[News] Are They Really Oil Wars?
Anti-Imperialist News
news at freedomarchives.org
Thu Jul 10 12:39:20 EDT 2008
http://www.counterpunch.org/zadeh07092008.html
July 9, 2008
Shell Games
Are They Really Oil Wars?
By ISMAEL HOSSEIN-ZADEH
A most widely-cited factor behind the recent U.S.
wars of choice is said to be oil. No Blood for
Oil has been a rallying cry for most of the
opponents of the war. While some of these
opponents argue that the war is driven by the
U.S. desire for cheap oil, others claim that it
is prompted by big oils wish for high oil prices
and profits. Interestingly, most antiwar forces
use both claims interchangeably without paying
attention to the fact that they are diametrically-opposed assertions.
Not only do the two arguments contradict each
other, but each argument is also wanting and
unconvincing on its own grounds; not because the
U.S. does not wish for cheap oil, or because Big
Oil does not desire higher oil prices, but
because war is no longer the way to control or
gain access to energy resources. Colonial-type
occupation or direct control of energy resources
is no longer efficient or economical and has,
therefore, been abandoned for more than four decades.
The view that recent U.S. military adventures in
the Middle East and the broader Central Asia are
driven by energy considerations is further
reinforced by the dubious theory of Peak Oil,
which maintains that, having peaked, world oil
resources are now dwindling and that, therefore,
war power and military strength are key to access
or control of the shrinking energy resources.
In this study I will first argue that the Peak
Oil theory is unscientific, unrealistic, and
perhaps even fraudulent. I will then show that
war and military force are no longer the
necessary or appropriate means to gain access to
sources of energy, and that resorting to military
measures can, indeed, lead to costly, not cheap,
oil. Next, I will demonstrate that, despite the
lucrative spoils of war resulting from high oil
prices and profits, Big Oil prefers peace and
stability, not war and geopolitical turbulence,
in global energy markets. Finally, I will argue a
case that behind the drive to war and military
adventures in the Middle East lie some powerful
special interests (vested in war, militarism, and
geopolitical concerns of Israel) that use oil as
an issue of national interestas a façade or
pretextin order to justify military adventures
to derive high dividends, both economic and geopolitical, from war.
Has Oil Really Peakedand Is It Running Out?
Peak oil thesis, as noted above, maintains that
world oil reserves, having reached their maximum
capacity, are now dwindlingwith grave
consequences of oil shortage and high energy
prices. While this has led many to call for more
vigorous conservation, it has led others to argue
in favor of unrestrained exploration and
extraction of oil reserves, especially those
located in the Alaskan Wildlife regions.
Significant policy and/or political implications
follow from the view that oil is running out. For
one thing, this view provides fodder for the
cannons of war profiteering militarists who are
constantly on the look out to invent new enemies
and find new pretexts for continued war and
escalation of military spending. For another, it
tends to disarm many antiwar forces that accept
this thesis and, therefore, internalize
responsibility for U.S. foreign policy every time
they fill their gas tank. Thus they own the wars.[1]
The Peak Oil thesis serves as a powerful trap and
a clever manipulation in that it lets the real
forces of war and militarism (the
military-industrial complex and the pro-Israel
lobby) off the hook; it is a fabulous
redirection. All evils are blamed on a commodity
upon which we are all utterly dependent.[2]
The fact, however, is that there is no hard
evidence that oil has peaked, or that global oil
reserves are shrinking, or that the current
skyrocketing price of oil is due to a supply
shortage. (As shown below, there is actually an oil surplus, no shortage.)
Peak oil theory is not altogether new. It was
originally floated around in the 1940s, arguing
that world oil reserves would be exhausted within
the next two decades or so. It then resurfaced in
the 1970s and early 1980s in reaction to the oil
price hikes of those yearswhich were,
incidentally, precipitated not by oil shortages
but by international political convulsions,
revolutions and wars. But it died down once the
price of oil fell back to pre-crises levels.
