What are we to make of oil prices that have gone up 50% in 12 months to more than $56 a barrel? Usually the motto in the oil business is: up is good! But there is a caveat to that motto – too up is not good. Oil prices are getting up there, no question about that. It’s high (though adjusted for inflation about the same as after Saddam invaded Kuwait and before Bush 41’s Gulf War liberation in '91 send prices back down). But let’s not forget, today’s prices could have been much worse! The fact that it is only $56 is thanks to the armed forces of the US, UK and Australia.
You won’t hear that analysis much these days. Rather, MSM would prefer to focus on other matters – say Bush 43’s naming neo-con guru and Iraq war theorist Paul Wolfowitz as the US choice to head the World Bank. According to the cocktail circuit cluckers, Wolfowitz was so wrong! He said 1) Saddam had WMD, 2) the Iraqi would welcome us as liberators, and 3) Iraqi oil would pay for the war.
From where Quillnews sits, as a former oil company soldier, Bush 43's decision to take down Saddam after Sept 11 was dead on. Now, granted, there’s been a problem on the timing of the assertions made by Wolfowitz and others. Quillnews believes the jury is still out on Saddam’s WMD threat (see here) but on the other two points: the US is being welcomed as liberators (now after 2 years of post-Saddam war), and Iraqi oil will pay for the cost of the war (eventually; no question about it). So, setting aside the point about timing, the US actions under Bush 43 leadership and made based on advise from Cheney, Rumsfeld, Rice, Wolfowitz et al were right.
(Editorial Aside 1: Quillnews can be a bit obsessive on this subject, I'll admit. But I've spent more than 30 years working this story, in one capacity or another, and have a bit of skin in this game! So, if you will indulge, it has helped when I've told pals that to properly look at oil prices and energy security, you need to survey the subject from a very broad perspective – as if from a vantage point of 40,000 feet where you can see way over the horizon. Because when dealing with oil supplies and world demand, its necessary to think big – very big. And just about everything rides on what happens.)
Let’s start at the beginning: After Sept 11, the US recognized that the money the US (and others) paid Saudi Arabia (and elsewhere in that region) for oil had nurtured a decades-long expansion program for a backward religious cult that had now reached toxic strength and threatened the civilized world. Al-Qaeda was the poison tip of the spear and, at the moment, the most lethal. But it was just the tip. In fact, oil wealth had underwritten billions to fund the proselytizing of the anti-modern, anti-Christian, anti-Jewish, anti-Muslim message of the Wahabbi sect based in Saudi Arabia for decades. The Saudi royals, to retain political power and control of this oil wealth, had underwritten this religious education program (crusade?) in exchange for the continued support of the region’s most hostile and backward religious cult, with whom they were allied for generations before oil money paid by westerners gave them resources beyond imagination. Now, the most radical of these anti-western zealots have organized a worldwide network to use our technology to kill us. The attack on Sept 11 was just the start of ever more lethal attacks – unless the US acted, acted boldly and quickly and with ovewhelming lethal force.
Bush 43 et al knew the enemy was rooted in the religious movement based in Saudi Arabia. But until Sept 11, it had been the policy – and the promise – of the US (since FDR in WW2) to protect the Saudi regime. The incongruous and dysfunctional policy meant that the US had 15,000 troops stationed in Saudi Arabia enforcing the no-fly rules imposed on Saddam in 1991 after he was expelled from Kuwait, but the presence of these forces was stimulating the anti-US jihadists.
Saudi Arabia was also the location of the world’s most crucial supply of oil. It was plentiful, cheap to produce and the sovereign government in control of the resource (despite their incompetence and sloth, the medievil inequity of their society and reckless funding of a delusional cult) promised to keep producing that oil at levels high enough that world supplies could be priced low enough the world could afford it and continue its economic development.
After Sept 11, the US policy was to kill Al-Qaeda, attack the wider movement that supported jihad including governments; Afghanistan first, and give the Pakistan and Saudi regimes time to reform – or else. Iraq, under the WMD-happy Saddam who was corrupting and threatened the region, was irredeemable. (Stay tuned: Iran will come later.) While the immediate war on Al-Qaeda in Afghanistan and beyond was underway, and reforms attempted in Saudi Arabia (Editorial Aside 2: hmmm, as if…), it was imperative the US also secure non-Saudi oil supplies. It was that need for oil supplies – along with Saddam’s other crimes – which created the positive geopolitical imperative that the US and its allies put armed forces on top of those petroleum resources and guarantee (by their presence of arms) an alternate supply of oil that could be produced to keep oil priced so the world (China, India et al) could grow enough to provide for the growing number of people who wanted the freedoms we have. The ability of the world to produce Iraqi oil gave the world leverage to demand reform of Saudi Arabia and liberate Islam from Wahabbism.
