Posted on 02/22/2003 8:39:02 PM PST by Drewman626
I'm going to end this "It's about oil" argument once and for all.
Iraq produces between 3% and 5% of the world's daily oil supply on any given day.
To put that in perspective, of the ten largest oil producing countries on the planet, Iraq ranks 7th. Saudi Arabia ranks 1st producing 500% more oil than Iraq. Number two is Mexico... three is Venezuela.
"Yeah, but... but... Iraq has the second largest oil reserve under it!"
If you have a quarter, I have a dime, and everyone else on earth has a nickel... I have the second largest coin on earth. But it's still a drop in the bucket compared to what's out there.
"Well...um.... but what is there is still worth a lot of money!"
Is it? There's an estimate that says that the oil in the sands of Iraq is worth $3trillion dollars.
Problem 1: getting to the oil. Iraq is producing 4% of the oil because that's all it can get at. If that oil were easily obtained, Iraq would've already tapped it. In order to even think about draining the untapped oil, infrastructure, technology, and machinery would have to be built, invented and installed. That costs money. That takes time.
Problem 2: refineries all ready at full capacity. The oil refineries around the world are already at full capacity. They are already maxed out as to how much oil they can take in and turn into gasoline and fuels. There's just no more room for more oil to go into them.
So if you tapped Iraq and drained all that oil, it'd sit in storage until the refineries can get to it... which costs money... But the refineries wouldn't ever get to it, because oil from other reserves needs to be refined too. Some all that excess oil would sit in storage indefinitely. That costs money. It sure as heck doesn't make money sitting in storage.
One option would be to build more refineries. Building refineries costs money. Plus, the environmental movement in the US is preventing any more refineries from being built. If the refineries are built in foreign countries, it would cost more money to run them and ship the fuels to their destinations. Plus, you'd be splitting taxes and would probably have to negotiate tariff deals.
Problem 3: Too much oil supply reduces prices. If you drained the oil, built more refineries, and released a couple billion barrels of oil out into the marketplace, you dramatically increase supply. Anyone who's taken a basic economics course knows that if supply goes up and demand stays the same, prices drop. That $3trillion quickly become $1trillion.... cutting into profits. So the cost of infrastructure, the cost of technology, the cost of machinery, the cost of refineries, the cost of shipping, the cost of tariffs, and the reducing of oil prices nets about 4% per year over 28 years. You can do better with T-Bills.
ADD to that the cost of cleaning up after a war.
And now the time factor. Time to clean up, time to build roads and infrastructure, time to develop technology, time to build machinery, time to ship and install machinery, time to build refineries, time for negotiating international tariff deals, time for refining, time for transport... all without a significant increase in demand.... By the time all that is done we could be driving H-cell cars by then.
My point is that if you want to get rich on oil, Iraq is not the place to do it. There are a dozen better options. If you're going to use war as a method for obtaining oil, let's go after Venezuela... they're ripe for a takeover right now and produce over 300% more oil than Iraq. Better yet, let's annex Mexico. Even better yet, let's take over Saudi Arabia...we already have military bases there.
If we really wanted more oil, we'd just lift the sanction on Iraq and buy it... at a cheaper cost and in less time than going through the hassle of everything listed above. But then you run into the full capacity and supply and demand issues. If this were really about oil, we would've kept troops in Iraq in 1991. It doesn't make economic sense. It would lose money.... especially in the short-term... meaning stock prices would fall. That's something no investor wants, especially in the short-term. The only oil factor in this equation is that the money Iraq DOES make from legal and illegal oil sales is going into producing weapons, golden palaces, and probably to terrorist groups.... hence the reason Saddam says he doesn't have enough money to feed his people and why they're starving to death in the streets while cheering his name. He spends the money on military and not on children. If a new Iraqi regime were in control of their oil, maybe the money would go towards schools, and food, and medicine, instead of towards anthrax, vx gas, aluminum tubes, and al-shamud missiles. The "War for Oil" line is without basis and just plain wrong. It's a "sound good" line perpetuated by the left and those people that are wishing for an ulterior motive because they just can't believe that Bush isn't lying. But as soon as you start to think about it rationally, like in this article, you see that the "War for Oil" line has no merit whatsoever.
That is all.
Feel free to repost.
Article reference: http://www.gravmag.com/oil2.html
TABLE 1. Ranking of world provinces that contain oil and gas by known petroleum volumes.
--------------------------------------------------------------------------------
Percent Cum.
of Percent
Rank World of World
excl. Known Petroleum Volumes Volume Volume
of Province Province Assessment Oil Gas NGL Total excl.of excl.of
Rank U.S. Code Name Type (BB) (TCF) (BB) (BBOE) U.S. U.S.