As recent geopolitical convulsions in the Middle
East (especially the U.S. war on Iraq, and the
resultant booming speculation in oil markets)
have triggered a new round of oil price hikes,
Peak Oil theory has once again become
fashionable. The theory is being promoted not
only by war profiteers and proponents of an
unbridled domestic oil exploration and
extraction, especially in Alaska, but also by
some apparently antiwar liberals such as Michael
T. Klare and James H. Kunstler.[3]
Peak oil theory is based on a number of
assumptions and omissions that make it less than
reliable. To begin with, it discounts or
disregards the fact that energy-saving
technologies have drastically improved (and will
continue to further improve) the efficiency of
oil consumption. Evidence shows that, for
example, over a period of five years (1994-99),
U.S. GDP expanded over 20 percent while oil usage
rose by only nine percent. Before the 1973 oil
shock, the ratio was about one to one.[4]
Second, Peak Oil theory pays scant attention to
the drastically enabling new technologies that
have made (and will continue to make) possible
discovery and extraction of oil reserves that
were inaccessible only a short time ago. One of
the results of the more efficient means of
research and development has been a far higher
success rate in finding new oil fields. The
success rate has risen in twenty years from less
than 70 percent to over 80 percent. Computers
have helped to reduce the number of dry holes.
Horizontal drilling has boosted extraction.
Another important development has been deep-water
offshore drilling, which the new technologies now
permit. Good examples are the North Sea, the Gulf
of Mexico, and more recently, the promising
offshore oil fields of West Africa.[5]
Third, Peak Oil theory also pays short shrift to
what is sometimes called non-conventional oil.
These include Canada's giant reserves of
extra-heavy bitumen that can be processed to
produce conventional oil. Although this was
originally considered cost inefficient, experts
working in this area now claim that they have
brought down the cost from over $20 a barrel to
$8 per barrel. Similar developments are taking
place in Venezuela. It is thanks to developments
like these that since 1970, world oil reserves
have more than doubled, despite the extraction of
hundreds of millions of barrels.[6]
Fourth, Peak Oil thesis pays insufficient
attention to energy sources other than oil. These
include solar, wind, non-food bio-fuel, and
nuclear energies. They also include natural gas.
Gas is now about 25 percent of energy demand
worldwide. It is estimated that by 2050 it will
be the main source of energy in the world. A
number of American, European, and Japanese firms
have and are investing heavily in developing fuel
cells for cars and other vehicles that would
significantly reduce gasoline consumption.[7]
Fifth, proponents of Peak Oil tend to exaggerate
the impact of the increased oil demand coming
from China and India on both the amount and the
price of oil in global markets. The alleged
disparity between supply and demand is said to be
due to the rapidly growing demand coming from
China and India. But that rapid growth in demand
is largely offset by a number of counterbalancing
factors. These include slower growth in U.S.
demand due to its slower economic growth,
efficient energy utilization in industrially
advanced countries, and increases in oil
production by OPEC, Russia, and other oil producing countries.
Finally, and perhaps more importantly, claims of
peaked and dwindling oil are refuted by the
available facts and figures on global oil supply.
Statistical evidence shows that there is
absolutely no supply-demand imbalance in global
oil markets. Contrary to the claims of the
proponents of Peak Oil and champions of war and
militarism, the current oil price shocks are a
direct consequence of the destabilizing wars and
geopolitical insecurity in the Middle East, not
oil shortages. These include not only the raging
wars in Iraq and Afghanistan, but also the threat
of a looming war against Iran. The record of
soaring oil prices shows that anytime there is a
renewed U.S. military threat against Iran, fuel prices move up several notches.
The war also contributes to the escalation of
fuel prices in indirect waysfor example, by
plunging the U.S. ever deeper into debt and
depreciating the dollar, or by creating favorable
grounds for speculation. As oil is priced largely
in U.S. dollars, oil exporting countries ask for
more dollars per barrel of oil as the dollar
loses value. Perhaps more importantly, an
atmosphere of war and geopolitical instability in
global oil markets serves as an auspicious ground
for hoarding and speculation in commodity
markets, especially oil, which is heavily
contributing to the recently soaring oil prices.