This a geo-political multiple bumper shot that would have given Fast Eddy a headache, let alone Bush 43, Cheney, Rummy, Condi, Wolfie et al. As Wolfowitz indicated at the time, the internal federal bureaucracy used WMD as a unifying theme for the anti-Saddam action. WMD got the headlines (and laid down the political marker that Bush foes picked up later to cry: Bush Lied!) Bizzz. Not exactly. At worst, Bush was told the truth about the conclusions of the intelligence community, which have not be proven yet. Still there were plenty of other reasons. The Joint Resolution to Authorize the use of United States Armed Forces Against Iraq approved Oct. 11, 2002 itemized why the President could order Americans to pull the trigger in 23 whereas clauses, including these money items:
9) Whereas the current Iraqi regime has demonstrated its continuing hostility toward, and willingness to attack, the United States, including by attempting in 1993 to assassinate former President Bush and by firing on many thousands of occasions on United States and Coalition Armed Forces engaged in enforcing the resolutions of the United Nations Security Council;
10) Whereas members of al-Qaida, an organization bearing responsibility for attacks on the United States, its citizens, and interests, including the attacks that occurred on September 11, 2001, are known to be in Iraq;
11) Whereas Iraq continues to aid and harbor other international terrorist organizations, including organizations that threaten the lives and safety of American citizens;
20) Whereas Congress has taken steps to pursue vigorously the war on terrorism through the provision of authorities and funding requested by the President to take the necessary actions against international terrorists and terrorist organizations, including those nations, organizations or persons who planned, authorized, committed or aided the terrorist attacks that occurred on September 11, 2001, or harbored such persons or organizations;
21) Whereas the President and Congress are determined to continue to take all appropriate actions against international terrorists and terrorist organizations, including those nations, organizations or persons who planned, authorized, committed or aided the terrorist attacks that occurred on September 11, 2001, or harbored such persons or organizations;
23) Whereas it is in the national security of the United States to restore international peace and security to the Persian Gulf region...
To Quillnews, this was way more than enough; and leaves out all the UN sanctions, resolutions and WMD matters. Bush 43 asked the UN Security Council to authorize force. France, China and Russia were among those opposed. (More on that trio below). While others debated, the US, UK and Australia to name three acted. Quillnews was paying attention. My 23-year gig as an oil company soldier ended with the beginning of 2003, but colleagues and friends were involved in the region's fate. Though the driving force for action was Saddam and the security threat he posed, I was acutely aware that petroleum supplies and prices for a generation were, among the many other things, also at stake. (See Just Business Just War for details.)
(Editorial Aside 3: My former employers in Australia were keenly interested. In January, 2003 Australia dispatched 2,000 land, air and naval forces to the Persian Gulf theater in what the Australian’s called Operation Falconer. Included were 250 personnel on 14 F/A Hornet jets, 600 on two frigates, 150 on three Hercules transport aircraft, 500 in a Special Air Service (SAS) squadron, and 350 on the transport ship HMAS Kanimbla. Australia’s forces were integrated and utilized with coalition units in the military operation called Iraqi Freedom. Aside 4: Good on 'ya, mates. Aside 5: It took political courage for PM John Howard and his government, who must contend with a down under version of elitist doubters.)
The US deadline for Saddam to let the inspectors back in ended March 19, and the next day the US took a one-time head shot, which made a pyrotechnic impression but failed. Friday March 21 was A Day – and the coalition departed from Kuwait and invaded Iraq. Key elements in early planning were the securing of the Iraq oil fields in the south and north, so that world oil markets could stabilize. UK forces guarded an oil pipeline on the Al Faw peninsula in southern Iraq. The U.S.-British land and air offensive captured key oil facilities, including a complex in the Rumaila oil field (near Kuwait) called by commanders a "jewel in the crown" of their initial advance into Iraq. The Aussie SAS Special Forces were used for intelligence, and as forward spotters and scouts. These units helped secure Iraq’s Rumaila oil fields in the south, the Majnoon and West Ournah fields to the north, and later the Masur and Kirkuk fields north of Baghdad.
