HomeCatalog Water CentralGrey Water CentralEcological Systems DesignAbout UsView Cart

 

It's the Ten Trillion Dollars, Stupid!

Economics of War in Afghanistan and Iraq

What is really going on? Follow the money to the answer.

Every aspect of modern life--pumping water, growing food, building shelter, heating, transportation, communication, medicine, every consumer product--all of it depends on oil. Today's prices don't begin to reflect the future strategic and economic value of world oil reserves.

At current US rates of usage, America only has four years worth of oil reserves within it's national boundaries. While supply is a hump-shaped curve that is peaking and about to decline, demand is still a rising curve, especially in the US.  When these two curves collide, the price curve is going to go through the roof.

Iraqi and Caspian oil which is worth $4,000,000,000,000 at today's prices will be worth at least ten trillion dollars, probably much more, when unproven reserves are found and before it is all gone. Military superiority and control of the largest fraction of world oil reserves would essentially equate with control of the world.

(The entire US  Gross Domestic Product was ten trillion dollars in 2002. The $4 trillion is based on 130 billion barrels in Iraq and the Caspian Region at $25 a barrel. US state department estimates that Iraq could have as much as 432 billion barrels, and you know, prices might go up too).

Killing a million or more innocent civilians to gain this level of wealth and power is considered a more than acceptable level of collateral damage. In fact, at a ratio of one to ten million dollars worth of oil for each fatality, this war could hardly be more attractive.

The arms sales, the timber, the shareholder rip-offs, the prison building—these all generate revenue and are useful diversions besides. But it is the oil that is the central goal.

This is what "running government more like a business" looks like for a cadre of current and former oil men, with major campaign funding from arms manufacturers.

"It's a hard choice, but I think, we think, it's worth it."

--U.S. Secretary of State Madeline Albright, in response to the question if half a million children killed by bombing and sanctions in Iraq was "worth it," on CBS, May 11, 1996.

Yikes. Is there hope?

I think so. Blinded by desire and drunk on greed, it looks as though Bush and Co. may reach out too far.  With success so close, they can't stop their itching trigger finger and the ringing in their ears is drowning out the sound of local and world protest.

Like Gollum, possessed with insatiable desire, they may overbalance and tip into the abyss, yelling "my precioussssss" all the way down into the cracks of doom.

Widespread protest could overturn the Bush oligarchy.

More prosaically, the US could run out of money. All this madness is being paid for by plastic. Before 1984, we were a creditor nation. Now we are a net debtor to the tune of $2.7 trillion dollars--over one quarter of our entire GDP and climbing with each new war and tax cut. Creditors putting their foot down ended the British empire, and it could end the American one as well.

One can only hope, live simply and well,  and keep the pressure on.

Here's a good place to start: Vote to Impeach Bush - Articles Of Impeachment,  Drafted By Former U.S. Attorney General Ramsey Clark <http://www.votetoimpeach.org>

References and further reading

Oil grab motivations and strategies

+War against Iraq obviously doesn't make sense for the stated reasons. North Korea, a bigger loose cannon, is relatively ignored. Meanwhile, the democratically elected leader of Venezuela (location of major oil reserves) is subjected to a US backed coup attempt.

+Caspian sea oil, 1.5% of the worlds reserves, worth about 375 billion dollars at today's prices. Dick Cheney testified to congress years ago that a secure pipeline route, preferably through Afghanistan, was all that was needed for the West to gain control of this oil. Now that they've got the pipeline route, who cares about Bin Laden?  He's done his bit.

+High quality Iraqi oil, which only costs a dollar a barrel to produce, is 11% of the worlds proven reserves, with much of the territory unexplored. These reserves are worth 2.8 trillion dollars at today's prices.

+The geologist Dr. M. King Hubbert used his famous "Hubbert Curve" statistical analysis (which relates new oil discoveries to the economic life of an oil field) to predict the US lower 48 states 1970 oil production peak. Applying this same analysis to world oil production, we are nearing the peak of the curve, something most authorities more or less agree on.

"Oiling the Wheels of War"

<http://www.peacecouncil.net/pnl/02/714/714OilWar.htm>

...Iraq possesses vast areas of promising but unexplored hydrocarbon potential. These fields may harbor the world's largest remaining reservoir of unmapped and unclaimed petroleum - far exceeding the untapped fields in Alaska, Africa and the Caspian. Whoever gains possession of these fields will exercise enormous influence over the global energy markets of the twenty-first century.

Knowing this, and seeking allies for his confrontation with Washington, Saddam Hussein has begun to parcel out concessions to the most promising fields to oil firms in Europe, Russia and China. According to the International Energy Agency's World Energy Outlook for 2001, he has already awarded such contracts for fields with an estimated potential of 44 billion barrels of oil _ an amount equal to the total reserves of the United States, Canada and Norway (the number-one European producer) combined. At current rates of about $25 per barrel, that makes these contracts worth an estimated $1.1 trillion.

And here's the rub: The Iraqi dissidents chosen by Washington to lead the new regime in Baghdad have threatened to cancel all contracts awarded to firms in countries that fail to assist in the overthrow of Saddam...Not surprisingly, US oil firms are expected to be awarded most of the Hussein-era contracts voided by the successor regime.