As much as 60% of todays crude oil price is pure
speculation driven by large trader banks and
hedge funds. It has nothing to do with the
convenient myths of Peak Oil. It has to do with
control of oil and its price. . . . Since the
advent of oil futures trading and the two major
London and New York oil futures contracts,
control of oil prices has left OPEC and gone to
Wall Street. It is a classic case of the tail that wags the dog.[8]
Wall Street financial giants that created the
Third World debt crisis in the late 1970s and
early 1980s, the tech bubble in the 1990s, and
the housing bubble in the 2000s are now hard at
work creating the oil bubble. By purchasing large
numbers of futures contracts, and thereby pushing
up futures prices to even higher levels than
current prices, speculators have provided a
financial incentive for oil companies to buy even
more oil and place it in storage. A refiner will
purchase extra oil today, even if it costs $115
per barrel, if the futures price is even higher.[9]
This has led to a steady rise in crude oil
inventories over the last two years, resulting
in US crude oil inventories that are now higher
than at any time in the previous eight years. The
large influx of speculative investment into oil
futures has led to a situation where we have both
high supplies of crude oil and high crude oil
prices. . . . In fact, during this period global
supplies have exceeded demand, according to the US Department of Energy.[10]
The fact that the skyrocketing oil prices of late
have been accompanied by a surplus in global oil
markets was also brought to the attention of
President George W. Bush by Saudi officials when
he asked them during a recent trip to the kingdom
to increase production in order to stem the
rising prices. Saudi officials reminded the
President that there is plenty of oil on the
market. Iran has put some 30 million barrels of
oil that it can't sell into floating storage. If
we produced more oil, it wouldn't find buyers,
says the Saudi source. It wouldn't affect the price at all."[11]
And why producing more oil wouldnt affect the
price at all? Well, because what is driving the
soaring oil prices is not shortage but
speculation: with so much investment money
sloshing around in the commodities markets, the
Saudis calculate they have no hope of controlling
short-term price fluctuations. They blame the
recent price run-ups on speculation and fear of
shortages [not real shortages], factors they say are beyond their control.[12]
War for Cheap Oil?
The widely-shared view that the U.S. desire for
access to abundant and cheap oil lurks behind the
Bush administrations drive to war in the Middle
East rests on the implicit but dubious assumption
that access to energy resources requires direct
control of oil fields and/or oil producing
countries. There are at least three problems with this postulation.
First, if control of or influence over oil
producing countries in the Middle East is a
requirement for access to cheap oil, the United
States already enjoys significant influence over
some of the major oil producers in the
regionSaudi Arabia, Kuwait, and a number of
other smaller producers. Why, then, would the
U.S. want to bring about war and political
turmoil in the region that might undermine that
long and firmly-established influence?
Let us assume for a moment that the
neoconservative militarists are sincere in their
alleged desire to bring about democratic rule and
representational government in the Middle East.
Let us further assume that they succeed in
realizing this purported objective. Would, then,
the thus-emerging democratic governments,
representing the wishes of the majority of their
citizens, be as accommodating to U.S. economic
and geopolitical objectives, including its oil
needs, as are its currently friendly rulers in the region? Most probably not.
Secondly, and more importantly, access to oil no
longer requires control of oil fields or oil
producersas was the case in times past. For more
than a century, that is, from the early days of
oil extraction in the United States in the 1870s
until the mid-1970s, the price of oil was
determined administratively, that is, by
independent producers operating in different
parts of the world without having to compete with
each other. Under those circumstances, colonial
or imperial wars of conquest and occupation were
crucial to the control of oil (and other) resources.
Beginning with the 1950s, however, that pattern
of local, non-competitive price determination
began to gradually change in favor of regional
and/or international markets. By the mid 1970s,
an internationally competitive oil market emerged
that effectively ended the century-old pattern of
local, administrative pricing. Today, oil prices
(like most other commodity prices) are determined
largely by the forces of supply and demand in
competitive global energy markets; and any
country or company can have as much oil as they
wish if they pay the going market (or spot) price.[13]
To the extent that competitive oil markets and/or
prices are occasionally manipulated, such
subversions of competitive market forces are
often brought about not so much by OPEC or other
oil producing countries as by manipulative
speculations of financial giants in New York and
London. As was discussed earlier, gigantic Wall
Street financial institutions have accomplished
this feat through innovative financial
instruments such as establishment of energy hedge
funds and speculative oil futures markets in New York and London.[14]
It is true that collective supply decisions of
oil producing countries can, and sometimes does,
affect the competitively determined market price.
But a number of important issues need to be considered here.
To begin with, although such supply manipulations
obviously affect or influence market-determined
prices, they do not determine those prices. In
other words, competitive international oil
markets determine its price with or without oil
producers supply manipulations. Such supply
managements are, however, designed not to create
volatility in energy markets, or chronic oil
price hikes. Instead, they are designed to
stabilize global oil prices because oil exporting
countries prefer stability, predictability and
long-term planning for their economic development
and industrialization projects. Here is how Cyrus
Bina and Minh Vo describe this relationship:
As a result, we conclude that the global oil
market is the prime mover [i.e., prime
determinant of oil price] and OPEC indeed follows
its trajectory accordingly and consistently. . .
