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<a href="http://www.counterpunch.org/zadeh07092008.html" eudora="autourl">
http://www.counterpunch.org/zadeh07092008.html<br>
</a></font><font face="Verdana" size=2>July 9, 2008<br><br>
</font><font face="Times New Roman, Times" size=4><b><i>Shell Games
<br><br>
</i></font><h1><font face="Times New Roman, Times" size=5 color="#990000">
<b>Are They Really</i> Oil Wars?
</b></font></h1><font face="Times New Roman, Times" size=4>By ISMAEL
HOSSEIN-ZADEH <br><br>
</font><font face="Verdana" size=6 color="#990000">A</font>
<font face="Verdana" size=2> 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 oil’s 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.<br><br>
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.<br><br>
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.<br><br>
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
interest”as a façade or pretextin order to justify military adventures
to derive high dividends, both economic and geopolitical, from
war.<br><br>
</font><font size=3> <br><br>
</font><font face="Verdana" size=2 color="#990000"><b>Has Oil Really
Peakedand Is It Running Out?</b> <br><br>
</font><font face="Verdana" size=2>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.<br><br>
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]<br><br>
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]<br><br>
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.)<br><br>
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.<br><br>
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]<br><br>
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]<br><br>
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]<br><br>
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]<br><br>
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]<br><br>
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.<br><br>
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.<br><br>
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.<br><br>
As much as 60% of today’s 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]<br><br>
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]<br><br>
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]<br><br>
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]<br><br>
And why producing more oil “wouldn’t 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]<br><br>
</font><font face="Verdana" size=2 color="#990000"><b>War for Cheap
Oil?</b> <br><br>
</font><font face="Verdana" size=2>The widely-shared view that the U.S.
desire for access to abundant and cheap oil lurks behind the Bush
administration’s 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.<br><br>
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?<br><br>
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.<br><br>
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.<br><br>
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]<br><br>
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]<br><br>
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.<br><br>
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:<br><br>
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]<br><br>
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.<br><br>
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.<br><br>
Furthermore, supply manipulation (in pursuit of price manipulation) is
not limited to the oil industry. In today’s 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.<br><br>
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 OPEC’s policy
of supply and/or price manipulation.<br><br>
It is also necessary to keep in mind that OPEC’s 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.<br><br>
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.<br><br>
</font><font face="Verdana" size=2 color="#990000"><b>War for Expensive
Oil?</b> <br><br>
</font><font face="Verdana" size=2>Now let us consider the widely-shared
view that attributes the Bush administration’s 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.<br><br>
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.<br><br>
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
industry’s push for stability and cooperation with Middle Eastern
countries and leaders, and the U.S. government’s drive for hegemony works
against the oil industry.”[18] As Thierry Desmarest, Chairman and Chief
Executive Officer of France’s 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]<br><br>
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
country’s 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 that’s
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]<br><br>
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.<br><br>
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 Yeltsin’s presidency. Putin built a
seemingly trusting relationship with George Bush who looked into Putin’s
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 America’s 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.<a name="_ednref9"></a>”[21] <br><br>
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]<br><br>
Bush’s 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 Putin’s 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]<br><br>
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.<br><br>
On March 15, 1995 President Clinton issued Executive Order 12957 which
banned all U.S. contributions to the development of Iran’s 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.<br><br>
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]<br><br>
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.<br><br>
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
Conoco’s 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.<br><br>
Alas, Washington’s 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 AIPAC’s influence on Middle East policy or
the renewal of ISLA.”[25]<br><br>
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?<br><br>
</font><font face="Verdana" size=2 color="#990000"><b>Behind the Myth of
War for Oil</b> <br><br>
</font><font face="Verdana" size=2>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.<br><br>
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.<br><br>
There is also evidence that for every dollar’s 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]<br><br>
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.
