Sunday, October 25, 2009

Speaking the unspeakable

Legendary oilman T. Boone Pickens has managed to say in public what many policymakers and pundits who championed the invasion of Iraq only think to themselves, namely, that oil companies based in the United States are "entitled" to access to Iraq's oil fields because of the American treasure and blood expended in the Iraq war.

It is a curious logic, but entirely in keeping with the mindset of those who say so-called resource nationalism is preventing the Earth's supposed bounty of oil from reaching global markets. (More on that below.) When you parse Pickens' statement it amounts to something like this: Corporate interests based primarily but not exclusively in the United States should be awarded a share of the work in Iraq's oil fields which is currently being parceled out by the Iraqi government because the U. S. military engaged in a hostile invasion of the country followed by a troubled and often deadly six-year occupation.

If one were thinking strictly in terms of the spoils of war, one might make the case that the soldiers of the victorious army should get some share of Iraqi oil wealth--though I doubt the Iraqis would find such a case compelling. But how does one make the case for U. S. oil companies plundering profit from the handiwork of soldiers employed by the United States and by the other countries involved? Doing so would be a public admission that the Iraq war was fought for access to oil and the opportunity to award the profits from that access to favored corporate interests headquartered in the United States. Just how would the soldiers who fought in the conflict feel about that?

And yet, this would be the logical outcome of the resource nationalism argument made by so many oil supply optimists. To review: Resource nationalism is a term which refers to the control of national resources within a border of a country by its government, whether done directly through ownership or indirectly through policy and taxation. Oil optimists love to say that there is plenty of oil in the ground. It's just that the countries that control the reserves are either hoarding them or are incompetent at getting them out of the ground. And, since national governments essentially control 88 percent of the known reserves, the oil optimists say we must place the blame largely on those governments for oil scarcity.

What then are we to do if those governments don't correct the situation to our satisfaction? Boone Pickens has given one answer that some policymakers believe is necessary, but dare not say publicly: Force those governments to produce more oil in accordance with our needs using intermediaries, i.e., U. S. oil companies, to guide such increases in production.

If peak oil is indeed upon us, you can be sure that thinking like this will increasingly animate the war-making councils of oil importing nations even as they dither in making the difficult but necessary decisions to move toward a post-oil society.


Andrea Muhrrteyn said...

They said it far better than I:

War is a Racket, USMC Gen. Smedley Butler; and

Military Gospel According to Homer Lea....

mattbg said...

But doesn't it also throw doubt onto the idea that the war was carried out for the purpose of securing access to oil?

The war was carried out, and the US is not being given access to the oil. So how can it be straightforwardly said that the US invaded Iraq to get its hands on the oil?

Kurt Cobb said...


The United States is indeed gaining access to Iraqi oil. According to the U. S. Energy Information Administration the average so far this year is 453,000 barrels per day of Iraqi oil imports. What the Bush administration failed to do was make sure U. S.-based oil companies gained a big share of the business. I suspect this has been due to colossal incompetence. Surely the administration wanted U. S. companies involved in Iraq, but it lost control of the situation and found itself unable to steer policy in Iraq once it set up a new government. The course of the occupation has not exactly endeared the Iraqis to us, and Iraqi politicians get far more mileage out of bashing Americans than speaking up for them.

I do not think the U. S. ever had any intention of hoarding the oil in Iraq for itself. And, I do not think oil was the sole reason for the invasion. But with respect to oil, the Americans' real plan was to bring more oil to the world markets and thereby bring down the world price. Oil is fungible, of course. If the U. S. had taken all of the oil exports from Iraq for itself, this would simply have led other exporters to send oil normally destined for the United States elsewhere. I actually think that having American oil companies involved in the Iraqi oil trade was not a main objective. But I think that because the Bush administration was naive enough to think that American soldiers would be greeted as liberators, it also figured that American oil companies would be welcomed. Of course, their expectations were dashed from the beginning.