. When market price (both spot and futures) is
falling, OPEC decreases its output; when market
price is rising, OPEC attempts to increase its
output; and when market price is steady, OPEC
keeps its output unchanged. . . . And, this is a
kind of oil market we have experienced after the
dust settled following the crisis of
de-cartelization and globalization of oil industry in the 1970s.[15]
Producers policy to sometimes curtail or limit
the supply of oil, the so-called limited flow
policy, is designed to raise the actual trading
price above the market-determined price in order
to keep high-cost U.S. producers in business
while leaving low-cost Middle East producers with
an above average, or super, profit. While for
low-cost producers this limited flow policy is
largely a matter of making more or less profits,
for high-cost U.S. producers it is a matter of
survival, of being able to stay in or go out of
businessan important but rarely mentioned or acknowledged fact.
A hypothetical numerical example might be helpful
here. Suppose that the market-determined, or
free-flow, price of oil is $30 per barrel.
Further, suppose this price entails an average
rate of profit of 10 percent, or $3 per barrel.
The word average in this context refers to
average conditions of production, that is,
producers who produce under average conditions of
production in terms of productivity and cost of
production. This means that producers who produce
under better-than-average conditions, that is,
low-cost, high productivity producers, will make
a profit higher than $3 per barrel while
high-cost, low efficiency producers will end up
making less than $3 per barrel. This also means
that some of the high-cost producers may end up
going out of business altogether. Now, if the
limited flow policy raises the actual trading
price to $35 per barrel, it will raise the
profits of all producers accordingly, thereby
also keeping in business some high-cost producers
that might otherwise have gone out of business.
Furthermore, supply manipulation (in pursuit of
price manipulation) is not limited to the oil
industry. In todays economic environment of
giant corporations and big businesses, many of
the major industries try, and often succeed in
controlling supply in order to control price.
Take, for example, the automobile industry.
Theoretically, automobile producers could flood
the market with a huge supply of cars. But that
would not be good business as it would lower
prices and profits. So, they control supply, just
as do oil producers, in order to manipulate
price. During the past several decades, the price
of automobiles, in real terms, has been going up
every year, at least to the tune of inflation.
During this period, the industry (and the economy
in general) has enjoyed a many-fold increase in
labor productivity. Increased labor productivity
is supposed to translate into lower costs and,
therefore, lower prices. Yet, that has not
materialized in the case of this industryas it
has in the case of, for example, pocket calculators or computers.
Another example of price control through supply
manipulation is the case of U.S. grain producers.
The so-called set aside policy that pays
farmers not to cultivate part of their land in
order to curtail supply and prop up price is not
differentnay, it is worse than OPECs policy of
supply and/or price manipulation.
It is also necessary to keep in mind that OPECs
desire to sometimes limit the supply of oil in
order to shore up its price is limited by a
number of factors. For one thing, the share, and
hence the influence, of Middle Eastern oil
producers as a percentage of world oil production
has steadily declined over time, from almost 40
percent when OPEC was established to about 30
percent today.[16] For another, OPEC members are
not unmindful of the fact that inordinately high
oil prices can hurt their own long-term interests
as this might prompt oil importers to economize
on oil consumption and search for alternative
sources of energy, thereby limiting producers export markets.
OPEC members also know that inordinately high oil
prices could precipitate economic recessions in
oil importing countries that would, once again,
lower demand for their oil. In addition, high oil
prices tend to raise the cost of oil producers
imports of manufactured products as high energy
costs are bound to affect production costs of those manufactured products.
War for Expensive Oil?
Now let us consider the widely-shared view that
attributes the Bush administrations drive to war
to the influence of big oil companies in pursuit
of higher oil prices and profits. As noted, this
is obviously the opposite of the war for cheap
oil argument, as it claims that Big Oil tends to
instigate war and political tension in the Middle
East in order to cause an oil price hike and
increase its profits. Like the war for cheap
oil theory, this claim is not supported by
facts. Although the claim has an element of a
prima facie reasonableness, that apparently
facile credibility rests more on precedent and
perception than reality. Part of the perception
is due to the exaggerated notion that both
President Bush and Vice President Cheney were
oil men before coming to the White House. But
the fact is that George W. Bush was never more
than an unsuccessful petty oil prospector and
Dick Cheney headed a company, the notorious
Halliburton, that sold (and still sells) services
to oil companies and the Pentagon.
The larger part of the perception, however, stems
from the fact that oil companies do benefit from
oil price hikes that result from war and
political turbulence in the Middle East. Such
benefits are, however, largely incidental.
Surely, American oil companies would welcome the
spoils of the war (that result from oil price
hikes) in Iraq or anywhere else in the world.
