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Oil producers - May 8

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The Struggle over Iraqi Oil
Eyes Eternally on the Prize

Michael Schwartz, TomDispatch
The struggle over Iraqi oil has been going on for a long, long time. One could date it back to 1980 when President Jimmy Carter -- before his Habitat for Humanity days -- declared that Persian Gulf oil was "vital" to American national interests. So vital was it, he announced, that the U.S. would use "any means necessary, including military force" to sustain access to it. Soon afterwards, he announced the creation of a Rapid Deployment Joint Task Force, a new military command structure that would eventually develop into United States Central Command (Centcom) and give future presidents the ability to intervene relatively quickly and massively in the region.

Or we could date it all the way back to World War II, when British officials declared Middle Eastern oil "a vital prize for any power interested in world influence or domination," and U.S. officials seconded the thought, calling it "a stupendous source of strategic power and one of the greatest material prizes in world history."

The date when the struggle for Iraqi oil began is less critical than our ability to trace the ever growing willingness to use "any means necessary" to control such a "vital prize" into the present. We know, for example, that, before and after he ascended to the Vice-Presidency, Dick Cheney has had his eye squarely on the prize.

...The specific prize in Iraq is certainly worthy of almost any kind of preoccupation. Indeed, Iraq could someday become the most important source of petrochemical energy on the planet.

According to the U.S. Energy Information Administration, Iraq possesses 115 billion barrels of proven oil reserves, third largest in the world (after Saudi Arabia and Iran). About two-thirds of its known oil reserves are located in Shia southern Iraq, and the final third in Kurdish northern Iraq. However, in energy terms, only about 10% of the country has actually been explored and there is good reason to believe that modern methods -- which have not been applied since the beginning of the Iraq-Iran War in 1980 -- might well uncover magnitudes more oil.
(X May 2007)
TomDispatch editor Tom Engelhardt introduces the essay. The essay is also posted at Common Dreams and at ZNet.


Chavez-style oil nationalism is endangering world economic growth

West, Newsweek International
Last week's announcement from Caracas that the operations of Western energy companies including BP, Chevron, Conoco, Exxon, Total and Statoil were being reduced due to continuing nationalization of oil reserves, and that the Chinese state oil giant CNPC would play a much bigger future role in exploration and production, poses a serious threat to the global oil market.

About 80 percent of the world's oil is controlled by national oil companies. Some of these state-owned enterprises operate at world-class standards, notably Petrobras of Brazil, Petronas of Malaysia and Aramco of Saudi Arabia. In those places, production is increasing.

But most of the large state firms (including CNPC) have much lower operating standards than multinationals, such as the ones leaving Venezuela. This is due largely to political interference. The inefficient bureaucracies of state-run firms are too slow and incompetent to reinvest record industry profits in the modernization of their aging oilfields. Both national oil-company executives and politicians may be corrupted by the surge in cash from high prices.

The result is a number of countries with huge oil reserves and falling production, including Iran, Iraq and Mexico. Russia and Kuwait will also stagnate unless practices change. These countries represent more than one third of the world's oil reserves.

...The situation in Venezuela is symbolic of a growing trend. High prices have spurred unprecedented resource nationalism, and it is no surprise that the Chinese are capitalizing on this. Politicians detest the demands of transparency and accountability that often come with multinationals.

...The implications for the world economy are potentially catastrophic. The world is not running out of oil, but it will run out of production capacity if the national companies, the new rule makers in this business, don't invest.

West is chairman of PFC Energy, a Washington, D.C.-based adviser to governments and international energy companies.
(14-21 May 2007)
Two things are worrying about an analysis of this sort. First, there is no mention of geological limits to oil production. Second, a scapegoat is being prepared for coming oil shortages - in this case, national oil companies. Arguments such as this prepare the way for intervention in the affairs of oil producing countries "for the greater good." -BA


The (Not So) Eagerly Modern Saudi

Michael Slackman, NY Times
SAUDI ARABIA, home of Islam’s holiest sites, flush with oil revenue, and increasingly the most influential player among Arab countries, has long resisted changing its ultratraditional ways. Now the intrusions of global economics and technology have begun to challenge some traditions in ways that the country’s idealists could not. And the strain that this is causing is showing in the form of surprisingly open debate about how much Saudis really want to modernize.

While the notorious religious police still roam this capital city, much is evolving in the way people live. Saudis are suddenly overwhelmed with credit card debt. Thousands have grown rich, and thousands more have lost large sums, in the stock market. Foreigners can now invest in the country’s insurance services, mining, railroads, airlines and satellite transmission services, all once off limits.

Much of this economic activity has been driven by the leaders’ desire to have Saudi Arabia be more economically competitive, more a part of the modern world beyond its borders. The government is building huge new industrial cities that will have to attract many tens of thousands of foreign professionals; that is expected to bring more changes - in social and legal habits - as a price of admission to a global consumer economy.
(6 May 2007)

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