Another hippie claims the war in Iraq is about oil

[JUST NOTED a similar headline at Pundit Nation. I swear I didn't lift it.]

Alan Greenspan writes in his soon-to-be-published memoir, The Age of Turbulence: Adventures in a New World.

I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil.

Frantic back-pedaling on The Today Show as Greenspan claimed left wing pundits were seizing on his comment to reinforce their claim that Bush lied:

"It's utterly unfair," Greenspan responded. "I was expressing my view. Saddam Hussein was obviously seeking to get a choke hold on the Straits of Hormuz, where about 18 million barrels a day flow from the Middle East to the industrial world. Had he been able to get hold of a nuclear weapon and indeed move through Kuwait and into Saudi Arabia and control the Straits of Hormuz, it would have caused chaos in the international --"

[Matt] Lauer interjected, "So are we talking about semantics here, Alan? In other words, the administration went to war saying it was all about weapons of mass destruction."

"I believe that they believed that," Greenspan said. "I'm not saying that they believed it was about oil. I'm saying it is about oil and that I believe it was necessary to get Saddam out of there."

Odd.

I like how Matt Lauer calls the former Chairman of the US Federal Reserve "Alan." See, they're all pals. Heck, Greenspan married into the media (his wife is Andrea Mitchell of NBC News).

Then...

"Back to the subject of oil, you say if the war in Iraq was all about oil, some people say, 'Then why are we facing $80 a gallon right now -- a barrel right now?'" NBC's Lauer asked Greenspan. "You make the point that if we hadn't gone to war, we might be facing $130, $140 a barrel. Correct?"

"Correct," Greenspan agreed.

Lauer continued, "And you think that would have been a real possibility."

"Absolutely," Greenspan said. "The way I read Saddam, that's where he was going."

Maybe. But consider this:

The major oil companies (let's go ahead and call them "Big Oil") have everything to gain and nothing to lose with higher per-barrel oil prices, see?

Meanwhile, Neo-cons had their eyes on Saddam before 9/11. In April 2001, Dick Cheney commissioned an "energy security" report that concluded:

Saddam Hussein has ... demonstrated a willingness to threaten to use the oil weapon and to use his own export program to manipulate oil markets. Therefore the US should conduct an immediate policy review toward Iraq including military, energy, economic and political/diplomatic assessments.

But, the concern was just as much centered on the conjecture that Iraq might break ranks with OPEC and exceed its production quotas; prices go down, profits go down, etc. On the other hand, Saddam could make prices go up in the U.S. if he, say, cut production in half, right? Problem is, he would be enriching his Saudi rivals as they raise per-barrel prices due to "scarcity." This "up-down-up-down" potential is not good for business if you're Big Oil; you crave predictability.

But not "lower price" predictability. If Saddam went off his nut somewhere down the line, as described in Greenspan's Straits of Hormuz scenario, he could very well bust OPEC or create a situation where OPEC is significantly weakened (via "rescue") by the timely intervention by a U.S.-led coalition. This would assume, of course, that we had no non-invasion means whatsoever of keeping Saddam "on his nut," so to speak. But a U.S. threat to a saber-rattling Saddam made in exchange for OPEC price concessions would also keep oil prices low.

Not good for Big Oil.

Big Oil is OPEC-friendly: OPEC-enforced price fixing and quotas maintain high oil prices - - more money in Big Oil's pockets, as they get a piece of those increases (oh yes they do!). If some knucklehead like Hussein or Venezuela's  Chavez decides to exceed it's OPEC-mandated quota and flood the market with their country's actual pumping capacity, Big Oil sees its profits go down. If OPEC is somehow busted or significantly weakened - - forget it. Chavez and Venezuela reap sufficient benefits from OPEC quotas, however, that he is unlikely to open the floodgates.

So, the theory posits, Saddam had to go. Soon. Pretty close to Greenspan's take, but indicting Big Oil.

How is this relevant to the topic of sprawl and community planning? Every time we weaken mass transit and enforce decisions that cause more dependence on vehicles, for example, we strengthen Big Oil's hold on our economy and foreign policy. Thus, Big Oil is eager to fund spurious studies and articles that attempt to smear mass transit, global warming's effects, etc. They love cities like Franklin, where lack of connectivity and even sidewalks means a vehicle is needed for virtually any trip beyond your back yard. Burn gas, buy more.
 

Back to our tale:

The OPEC-strengthening war has been very good to Big Oil. From Greg Palast's Armed Madhouse (the book being clutched, unfortunately, by the tasered guy in Florida):

In 2005, Iraq exported only 1.4 million barrels a day, less than under Saddam, less than half its old OPEC quota, less than a fourth of its ultimate capacity and light-years from [Paul] Wolfowitz's promise.

"Less than half its old OPEC quota." Saddam delivered on a perceived threat while in a cell awaiting execution, invasion or not.

The promise? Wolfowitz told Congress on March 27, 2003 - - while explaining that "C'mon, you wussies, the war will virtually pay for itself!" - -

The oil revenues of that country [Iraq] could bring between $50 and $100 billion over the next two or three years.

Oops. Didn't happen. Those oil revenues relied on privatization of Iraq's oil wells - - a no-no to OPEC and Big Oil (more oil; prices go down). Might even bust OPEC. The Neo-cons ran counter to Big Oil on this one - guess who won?

Big Oil is a pal of OPEC, and Big Oil has a very, very good friend in the Oval Office. The former CEO of Shell Oil USA, Philip Carroll, went to Iraq under government guard and ordered Paul Bremer to abandon all talk of privatizing Iraq's oil production. (Carroll was also former CEO of the third biggest contractor in Iraq - after Bechtel and Halliburton - Fluor Corporation.) How do we know this? Carroll told Greg Palast right to his face. Was he lying? You decide, I guess ...

Needless to say, there was no privatization of Iraq's oil wells despite early plans to do so. OPEC is pleased; Big Oil is pleased. $3 a gallon.

Is the war about oil? If it is, consider the possibility that it's not about getting the oil, but controlling the oil's price. Upward.

 

Comments

[Greg Kowalski]

Could you have got a bigger picture of Mr. Greenspan!? He takes up the majority of my screen! :)