From the largely incidental oil price hikes that
follow war and political convulsion, some
observers automatically conclude that, therefore,
Big Oil must have been behind the war.[17] But
there is no evidence that, at least in the case
of the current invasion of Iraq, oil companies pushed for or supported the war.
On the contrary, there is strong evidence that,
in fact, oil companies did not welcome the war
because they prefer stability and predictability
to periodic oil spikes that follow war and
political convulsion: Looking back over the last
20 years, there is plenty of evidence showing the
industrys push for stability and cooperation
with Middle Eastern countries and leaders, and
the U.S. governments drive for hegemony works
against the oil industry.[18] As Thierry
Desmarest, Chairman and Chief Executive Officer
of Frances giant oil company, TotalFinaElf, put
it, A few months of cash generation is not a big
deal. Stable, not volatile, prices and a $25
price (per barrel) would be convenient for everyone.[19]
It is true that for a long time, from the
beginning of Middle Eastern oil exploration and
discovery in the early twentieth century until
the mid-1970s, colonial and/or imperial powers
controlled oil either directly or through control
of oil producing countriesat times, even by
military force. But that pattern of colonial or
imperialist exploitation of global markets and
resources has changed now. Most of the current
theories of imperialism and hegemony that
continue invoking that old pattern of Big Oil
behavior tend to suffer from an ahistorical
perspective. Today, as discussed earlier, even
physically occupying and controlling another
countrys oil fields will not necessarily be
beneficial to oil interests. Not only will
military adventures place the operations of
current energy projects at jeopardy, but they
will also make the future plans precarious and
unpredictable. Big Oil interests, of course, know
this; and thats why they did not countenance the
war on Iraq: "The big oil companies were not
enthusiastic about the Iraqi war," says Fareed
Mohamedi of PFC Energy, an energy consultancy
firm based in Washington D.C. that advises
petroleum firms. "Corporations like Exxon-Mobil
and Chevron-Texaco want stability, and this is
not what Bush is providing in Iraq and the Gulf region," adds Mohamedi.[20]
Big Oil interests also know that not only is war
no longer the way to gain access to oil, it is in
fact an obstacle to gaining that access.
Exclusion of U.S. oil companies from vast oil
resources in countries such as Russia, Iran,
Venezuela, and a number of central Asian
countries due to militaristic U.S. foreign policy
is a clear testament to this fact. Many of these
countries (including, yes, Iran) would be glad to
have major U.S. oil companies invest, explore and
extract oil from their rich reserves. Needless to
say that U.S. oil companies would be delighted to
have access to those oil resources. But U.S.
champions of war and militarism have successfully
torpedoed such opportunities through their
unilateral wars of aggression and their penchant
for a Cold War-like international atmosphere.
When Vladimir Putin first became president of
Russia he was willing to allow American energy
companies to continue with the one-sided
contracts they had drawn up during Boris
Yeltsins presidency. Putin built a seemingly
trusting relationship with George Bush who looked
into Putins soul and liked what he saw. The two
leaders grew even closer in the aftermath of the
9/11 attacks on World Trade Centre and the
Pentagonwhen Russia provided help for Americas
invasion of Afghanistan. Soon after this
generous cooperation, however, Bush repudiated
the anti-ballistic missile treaty in the belief
that America could develop the technology for
winning a nuclear war. This posed a huge strategic threat to Russia.[21]
Describing the heavy-handed, imperial U.S. policy
toward Russia, Stephen F. Cohen writes: The real
US policy has been very differenta relentless,
winner-take-all exploitation of Russia's
post-1991 weakness. Accompanied by broken
American promises, condescending lectures and
demands for unilateral concessions, it has been
even more aggressive and uncompromising than was
Washington's approach to Soviet Communist Russia.[22]
Bushs withdrawal from the ABM treaty not merely
posed an existential threat to Russia but was
almost a betrayal of the trust that Putin had put
in him. This led to Putins disenchantment with
America. Eventually he seems to have decided
that every time America transgressed against
Russian interests he would retaliate by stopping
another American company from exploiting Russian resources.[23]
During the past few decades, major oil companies
have consistently opposed U.S. policies and
military threats against countries like Iran,
Iraq, and Libya. They have, indeed, time and
again, lobbied U.S. foreign policy makers for the
establishment of peaceful relations and
diplomatic rapprochement with those countries.
The Iran-Libya Sanction Act of 1996 (ILSA) is a
strong testament to the fact that oil companies
nowadays view wars, economic sanctions, and
international political tensions as harmful to
their long-term business interests and,
accordingly, strive for peace, not war, in international relations.