--------------------------------------------------------------------------------
1 1 1174 West Siberian Basin Priority 140.4 1271.8 3.1 355.6 14.3 14.3
2 2 2024 Mesopotamian
Foredeep Basin Priority 292.4 298.3 1.8 344.0 13.8 28.1
3 3 2021 Greater Ghawar Uplift Priority 141.7 248.6 8.6 191.7 7.7 35.8
4 4 2030 Zagros Fold Belt Priority 121.6 399.4 1.4 189.5 7.6 43.4
5 5 2019 Rub Al Khali Basin Priority 89.9 182.3 2.6 122.8 4.9 48.3
6 6 2022 Qatar Arch Priority 1.2 465.6 13.8 92.5 3.7 52
7 7 1015 Volga-Ural Region Priority 64.0 99.2 1.1 81.6 3.3 55.3
8 8 4025 North Sea Graben Priority 44.1 160.6 6.0 76.9 3.1 58.4
9 5047 Western Gulf 26.9 251.6 7.5 76.2
10 5044 Permian Basin 32.7 94.0 6.7 55.0
11 9 6099 Maracaibo Basin Priority 49.1 26.7 <0.1 53.6 2.2 60.6
12 10 7192 Niger Delta Priority 34.8 93.9 2.8 53.3 2.1 62.7
13 11 6098 East Venezuela Basin Priority 30.2 129.7 0.7 52.6 2.1 64.8
14 12 1016 North Caspian Basin Priority 10.8 156.9 8.9 45.8 1.8 66.6
15 13 2043 Sirte Basin Priority 36.7 37.7 0.1 43.1 1.7 68.4
16 14 5305 Villahermosa Uplift Priority 35.0 41.3 0.1 42.0 1.7 70.1
17 15 1154 Amu-Darya Basin Priority 0.8 230.4 1.2 40.3 1.6 71.7
18 5097 Gulf Cenozoic OCS 11.9 140.3 0.0 36.8
19 16 5243 Alberta Basin Priority 15.0 93.7 2.3 32.9 1.3 73
20 17 3127 Bohaiwan Basin Priority 24.6 15.7 0.1 27.3 1.1 74.1
21 18 4035 Northwest German
Basin Priority 2.3 141.7 <0.1 25.9 1.0 75.1
22 19 2058 Grand Erg/Ahnet Basin Priority 0.5 114.2 5.0 24.6 1.0 76.1
23 20 1112 South Caspian Basin Priority 17.4 36.0 0.5 23.9 1.0 77.1
24 5001 Northern Alaska 14.4 33.0 1.1 21.0
25 5058 Anadarko Basin 2.2 93.1 2.8 20.6
26 21 2054 Trias/Ghadames Basin Priority 15.3 25.1 1.0 20.5 0.8 77.9
27 22 1008 Timan-Pechora Basin Priority 13.2 36.6 0.7 20.0 0.8 78.7
28 23 2023 Widyan Basin-Interior
Platform Priority 17.4 7.4 <0.1 18.7 0.8 79.5
29 24 7203 West-Central Coastal Priority 14.5 12.2 0.1 16.6 0.7 80.1
30 5010 San Joaquin Basin 13.8 12.5 0.7 16.6
31 5048 East Texas Basin 9.2 34.8 1.6 16.6
32 25 3144 Songliao Basin Priority 15.5 1.7 0.0 15.8 0.6 80.8
33 5049 Louisiana-Mississippi
Salt Basins 7.1 42.8 1.3 15.6
34 26 3702 Greater Sarawak Basin Priority 0.8 82.3 0.4 14.9 0.6 81.4
35 27 1109 Middle Caspian Basin Priority 9.6 28.7 0.1 14.4 0.6 81.9
36 28 3808 Central Sumatra Basin Priority 13.2 3.9 <0.1 13.9 0.6 82.5
37 29 3701 Baram Delta/Brunei-
Sabah Basin Priority 6.9 36.2 0.2 13.1 0.5 83
38 30 8043 Bombay Priority 8.4 24.2 0.3 12.7 0.5 83.5
39 31 4036 Anglo-Dutch Basin Priority 0.6 71.7 0.1 12.7 0.5 84
40 32 2056 Illizi Basin Priority 3.7 45.1 0.9 12.1 0.5 84.5
41 33 3703 Malay Basin Priority 3.7 48.3 0.3 12.0 0.5 85
42 5043 Palo Duro Basin 1.8 48.4 2.1 11.9
43 34 3817 Kutei Basin Priority 2.9 45.8 1.3 11.8 0.5 85.5
44 35 1050 South Barents Basin Priority 0.0 70.0 0.1 11.8 0.5 86
45 36 1009 Dnieper-Donets Basin Priority 1.6 59.1 0.2 11.7 0.5 86.4
46 37 3948 Northwest Shelf Priority 1.1 56.7 1.0 11.6 0.5 86.9
47 38 6035 Campos Basin Priority 10.1 6.2 <0.1 11.2 0.4 87.3
48 39 2071 Red Sea Basin Priority 9.2 8.5 0.3 10.9 0.4 87.8
49 5014 Los Angeles Basin 8.6 7.0 0.4 10.1
50 5022 San Juan Basin 0.3 38.2 1.4 8.0
http://greenwood.cr.usgs.gov/energy/WorldEnergy/OF97-463/97463tbl1.html
To profess such a pedestrian understanding of a country and their people is to overlook the deeper issues at play like the fact that saddom is a defeted agressor under terms to disarm. We are living up to our end of the deal (by stoping the 37 member country coalition in the Iraqi desert, and returning 60,000 surrendered troops), but saddom is not.
