or the other.

All the rest is irritant and inconvenience.


Anonymous said...


Hume's Ghost said...

One of the most frustrating things that I hear is people saying, "if the war was about oil why does gas cost so much." A worse straw-man I can't conceive of. Who could ever seriously posit that the gov't would be interested in obtaining control of an oil rich reason for altruistic reasons?

What I find interesting is the purported clash within the administration between neoconservatives (motivated by American power) interested in nationalizing oil production versus corporatists (motivated by profit) seeking to privatize the Iraqi oil.


jmcmaster said...

Spot on, they don't want to expand the oil production they want to control it and actually lessen production so the price increases. Same thing the oil companies did with the refineries here in the U.S..