On March 15, 1995 President Clinton issued
Executive Order 12957 which banned all U.S.
contributions to the development of Irans
petroleum resources, a crushing blow to the oil
industry, especially to the Conoco oil company
that had just signed a $1 billion contract to
develop fields in Iran. The deal marked a strong
indication that Iran was willing to improve its
relationship with the United States, only to have
President Clinton effectively nullify it. Two
months later, sighting an extraordinary threat
to the national security, foreign policy and
economy of the U.S., President Clinton issued
another order, 1259, that expanded the sanctions
to become a total trade and investment embargo
against Iran. Then a year later came ILSA which
extended the sanctions imposed on Iran to Libya as well.
It is no secret that the major force behind the
Iran-Libya Sanction Act was the America Israel
Public Affairs Committee (AIPAC), the main
Zionist lobby in Washington. The success of AIPAC
in passing ILSA through both the Congress and the
White House over the opposition of the major U.S.
oil companies is testament to the fact that, in
the context of U.S. policy in the Middle East,
even the influence of the oil industry pales
vis-à-vis the influence of the Zionist lobby.[24]
ILSA was originally to be imposed on both U.S.
and foreign companies. However, in the end it was
the U.S. companies that suffered the most due to
waivers that were given to European companies
after pressure from the European Union. In 1996
the EU pursued its distaste of ILSA by lodging
complaints with the World Trade Organization
(WTO) against the U.S. and through adopting
blocking legislation that would prevent EU
companies from complying with ILSA. Meanwhile,
the contract that Iran had originally signed with
Conoco was awarded to TotalFinaElf of France for
$760 million; the deal also left the door open
for Total to sign an additional contract with
Iran for $2 billion in 1997 with their partners Gazprom and Petronas.
In May of 1997 major U.S. oil companies such as
Conoco, Exxon, Atlantic Richfield, and Occidental
Petroleum joined other (non-military) U.S.
companies to create an anti-sanction coalition.
Earlier that same year Conocos Chief Executive
Archie Dunham publicly took a stance against
unilateral U.S. sanctions by stating that U.S.
companies, not rogue regimes, are the ones that
suffer when the United States imposes economic
sanctions. Texaco officials have also argued
that the U.S. can be more effective in bringing
about change in other countries by allowing U.S.
companies to do business with those countries
instead of imposing economic sanctions that tend to be counterproductive.
Alas, Washingtons perverse, misguided and
ineffectual policy of economic sanctions for
political purposesoften in compliance with the
wishes of some powerful special
interestscontinues unabated. Even with the
increased pro-trade lobbying efforts of the oil
industry and groups like USAEngage, whose
membership ranges from farmers and small business
owners to Wall Street executives and oilmen, the
lack of support from Washington and the Bush
administration could not allow them [major oil
companies and other non-military transnational
companies] to overtake or counteract the already
rolling momentum of AIPACs influence on Middle
East policy or the renewal of ISLA.[25]
Despite the fact that oil companies nowadays view
war and political turmoil in the Middle East as
detrimental to their long-term interests and,
therefore, do not support policies that are
conducive to war and militarism, and despite the
fact that war is no longer the way to gain access
to oil, the widespread perception that every U.S.
military engagement in the region, including the
current invasion of Iraq, is prompted by oil
considerations continues. The question is why?
Behind the Myth of War for Oil
The widely-shared but erroneous view that recent
U.S. wars of choice are driven by oil concerns is
partly due to precedence: the fact that for a
long time military force was key to colonial or
imperialist control and exploitation of foreign
markets and resources, including oil. It is also
partly due to perception: the exaggerated notion
that both President Bush and Vice President
Cheney were oil men before coming to the White
House. But, as noted earlier, George W. Bush was
never more than an ineffective minor oil
prospector and Dick Cheney was never really an
oil man; he headed the notorious Halliburton
company that sold (and still sells) services to oil companies and the Pentagon.
But the major reason for the persistence of this
pervasive myth seems to stem from certain
deliberate efforts that are designed to
perpetuate the legend in order to camouflage some
real economic and geopolitical special interests
that drive U.S. military adventures in the Middle
East. There is evidence that both the
military-industrial complex and hard-line Zionist
proponents of greater Israel disingenuously use
oil (as an issue of national interest) in order
to disguise their own nefarious special interests
and objectives: justification of continued
expansion of military spending, extension of
sales markets for military hardware, and
recasting the geopolitical map of the Middle East in favor of Israel.
There is also evidence that for every dollars
worth of oil imported from the Persian Gulf
region the Pentagon takes five dollars out of the
Federal budget to secure the flow of that oil!