Iraq is under an agreement that brought the suspension of hostilities in 1991. How long that suspension lasts is up to saddom.
But here's the zinger that shuts them up:
Q: Name for me the oil field that the USA seized in 1991?
No basis has ever been cited for this accusation — perhaps because the accusation makes no sense, as a matter of basic economics.
Unless the Iraqis drill and sell their oil, it is worthless to them. They must sell it somewhere on the world oil market to get any gain out of it.
But oil is a fungible commodity, so once they sell it — anywhere — it becomes part of the world oil supply. That increased supply in turn reduces the world oil price, until some equilibrium is reached between supply and demand.
From that point on, it doesn't matter to anyone where the Iraqi oil actually goes. If it goes to Japan, the Japanese will buy less oil from Venezuela and Nigeria. More oil from those countries would then go to the U.S. Indeed, as the oil supply sloshes around on world markets, no one really cares — or keeps track of — where it originated, so long as it meets quality standards. For all anybody knows or cares, every drop of Iraqi oil could end up at southern California gas stations.
Moreover, just who do the "war protesters" think Iraq would sell its oil to, in any event? The Western oil companies, primarily American companies, would be the primary purchasers of Iraqi oil, whether they buy it directly or circuitously through various middlemen. Who else is going to refine, distribute, and sell the stuff to the huge Western (and particularly American) consumer market? Have you ever seen or heard of any Iraqi gas stations?
In short, the oil companies already ultimately get the oil now. They don't need Bush to go to war to get it for them.
The proportion of the world oil supply currently consumed by America will continue to get here one way or another through world oil markets. If oil producers tried to cut off the huge American consumer market, there would effectively be a huge drop in the total world demand for their oil — and, consequently, a huge reduction in the world price.
Who else is going to consume world oil output except American consumers (and those gas-guzzling SUVs)? The truth is that Middle Eastern oil producers — including Iraq — need America and its consumers a lot more than we need them. We can always figure out other ways of powering our transportation and warming our homes, technologically. But has the Middle East ever figured out any way of getting dollars other than pumping and selling oil?
That is why an oil boycott is ultimately no real threat either. Again, Iraq and other oil producers must sell the oil somewhere on the world market to get anything out of it. And once they do, they add to the world oil supply and reduce the price to approach a new supply/demand equilibrium. The world oil market then distributes the available oil supply to wherever the demand is — which means America and the rest of the West.
Indeed, it is the West that has been restraining Iraqi oil supply since the Gulf War, with various restrictions on Iraqi oil sales. And it has been the Iraqis who have been pleading to open up their production and sales. An Iraqi oil boycott is not even remotely an issue today.
So the contention that the impending war is really about oil is senseless as well as being baseless. Which leaves us with this question: Why is the American Left joining with its foreign comrades to defame America with this silly and transparently false accusation? Is it really all just about anti-Americanism? Is it really just rooted in a hatred of American power and an attempt to stop its exercise? Isn't it time they came clean and told the truth?
— Peter Ferrara is director of the International Center for Law and Economics in Fairfax, Va.
No you're not.
You're simplisticly naive to translate "it's about oil" to a more restrictive "it's about Iraqi oil."
It is Saddam Hussein's ambitions of territorial expansion that threaten political stability, and petroleum resources, in the entire Persian Gulf region. If this were not true, this regional conflict would be ignored the same as the Hutu and Tutsis in Africa.
Maybe we should look at the new, zillion-acre National Monuments that the Felon roped off in UTah for the envirowackos. There's more oil, gas and coal there than people realize, but lamentably, we can't get by those dang ropes, more's the pity. Riady celebrated with the enviros when the Felon closed that territory to development. Why hasn't Bush opened it up with a Klintoon-like Exec Order along with ANWR? It's a no-brainer, methinks.
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