So here’s the thing: Iraq

It strikes me that there’s two things that pretty much everyone can agree on about Iraq. First that there’s a lot of oil there, and second that Saddam was a bad man.*

Now some people have followed this logic:
Saddam is bad so he might attack us, we should go and stop him first

And other people have followed this logic:
How will we ever be able to say to people you can’t attack us if we’ve attacked people without being provoked

I am really surprised that more people haven’t been saying openly:
Hey don’t you find petrol / gas really expensive? We’ve found this guy who has tons of it, and he’s really nasty. Shall we go get him?

The thing is of course that the people in the know can’t really use that argument, and the reason they can’t use it isn’t because of some left wing reason like: “they can’t admit they’re in it for the cheap oil because that sounds so crass”. They can’t say it for completely the opposite reason. They didn’t invade Iraq to make oil cheaper but instead to make it more expensive.

The thing is that America itself makes tons and tons of money from actually producing oil. And the thing about firms making things and selling them is that they will tend to make one or two people very rich and other people won’t be rich because they spent all of their money on the products. There are millions of people who use petrol but don’t make any money from it and a few people who although they use petrol they make a lot more from selling it.

The democratic system is supposed to act as a corrective to this system in that the millions of people have many more votes so should have all of the power. However that doesn’t really work because who gets to influence the politicians? Well the few of course because if you have lots of money then you must be important. Two bald reasons really:

1) You can buy the votes directly from the right by appealing to their capitalist tendencies.

And

2) You can guilt the votes directly from the left by appealing to their fear of making people redundant.

Anyhoo, many people have suggested that the war in Iraq is about Oil. Lots of people have suggested that it was revenge for Bush jr. for his Dad aka: oil. A few people have suggested the whole WMD thing. Some have even suggested the whole funding global terrorism thing. And so on. But mainly people nowadays think that it was probably the whole oil thing. But most people seem to have got the whole thing wrong.

America doesn’t want cheap oil. Americans want cheap oil but America does not.

The thing about oil production is that it’s really a cartel. OPEC control most of the worlds production, the IPAA (Independent Petroleum Association of America) is: a group of people that are independent and are not forming a cartel and advocate free trade and really really want prices to be right for the consumer and hope and pray that market forces will finally come to the oil industry because that would be so good… or something. It is a members club that contains most of the US Oil producers.

Bizarre as it is to relate, both George H.W. Bush and George Bush Jr. have both been members of the IPAA.

The thing is this, the IPAA were really mad about what the UN were doing in Iraq. Mainly, this was because, the UN had offered an oil for food program there as part of their sanctions. And this was, and this is a direct quote this time: “ By early 1999, Iraq was exporting 2.5 million B/D and had become the world’s swing producer of oil. As other countries reduce production, Iraq’s willingness to increase its production and sell at low prices keeps prices low. At a geopolitical level this role gave Saddam Hussein the victory he lost in Kuwait. He controlled oil prices and was able to punish his enemies – Saudi Arabia, Kuwait, Iran, and, by undermining our domestic production, the United States. It represented a clear failure of the UN sanctions at two levels – it had failed to provide humanitarian aid to the Iraqi people and it had given Saddam Hussein an oil weapon he could not win on the battlefield.”

Here’s the graph they used to show this:

The oil industry is really really rich, and they had one of their own in the white house. His dad had gone in last time and kicked Saddam out of Kuwait because if Saddam controlled Kuwait he’d be too powerful. But he didn’t need to invade because having a crazy guy like Saddam around kept a lot of Iraq’s neighbours on Americas side. It was good politics.

But how do you fight a body like the UN? You can’t really, they are a huge bureaucracy and so it’s all very complicated. You have to have meetings, sit down and argue things, and the UN will try very hard not to have some people fighting at the end. That’s hardly what the oil industry wants. They wanted action now, and they wanted things getting blown up at the end. The one thing the US Armed Services does very well is burn an awful lot of fuel.

And so the real reason that America went to war with Iraq is not that they wanted to steal a whole load of oil from the Iraqis but that they actually really, honestly wanted the Iraqis to benefit from the sale of oil. Because Saddam had lost his grip. He had stopped caring about really making lots of money from oil long term, and had decided to go on a splurge. He knew if he sold his oil cheap he’d actually really sock it to the Americans and the Saudi’s. Because the world price would go down. And by the time the wells in Iraq ran out he’d be long gone so it wouldn’t matter to him. He didn’t care about the long term future of his country he just wanted to win.

America invaded Iraq not to steal its oil for itself, but simply to put the oil of Iraq in the hands of somebody that would join a cartel and behave themselves. And this is not the left wing propagandists talking this is the IPAA themselves. They wanted to make sure the oil price would go higher so they could make some more money.

And bizarre as it is to relate, both George H.W. Bush and George Bush Jr. have both been members of the IPAA.

The odd thing about the oil industry is that there is actually a genuine crisis because of the threat of global warming. If global warming continues it will actually negatively impact on demand for oil. If the world is warmer then the world’s houses will need less heating. In fact the IPAA talk about this too: “A warmer than normal Northern Hemisphere winter – particularly in the U.S. and Europe reduced demand and failed to work off normal inventories that had been stored”.

There has long been a suggestion that oil directs America’s foreign policy but I believe that generally the policy has been being read backwards. America uses vast amounts of oil. It is not the desire for cheap oil that drives American policy, it is instead a need to control the oil price to stabilise it. This is why despite the House of Saud’s blatant human rights violations Saudi Arabia will never be considered an enemy. Saudi Arabia wants to control the oil price through OPEC.

And the reason for this is because while America consumes vast amounts of oil, it also produces it. And the production of oil in America has made certain people there incredibly rich and powerful.

If America didn’t produce oil but only consumed it there would be a different story. In fact it would be a difficult one to understand because oil played an important point in shaping America’s economic history. But if America was without an oil industry now, America’s foreign policy would be very different.

While America could, in this situation, try and control the oil price internationally by invasion I think that innovation and technology would be thrown at the task much more conclusively if they didn’t have any production of their own. Although we have heard lots about Hybrid cars and so on being bought in the US they were not developed there but instead were developed in the Asia / Pacific area. The Asia / Pacific area is the second highest user of oil in the world but has a low level of production of its own as can be seen from this graph provided by the Department of Energy:

So if you still don’t believe me that America went to Iraq to make the oil more expensive rather than cheaper then take a look at these following bullet points from the Department of Energy:

America:

  • is the oldest major global oil producer;
  • is formerly the Number 1 global oil producer;
  • is currently the Number 2 global oil producer;
  • has produced more oil, cumulatively, than any other country (180 billion barrels from 1918 to 1999);
  • has produced more oil, cumulatively, than the current reserves of any country but Saudi Arabia.

So the oil industry had to make oil more expensive again. And they had one of their own in the White House.

Here’s the breakdown of monies generated in 2001 in the four largest oil producing states:

Alaska – $7,385,643,000
California – $7,539,055,000
Louisiana – $8,552,179,000
Texas – $32,135,420,000

I wonder which state governor would find it easiest to raise vast amounts of money from his buddies in the IPAA if he was running on a secret platform of removal of Saddam Hussein no matter what.

And bizarre as it is to relate, both George H.W. Bush and George Bush Jr. have both been members of the IPAA.

* Except Saddam himself, of course, who thought that he was pretty darn cool.

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