This is a clear indication that the claim that
the U.S. military presence in the Middle East is
due to oil consideration is a fraud .[26]
While anecdotal, an example of how partisans of
war and militarism use oil as a pretext to cover
up the real forces behind war and militarism can
be instructive. In the early stages of the
invasion of Iraq, when the anti-occupation
resistance in Iraq had not yet taken shape and
the invasion seemed to be proceeding smoothly,
two of the leading champions of the invasion,
Secretary of Defense Donald Rumsfeld and his
deputy Paul Wolfowitz, often boasting of the
apparent or pre-mature success of the invasion at
those early stages, gave frequent news
conferences and press reports. During one of
those press reports (at the end of an address to
delegates at an Asian security summit in
Singapore in early June 2003), Wolfowitz was
asked why North Korea was being treated
differently from Iraq, where hardly any weapons
of mass destruction had been found. Wolfowitzs
response was: "Let's look at it simply. The most
important difference between North Korea and Iraq
is that economically, we just had no choice in
Iraq. The country swims on a sea of oil."[27]
Many opponents of the war jumped on this
statement, so to speak, as corroboration of what
they had been saying or suspecting all along:
that the war on Iraq was prompted by oil
interests. Yet, there is strong evidencesome of
which presented in the preceding pagesthat for
the last several decades oil interests have not
favored war and turbulence in the Middle East,
including the current invasion of Iraq. Nor is
war any longer the way to gain access to oil.
Major oil companies, along with many other
non-military transnational corporations, have
lobbied both the Clinton and Bush administrations
in support of changing the aggressive,
militaristic U.S. policy toward countries like
Iran, Iraq and Libya in favor of establishing
normal, non-confrontational trade and diplomatic
relations. Such efforts at normalization of trade
and diplomatic relations, however, have failed
time and again precisely because Wolfowitz and
his cohorts, working through AIPAC and other
war-mongering think tanks such as the American
Enterprise Institute (AEI), Project for the New
American Century (PNAC), and Jewish Institute for
National Security Affairs (JINSA) oppose them.
These think tanks, in collaboration with a whole
host of similar militaristic lobbying entities
like Center for Security Affairs (CSA) and
National Institute for Public Policy (NIPP),
working largely as institutional façades to serve
the defacto alliance of the military-industrial
complex and the pro-Israel lobby, have repeatedly
thwarted efforts at peace and reconciliation in
the Middle Eastoften over the objections and
frustrations of major U.S. oil companies. It is a
well established fact that Wolfowitz has been a
devoted champion of these jingoistic think tanks
and their aggressive unilateral policies in the
Middle East. In light of his professional record
and political loyalties, his claim that he
championed the war on Iraq because of oil
considerations can be characterized only as
demagogic: it contradicts his political record
and defies the policies he has been advocating
for the last several decades; it is designed to
divert attention from the main forces behind the
war, the armaments lobby and the pro-Israel lobby.
These powerful interests are careful not to draw
attention to the fact that they are the prime
instigators of war and militarism in the Middle
East. Therefore, they tend to deliberately
perpetuate the popular perception that oil is the
driving force behind the war in the region. They
even do not mind having their aggressive foreign
policies labeled as imperialistic as long as
imperialism implies some vague or general
connotations of hegemony and domination, that is,
as long as it thus camouflages the real, special
interests behind the war and political turbulence in the Middle East.
The oil and other non-military transnational
corporations aversion to war and military
adventures in the Middle East stem, of course,
from the logical behavior of global or
transnational capital in the era of integrated
world markets, which tends to be loath to war and
international political convulsions. Considering
the fact that both importers and exporters of oil
prefer peace and stability to war and militarism,
why would, then, the flow of oil be in jeopardy
if the powerful beneficiaries of war and
political tension in the Middle East stopped
their aggressive policies in the region?
Partisans of war in the Middle East tend to
portray U.S. military operations in the region as
reactions to terrorism and political turbulence
in order to safeguard the interests of the
United States and its allies. Yet, a close
scrutiny of action-reaction or cause-effect
relationship between U.S. military adventures and
socio-political turbulence in the region reveals
that perhaps the causality is the other way
around. That is, social upheavals and political
convulsions in the Middle East are more likely to
be the result, not the cause, of U.S. foreign
policy in the region, especially its one-sided,
prejudicial Israeli-Palestinian policy. The U.S.
policy of war and militarism in the region seems
to resemble the behavior of a corrupt cop, or a
mafia godfather, who would instigate fights and
frictions in the neighborhood or community in
order to, then, portray his parasitic role as
necessary for the safety and security of the
community and, in the process, fill out his deep pockets.