Wolfowitz’s 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]<br><br>
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.<br><br>
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.<br><br>
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.<br><br>
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?<br><br>
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.<br><br>
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.<br><br>
<b>Ismael Hossein-zadeh</b>, author of the recently published
<a href="http://www.amazon.com/Political-Economy-U-S-Militarism/dp/0230602282/ref=ed_oe_p/105-1298000-8724441">
<i>The Political Economy of U.S. Militarism</a></i> (Palgrave-Macmillan
2007), teaches economics at Drake University, Des Moines, Iowa.<br><br>
<br>
<b><a name="OLE_LINK1"></a>References <br><br>
</b>[1] Ron Andreas, reporter/researcher, e-mail correspondence with the
author.<br>
[2] Ibid.<br>
[3] Michael T. Klare, <i>Resource Wars: The New Landscape of Global
Conflict</i> (New York: Holt paperbacks 2002); James Howard Kunstler,
<i>The Long Emergency: Surviving the Converging Catastrophes of the
Twenty-first Century</i> (Grove/Atlantic, 2005).<br>
[4] Eliyahu Kanovsky, “Oil: Who's Really Over a Barrel?” <i>Middle East
Quarterly</i> (Spring 2003). <br>
[5] Ibid.<br>
[6] <i>The Wall Street Journal</i> (17 May 2001); cited in Eliyahu
Kantovsky, Ibid.<br>
[7] <i>The Wall Street Journal</i> (10 March 1998); cited in Eliyahu
Kantovsky, Ibid.<br>
[8] F. William Engdahl, “Perhaps 60% of Today’s Oil Price Is Pure
Speculation,” <i>financialsense.com</i> (2 May 2008)<br>
[9] Ibid.<br>
[10] Ibid.<br>
[11] Stanley Reed, “Help from the House of Saud: Why the leading oil
producer wants to cool off the market,” <i>Business Week</i> (29 May
2008)<br>
[12] Ibid.<br>
[13] Cyrus Bina and Minh Vo, “OPEC in the Epoch of Globalization: An
Event Study of Global Oil Prices,” <i>Global Economy Journal</i>, 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,” <i>Arab Studies Quarterly</i> 15, no. 3
(Summer 1993); also Cyrus Bina, “Limits of OPEC Pricing: OPEC Profits and
the Nature of Global Oil Accumulation,” <i>OPEC Review</i> 14, no. 1
(Spring 1990).<br>
[14] F. William Engdahl, “Perhaps 60% of Today’s Oil Price Is Pure
Speculation,” <i>financialsense.com</i> (2 May 2008), <br>
[15] Cyrus Bina and Minh Vo, “OPEC in the Epoch of Globalization: An
Event Study of Global Oil Prices,” <i>Global Economy Journal</i>, Vol. 7,
Issue 1 (2007).<br>
[16] Gary S. Becker, “Why War with Iraq Is Not about Oil,” <i>Business
Week</i> (17 March 2003): 30.<br>
[17] Johnathan Nitzan and Shimshon Bichler. <i>The Global Political
Economy of Israel</i> (London and Sterling, Virginia: Pluto Press,
2002).<br>
[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.<br>
[19] As quoted in Ruby, Ibid., P. 13.<br>
[20] As cited by Roger Burbach,
“<a href="http://www.counterpunch.org/burbach10032003.html">Bush
Ideologues vs. Big Oil: The Iraq Game Gets Even Stranger</a>,”
CounterPunch. <br>
[21] Israel Shamir, The Writings of Israel Shamir, Contributor 45<br>
[22] Stephen F. Cohen “The New American Cold War,” <i>The Nation</i> (10
July 2006); as quoted in Shamir, Ibid.<br>
[23] Shamir, Ibid.<br>
[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,” <i>Middle East Economic Survey</i> 45, no. 34 (26 August
2002), pp. D1-D5 (D section contains op eds. as opposed to staff-written
articles).<br>
[25] Ruby, “Is Oil the Driving Force to War?” pp. 16-17; see also David
Ivanovich, “Conoco’s Chief Blasts Sanctions,” <i>Houston Chronicle</i>
(12 February 1997).<br>
[27] The statement was widely reported by many news papers and other
media outlets. See, for example, <i>The Guardian</i> (4 June
2003)<br><br>
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