I find it amusing that the Chinese simply move forward with their strategy of securing oil supplies using commercial agreements throughout the world including with Iraq while the American government engages in the biggest energy-wasting exercise seemingly ever divised, namely, trying to control oil supplies militarily and politically rather than commercially. The Chinese have so far not wasted a single Chinese soldier in their strategy to lock up supplies of critical resources. Rather they have stockpiled those resources by buying huge amounts on the world market for their own strategic stores, by purchasing the corporations than mine those resources, and by concluding long-term supply agreements with resource-rich countries, usually by greasing the skids with aid.

The Chinese must understand something we Americans do not. It doesn't work to invade countries any more to gain control of their resources. There are now too many ways for the invaded country and its citizens to foil any attempts to divert those resources. It's better to negotiate mutually beneficial agreements with those countries that they want to keep.

mattbg said...

Kurt, I agree -- particularly about the fungibility of oil. As you said, if you free it up in one place, oil from the other places becomes available and therefore cheaper.

But, to me, the Chinese seem particularly ruthless (though passively) in their acquisition for oil. They will side with (via their place on the UN security council) or overlook all kinds of issues of human rights and maltreatment if it is in their interest to do so. It almost seems as if their entire foreign policy is geared toward securing energy and other resources for its expansion and they have no interest whatsoever in using their heft to motivate better conditions for others abroad.

I also imagine that the Chinese have to do very little to manage public opinion at home about their exploits abroad.

In that context, when compared to the Chinese the US seems like a mightily fine caretaker of the world, just as it would have been preferable to Russia if we absolutely must have a superpower in the world.

I do agree that China seems to understand the new way of doing business, though. But, I do wonder what their response to a terrorist attack would be, or to an attack on a very strategic resource supplier. They have not been tested in that regard yet.

Jerry said...

To mattbg:

It is exceedingly difficult to accept the assertion that the US uses its "heft" to motivate better conditions for those abroad. Sure, the US provides foreign aid, there is no denying that. But this aid could quite easily be called many things worse than "aid", not the least of which is "cover" for ignoring preventable, and even taking part in, genocide.

I don't mean to single you out for this statement, mattbg, as I see and hear it many places. Sometimes I respond, like now.

I also do not intend this response to mean that ALL Americans want this to be the case. But too many seem incapable of seeing that it is so.

mattbg said...

Jerry, I agree that it's not a black-and-white issue. I was just trying to contrast China's attitude -- it simply doesn't care about anything beyond its own borders except for its utility -- to at least the stated intention of the US. They at the very least pretend to care in some cases :)

They -- and especially under Bush -- send large amounts of aid to Africa.

They did, after all, intervene in Kosovo.

They would like to establish democracy in Afghanistan and stabilize Pakistan, in large part to weed out the terrorist groups that find shelter there, but which would also have positive side effects for its people if successful.

They have made big mistakes in Iraq, but if it ever recovers then it may be better off than under Saddam.

China has blocked progress in Darfur and blocked sanctions against Iran, in both cases because of their resource interests and the fact that they are friendly with those who would be harmed by the sanctions, no matter how repugnant those people have been.

mattbg said...

Jerry, also: I am Canadian, not American :)

Jerry said...

Fair enough, Matt. My comment stands for too many of us too!

I appreciate the optimism (?) but I maintain my position that simply putting a benevolent spin on the actions you listed does not make them so.

The US has been and is just as friendly with people just as repugnant as those you mention.

Are you unaware of the US supplying the very chemical weapons to Saddam for which they later blasted him for using on the Kurds?

Is it not clear that US government aid to Africa counters the huge amount of Chinese investment there? That it is attempting to buy political support in order to counter Chinese investment and purchasing?

How easy it is to remember that the US didn't have a problem with Afghanistan until the Taliban shut off the heroin supply. There is no debating that they are bad guys but they were left alone til they messed with the drugs.

EVERY US foreign policy has been about hegemony and access to cheap energy for several decades matter how prettily they might dress it up.

Have some of us benefited from this? Of course we have, but that doesn't make it right, or just. Nor is it claiming that China is innocent. Its just saying that we in the west have VERY little right to throw stones.