No matter how crucial oil is to the world
economy, the fact remains that it is, after all,
a commodity. As such, international trade in oil
is as important to its importers as it is to its
exporters. There is absolutely no reason that, in
a world free of the influence of the
beneficiaries of war and militarism and their
powerful lobbies (the armaments and the
pro-Israel lobbies), the flow of oil could not be
guaranteed by international trade conventions and commercial treaties.
Ismael Hossein-zadeh, author of the recently
published
<http://www.amazon.com/Political-Economy-U-S-Militarism/dp/0230602282/ref=ed_oe_p/105-1298000-8724441>The
Political Economy of U.S. Militarism
(Palgrave-Macmillan 2007), teaches economics at
Drake University, Des Moines, Iowa.
References
[1] Ron Andreas, reporter/researcher, e-mail correspondence with the author.
[2] Ibid.
[3] Michael T. Klare, Resource Wars: The New
Landscape of Global Conflict (New York: Holt
paperbacks 2002); James Howard Kunstler, The Long
Emergency: Surviving the Converging Catastrophes
of the Twenty-first Century (Grove/Atlantic, 2005).
[4] Eliyahu Kanovsky, Oil: Who's Really Over a
Barrel? Middle East Quarterly (Spring 2003).
[5] Ibid.
[6] The Wall Street Journal (17 May 2001); cited in Eliyahu Kantovsky, Ibid.
[7] The Wall Street Journal (10 March 1998); cited in Eliyahu Kantovsky, Ibid.
[8] F. William Engdahl, Perhaps 60% of Todays
Oil Price Is Pure Speculation, financialsense.com (2 May 2008)
[9] Ibid.
[10] Ibid.
[11] Stanley Reed, Help from the House of Saud:
Why the leading oil producer wants to cool off
the market, Business Week (29 May 2008)
[12] Ibid.
[13] Cyrus Bina and Minh Vo, OPEC in the Epoch
of Globalization: An Event Study of Global Oil
Prices, Global Economy Journal, Vol. 7, Issue 1
(2007); for a discussion of the theory and
history of oil price determination see also,
Cyrus Bina, The Rhetoric of Oil and the Dilemma
of War and American Hegemony, Arab Studies
Quarterly 15, no. 3 (Summer 1993); also Cyrus
Bina, Limits of OPEC Pricing: OPEC Profits and
the Nature of Global Oil Accumulation, OPEC Review 14, no. 1 (Spring 1990).
[14] F. William Engdahl, Perhaps 60% of Todays
Oil Price Is Pure Speculation, financialsense.com (2 May 2008),
[15] Cyrus Bina and Minh Vo, OPEC in the Epoch
of Globalization: An Event Study of Global Oil
Prices, Global Economy Journal, Vol. 7, Issue 1 (2007).
[16] Gary S. Becker, Why War with Iraq Is Not
about Oil, Business Week (17 March 2003): 30.
[17] Johnathan Nitzan and Shimshon Bichler. The
Global Political Economy of Israel (London and
Sterling, Virginia: Pluto Press, 2002).
[18] Melinda K. Ruby, Is Oil the Driving Force
to War? unpublished Senior thesis, Dept. of
Economics and Finance, Drake University, Des Moines, Iowa (spring 2004), 10.
[19] As quoted in Ruby, Ibid., P. 13.
[20] As cited by Roger Burbach,
<http://www.counterpunch.org/burbach10032003.html>Bush
Ideologues vs. Big Oil: The Iraq Game Gets Even Stranger, CounterPunch.
[21] Israel Shamir, The Writings of Israel Shamir, Contributor 45
[22] Stephen F. Cohen The New American Cold
War, The Nation (10 July 2006); as quoted in Shamir, Ibid.
[23] Shamir, Ibid.
[24] Ruby, Is Oil the Driving Force to War? pp.
14-15; see also Herman Franssen and Elaine
Morton, A Review of U.S. Unilateral Sanctions
Against Iran, Middle East Economic Survey 45,
no. 34 (26 August 2002), pp. D1-D5 (D section
contains op eds. as opposed to staff-written articles).
[25] Ruby, Is Oil the Driving Force to War? pp.
16-17; see also David Ivanovich, Conocos Chief
Blasts Sanctions, Houston Chronicle (12 February 1997).
[27] The statement was widely reported by many
news papers and other media outlets. See, for
example, The Guardian (4 June 2003)
Freedom Archives
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