Resource Wars Reprised

The previous post on oil field contracts in Iraq points up what I believe is one of the underlying drivers of the Iraq war and the American preoccupation with the Middle East. Yes, it has to do with our obvious interest in oil. But, as I said in my first post on the notion of resource wars we have a very specific concern with state control of oil resources in the Middle East. State-controlled companies tend to spend much less on exploration and development since they are used as cash cows to pay for social services and military hardware. Such companies tend to spend only what they need to spend to maintain production, and they have little incentive to spend heavily in a way that would flood the market and bring down prices.

Hence, the American interest in privatizing the production of oil in the Middle East where almost all the oil is held by state-controlled entities. Private companies are much more likely to develop oil resources quickly and to seek maximum feasible production. They have no social services or military purchases to fund and are seeking to enrich their shareholders as quickly as possible by as much as possible.

I believe that if the countries of the Middle East had been willing to open up their oil fields to private development and accelerated production, that this administration--in fact, any American administration--wouldn't have bothered to go to war. They would already have what they want: more oil supply and cheaper prices.

Of course, no Middle Eastern country is going to give control of its oil assets over to private companies, especially ones from the West, so the resource wars are likely to rage on. These wars are in my view completely misguided since a cheaper, more effective, and permanent solution to our energy woes could be found in subsidizing the broad and sustained introduction of renewable energy sources, a move that would create a vast new industry and new employment and free us from dependency on a volatile part of the world.

But, then what would we do with all the planes and tanks and carriers we own?

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