Heading Out

Seeking the winds that help to sail on Shakespeare's tide.

Monday, March 21, 2005

A Slight Disagreement with Professor Cole

In reviewing the current situation in Iraq Tom Engelhardt discusses the "word that cannot be spoken" about the reasons for the war.He quotes Juan Cole on the American plans that intended the privatization of the Iraqi oil industry as a counter to OPEC dominance of the world oil supply.

I believe however they understate the situation. For while until recently Saudi Arabia were allowing that they could produce up to 20 mbd they are now admitting that they cannot. It is likely that as far back as the Vice President's Energy Group meetings four years ago that the Administration recognized the mess that we are now heading into. The only large supply that remained relatively untapped was the Iraqi one (recognizing, as the good Professor does not yet, that Saudi oil production is not going to be able to reach much more than 10 mbd given the declining production at Ghawar and the "Queen" fields).

In such a case with the Iraqi oil going to people like the Russians and the French, rather than to us, there had to have been a concern about long-term supply to the US. If they were aware, as due diligence would require that they were, that world oil supply was about to peak and then decline, then it makes sense to grab the last remaining large supply that had the potential to keep the world out of oil supply trouble until just about the end of the second Bush Administration. Unfortunately as Professor Cole points out, they neglected to consider that some of the Iraqi people might not take kindly to the concept.

Professor Cole sees the argument merely as one where the Administration was seeking to gain a counter to OPEC strength, in reality the goal was likely that of trying to ensure a source of oil, prior to the time that overall supply starts to diminish. Unfortunately with world demand having grown faster than anticipated, and with about half of the Iraqi potential still being shut in, the crisis has come a couple of years too early.

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