War Makes Gas Cost More

[norml]

War takes oil off the market, driving prices up, especially when the war is where the oil is. Only those companies that get the contracts, the oil industry, and those invested in oil win, as far as oil is concerned. The "No War For Oil" slogan, or the "No Blood For Oil" slogan feed into the false propaganda that this war gets us oil in any way.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=104&topic_id=3435560

[TheFarseer]

1. I don't know if the war is getting us any oil

but I do know that we are wasting lots of oil in all the military vehicles it takes to keep the war going.

Oh not to mention NASCAR wasting our oil, but I didn't say that. Wouldn't want to piss off the "NASCAR Dads"

[punpirate]

2. Maybe...

... but how does that jive with the fact that current production is currently running about 4% above current demand?

To a considerable extent, crude oil prices are going up because of speculation--driven to noticeable degree by the operators of hedge funds. Gasoline prices are artificially high because of both speculation on crude and lack of refinery capacity in the US--which is another kind of manipulation, since oil companies have been taking refineries off-line until refinery capacity utilization has reached between 98% and 99%.

Right now, Iraqi production is running about 1.6 million barrels per day, and before the invasion, it was about 2.0 million barrels per day. We're suffering from the previous shortfalls, but that's because the Bush administration has taken crude from deliveries to keep the strategic reserves topped up, rather than using those reserves to stabilize price and supply.

Perhaps you're making the point that the oil market is being manipulated, and I would agree it is, but war is not the reason for it, but rather the excuse. A case in point: Iraq's oil production was greatly reduced for the better part of a decade during its war with Iran. Hussein made arrangements with both Saudi Arabia and Kuwait for those countries to increase production and the proceeds to go to Iraq in the form of loans (one of the reasons for Iraq's invasion of Kuwait--Kuwait was demanding immediate repayment of those loans at the conclusion of the war). Despite this chronic shortfall from Iraq due to war, oil prices were well-stabilized through most of that time--in fact, starting in 1981, there was a world-wide glut that drove prices down.

Now, five years from now, when demand really starts to accelerate and production has peaked, the reasons for sharp increases in price will be more related to traditional supply and demand.

Cheers.

[norml]

3. Right before the war Iraqi oil production was way down.

If you look at the production figures for the late 90s under the Oil for Food program, and then add in all that was being smuggled out of the country, you'll see that Iraq had been adding to the world oil glut.

[punpirate]

4. I'm not sure what import that has...

... with what's happening four or five years later--the oil market is a lot more fungible than to have five-year effects.

The glut I spoke of was during the `80s, in the midst of the Iran-Iraq war.

On edit, on thinking about it, I think I see what you mean. I would say that those amounts siphoned off may be a bit difficult to establish, and even if it were a million barrels a day, that's a little more than 1% of world production--not enough to create a glut all by its lonesome. This suggests that Iraq oil production has never exceeded 3.7 million barrels, so the amount possible toward the end of the `90s would likely be less, if only because its oilfield equipment was falling apart due to the Iran-Iraq war and sanctions:



Cheers.

[norml]

5. I know you were talking about the oil glut of the 80s.

I was talking about the oil Iraq was producing in the 90s, which was much more than it was producing at the start of this war.

You seem to know a lot about this subject, and I respect your opinion.

The first thing that was done after the invasion was to get Iraq back into OPEC, so no matter what production would've been restricted.

I see the world's second largest reserve of oil being taken off the market by this war, more so than it was by the Iran/Iraq War.

I think current production figures are bogus.

I've heard they're just pumping the oil from one part of the country and putting it back in the ground in another.

I think if Iran (with the world's fourth largest reserve of oil) is sanctioned, invaded, and occupied, prices would go even higher.

[punpirate]

6. See my edited...

... update. Might explain my thinking.

Don't know about moving oil from one place to the other, but what has been verified--by the UN and the Iraqis--is that for the better part of a year after the invasion, oil was going out of Iraq without being metered.

I think it's important to consider this--and Venezuela is a possible example--that wars (proxy, overt or covert) fought by the United States in oil-producing areas are not to secure access to oil. They're to ensure cheap access for US multinationals and to ensure that those countries are financially dependent upon the US.

The attempted coup against Venezuela came about, almost certainly, because Chavez raised the royalty for extracted oil. Chevron and others still have access to the oil, but with their wholesale price tied to the futures market (with spot prices being variable), that means their profits are decreased if royalties go up.

One of the prevailing theories about the final decision to invade Iraq is also about currency--Iraq had converted to the Euro for oil transactions in 1998, and the very first thing that Bremer did was put Iraq oil back on the dollar standard--even though that decreased the Iraq reconstruction kitty by about 13%, when and if they could get that oil to market. That's another part of the scheme--dependency on the dollar.

Cheers.