This could prove to be the biggest oil grab in modern history, providing hundreds of billions of dollars to US oil firms - many linked to senior officials in the Bush Administration

"US buys up Iraqi oil to stave off crisis: Seizing reserves will be an allied priority if forces go in"

<http://www.observer.co.uk/iraq/story/0,12239,882517,00.html>

...[Iraq] has the world's second largest proven reserves - some 112 billion barrels, and at least another 100bn of unproven reserves, according to the US Department of Energy. Iraqi oil is comparatively simple to extract - less than $1 per barrel, compared with $6 a barrel in Russia. Soon, US and British forces could be securing the source of that oil as a priority in the war strategy. The Iraqi fields south of Basra produce prized 'sweet crudes' that are simpler to refine.  On Friday, Pentagon sources said US military planners 'have crafted strategies that will allow us to secure and protect those fields as rapidly as possible in order to then preserve those prior to destruction'.  The US military says this is a security issue rather than a grab for oil, after a 'variety of intelligence sources' indicated that Saddam planned to damage or destroy his oil fields - which would inflict up to $30bn damage on the US economy and cause irreparable environmental damage.  But the prospect of British and US commandos claiming key oil installations around Basra by force has pushed global oil diplomacy into overdrive. International oil companies have been jockeying position to secure concessions before 'regime change'.  Last weekend a Russian delegation flew to Baghdad to patch up relations after Iraq's cancellation of its five-year-old contract to develop the huge West Qurna oil field - worth up to $600bn at today's oil price. Lukoil was punished by Baghdad for negotiating with the US and Iraqi exiles on keeping its concession in a post-Saddam Iraq.  The delegation of Ministers and oil executives returned to Moscow with three signed contracts. Oil is the state budget's lifeblood, and Russia requires an oil price of at least $18. Russians fear a US grip on a large reserve of cheap oil could send prices tumbling.  But Saddam has offered lucrative contracts to companies from France, China, India and Indonesia as well as Russia.  It is only the oil majors based in Britain and America - now the leading military hawks - that don't have current access to Iraqi contracts.  Richard Lugar, the hawkish chair of the Senate Foreign Relations Committee, suggests reluctant Europeans risk losing out on oil contracts. The case he had made is that the Russians and the French, if they want to have a share in the oil operations or concessions or whatever afterward, they need to be involved in the effort to depose Saddam as well,' said Lugar's spokesman.  A delegation of senior US Republicans was in Moscow last Tuesday trying to persuade Kremlin officials and oil companies that a war in Iraq would not compromise their concessions. A leaked oil analyst report from Deutsche Bank said ExxonMobil was in 'pole position in a changed-regime Iraq'.  Washington is split along hawk-dove lines about the role of oil in a post-Saddam Iraq. Two sets of meetings sponsored by the State Department and Vice-President Dick Cheney's staff have been attended by representatives of ExxonMobil, ChevronTexaco, ConocoPhilips and Halliburton, the company that Cheney ran before his election.  While the State Department is mindful of cynical world opinion about US war aims, officials do not always stick to the script. Grant Aldonas, Under Secretary at the US Department of Commerce, said war 'would open up this spigot on Iraqi oil which certainly would have a profound effect in terms of the performance of the world economy for those countries that are manufacturers and oil consumers'.  The US economy will announce zero growth this week, prolonging three years of sluggish performance. Cheap oil would boost an economy importing half of its daily consumption of 20m barrels.  But a cheaper oil price could have been reached more easily by lifting sanctions and giving the US oil majors access to Iraq's untapped reserves.  Instead, war stands to give control over the oil price to 'new Iraq' and its sponsors, with Saudi Arabia losing its capacity to control prices by altering productive capacity.  Paul Wolfowitz, Assistant Defence Secretary, and Richard Perle, a key Pentagon adviser, see military action as part of a grand plan to reshape the Middle East.  To this end, control of Iraqi oil needs to bypass the twin tyrannies of UN control and regional fragmentation into Sunni, Shia and Kurdish supplies. The neo-conservatives plan a market structure based on bypassing the state-owned Iraqi National Oil Company and backing new free-market Iraqi companies.  But, in the run-up to war, the US oil majors will this week report a big leap in profits. ChevronTexaco is to report a 300 per cent rise. Chevron used to employ the hawkish Condoleezza Rice, Bush's National Security Adviser, as a member of its board.  Five years ago the then Chevron chief executive Kenneth Derr, a colleague of Rice, said: 'Iraq possesses huge reserves of oil and gas - reserves I'd love Chevron to have access to.'  If US and UK forces have victory in Iraq, the battle for its oil will have only begun.

Gross Domestic Product

<http://www.bea.gov/bea/dn/nipaweb/TableViewFixed.asp#Mid>

World oil production/ Hubbert curve

"The Global Hubbert Peak Forecast of Future Global Oil Output"

<http://www.oilcrisis.com/midpoint.htm>

Population curve with oil bell curve at logrithmic growth point and other scary stuff

<http://dieoff.com/>

"The Hubbert Curve: It's Strengths and Weaknesses "(technical) <http://dieoff.com/page191.htm>

Iran Contra summary

"Grolier presents Iran Contra Affair"

http://gi.grolier.com/presidents/aae/side/irancont.html

US running out of money

"The End of Empire"

<http://www.thenation.com/doc.mhtml?i=20020923&s=greider>

The imperial ambitions of the Bush Administration, post-9/11, are founded on quicksand and are eventually sure to founder, but for fundamental reasons not currently under discussion...

State of the Economy

http://www.stanford.edu/~mckinnon/briefs/BushJohnson.pdf.

"Trade Deficit Shows Continuing Decline in U.S. Global Position"

<http://www.americaneconomicalert.org/view_art_print.asp?Prod_ID=174>

www.oasisdesign.net • Copyright © Art Ludwig 1997 -2014