Iraq's oil problem (and the world's) had been Saddam, who cravenly neglected oil field operations, leaving the vast resource largely undeveloped and badly maintained. Iraq’s proven reserves of about 120 billion barrels, triple that of the US, are second only to Saudi Arabia. Moreover, the oil is the cheapest in the world to produce. Oil hunters, the world greatest optimists even on cloudy days, predict that Iraq reserves could double to 300 billion, and perhaps up to 600 billion barrels! Iraq is a highly attractive oil prospect to any investor, Iraqi oil industry guys are smart, and there is plenty to do: only 17 of 80 discovered fields having been developed, and few deep wells, which are unlocking large new reserves everywhere else. Overall, only about 2,300 wells have been drilled in Iraq (of which about 1,600 are actually producing oil), compared to, say, Texas, where oil hunters have drilled 1 million wells!
The role of oil in the build up to the anti-Saddam war and its aftermath has been widely misinterpreted. The Red dead enders still around are convinced it was a capitalist plot to steal Iraqi oil. Hmmm. Here’s a typical – though only pinkish – read on this theme from the quagmire glass is half empty crowd. But exploiting Iraq's oil is hardly theft. The development of Iraq’s oil field will be a bonanza that would make the Iraq people rich and stabilize markets for poor people from India, China and beyond. Here.
And despite the nasty anti-Semitic interpretations about it all being a Israeli plot, have a look at the thoughtful argument made in the pre-war March 2003 by the real Zionists about the Iraq problem, and by the role of oil. Here, here, here. Money quote: “US policy is clearly further-reaching, with strategic implications for other regimes in the region. It also apparently intends to make accessible the world’s second largest proven oil reserves in a free market system that would also be part of this larger, regional and global balancing act. The oil stakes are a crucial factor, but the perspectives are not necessarily to the detriment of the United States: on the contrary, they reveal a number of competing interests and highlight the calculated behaviors of various countries.”
While the US made the case against Iraq in 2002, Saddam, after years of enabling in the scandalous UN Oil for Food program, awarded $30 billion in oil contracts to firms from
France, China and Russia. And Iraq still had $150 billion in war debt owed to Kuwait and other Gulf states from the 1990-91 war. The US and its allies ignored this trouble making.
Among the effects of the coalition’s work, was ensuring that oil markets remained stable throughout the military campaign and that the world oil prices did not spike during the battle and would remain stable after military operations ended. In this, the military was successful. After Saddam’s fall, for the first time in a generation, the owners of the Iraqi oil – the Iraqis themselves – would benefit from the production of this valuable resource, and the world’s consumers would benefit from reliable supplies and stable prices.
The terrorists, jihadists and Baathist dead-enders have waged merciless brutal war since. Among the targets of their war has been Iraq’s oil instillations. Incredible narrative here. But despite more than two years of attacks, the National Iraq Oil Corporation (NIOC) kept production at just under 2 million BD. India and China’s thirst for oil is driving the prices up. The growth of their economies is staggering. And these two countries make up 40% of humanity! Keeping those economies functioning, growing, and secure is critical to the everyone’s future.
The challenge now is to stabilize the Iraq political environment. So far so good. The bravery of the Iraqis in their drive for freedom has inspired the entire region. Also, good. There are signs that the world’s oil industry is gaining the confidence necessary to cut deals with the Iraqi people. Iraq's national oil company is inking deals with ExxonMobil, BP, Shell, the grown-up geohead / engineer / investors who know to make magic happen in oil fields. In the wings are China, France and Russia, too. Though ConocoPhilips has invested in the Russian company with long term deep pockets deals in Iraq. Good.
If this keeps up, proven oil reserves will be booked, oil supplies boosted to calm world oil markets, and oil revenues will pour into Iraqi bank accounts and used to turn that country into the oasis it deserves to be. It will take time, but the process is underway.
Too high oil prices are trouble. But they will come down. And the use of allied resources to help keep prices down for China and EU countries that want to give US and allied interests heartburn will wear very thin, and fast. Stay tuned. The anti-jihad war is long. Now that vast reserves of new oil are available, the allies can focus on making sure that the Saudi’s live up to their promise – reform their society, their behavior, their books, and set their women free. If they don’t, the US and its allies will do it for them. Jihadists will join the Nazis, Fascists and Commies in hell. Ask Japan, Germany, the Taliban, Saddam. That’s not a threat, just fact. Sept 11 was all the reason Americans need. We are going to win. They are going to lose. And free people's hunt for more -- of everything -- will go on.
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