Economic Costs of US Conquering Mideast Oil Outweigh Direct Economic Benefits of Such
But looking at the costs the US government has and will incur acquiring a grip on Iraqi oil in behalf of the US oil companies, it is apparent that the US government cost of giving US private sector elements ownership over Iraqi oil, will far outweigh increased profits for US oil companies resulting from the new US private sector ownership of Iraqi oil.
The five trillion dollars (at current prices) of Iraqi oil reserves sound like a glittering prize, but those 5 trillion in reserves (reserves tend to be overestimated) translate into only 67 billion dollars a year in oil revenues if Iraq recovers from its current production rate of 1.7 million barrels per day to produce at its historic peak level of 3.7 million barrels a day.
Even if you assume that every penny of the 67 billion per year in Iraqi oil revenues winds up as profit for the US oil companies--this ignores profits going to Iraq and costs of production--the 67 billion per year does not outweigh the 145 billion per year cost of occupation (not counting medical bills for wounded GIs) combined with the 463 billion the US has already spent on Iraq.
If you make the insanely "optimistic" assumption that in 2007 the US oil interests will get 67 billion in profit out of Iraq, this is balanced by the 608 billion the US will have spent on Iraq by the end of 2007. 608 minus 67 equals a loss of 541 billion. If the US over the next ten years continues to spend 145 billion a year attempting to occupy Iraq while it manages the impossible feat of bringing in 67 billion of Iraq's oil revenue as profit for the US private sector, the result would be an annual US loss of 78 billion per year leading to a situation ten years from now in 2017, if present trends continue, featuring the US having spent 2058 billion in Iraq while having taken out 737 billion in oil profits for a net US loss of 1321 billion over the ten years. This compares to the 670 billion Iraq would take in over the next 10 years for itself, if it had never been invaded, given the improbable assumptions that it produces at its historic peak level every year for 10 years with every penny of revenue magically turning into profits.
The retort might be, the (actually much greater than) 1321 billion US loss is worth it, because the alternative of Iraq having its oil revenues at its own disposal is so terrible. Oh yea? A cheap bombing campaign costing a tiny fraction of 1321 billion could knock out Iraq's oil production capability.
Beyond Iraq, elements in the US dream of seizing the glittering prize that is the six trillion dollars in oil reserves supposedly in Iran, again fail to take into account that if miraculously every penny of Iran's oil revenues wound up as profits for US private sector oil interests, this would be outweighed by the costs of establishing US control of Iranian oil. Iraq's population is 27 million; Iran's is 69 million, 2.6 times greater than Iraq. One could roughly speaking expect that an occupation of Iran would cost 2.6 times the 145 billion per year the occupation of Iraq is costing, which far exceeds the 67 billion a year the US would obtain if miraculously every cent of Iranian oil revenues ended up in Us private sector hands in the form of profits, as Iran continued to produce oil at its current rate.
All this is in the context that with every passing year the world grows more and more capable of replacing oil with alternative fuels. The possibility exists that some time in the next ten years scientists will discover new sources of energy that render mideast oil obsolete, resulting in a cost-benefit that would be even worse.
Thus since the economic costs of the US taking over ownership of Iraqi/Iranian oil outweigh the direct economic benefits of the US attaining to such ownership, the conquering-oil-for-national-security's-sake camp to win its argument, needs to prove that alternatives the US could spend on using the money it loses attempting to conquer middle-eastern oil are inferior to the benefits of--taking into account the probability of success--forcing oil producers to accept only dollars for oil, and/or obtaining leverage over oil-importing nations by way of controlling their sources of oil. This the controlling-oil-makes-the-US-safe crowd has not done; and the fact they have failed to provide such proof, gives credence to the suspicion, that the petro-military-industrial-etcetera complex in the US, is plunging the US into oil wars that enrich the petro-military-industrial-etcetera complex via legislation and the transfer of US and foreign resources to the petro-military-industrial complex, while at the same time said oil wars reduce the wealth and income and power of the US as a whole.
Which leads to the question, what does this kind of weakening of the US and foreign nations combined with the strengthening of the US petro-military-industrial-etcetera complex portend for the US and the world? If the US petro-military-industrial-etcetera complex through overwhelming financial advantage gained through oil wars becomes dictator over the US people, what kind of world can the US expect to live in?
@2007 David Virgil Hobbs
Notes:
Even so, it (oil) is the overwhelming source of revenue in Iraq and is expected to bring in $31 billion this year, based on projected exports of 1.7 million barrels a day at a price of $50 a barrel.
-- http://www.latimes.com/news/printedition/asection/la-fg-iraqoil27feb27,1,1499618.story?coll=la-news-a_section
Iraqi oil production peaked at around 3.7 million barrels a day in 1979, as Saddam Hussein was coming to power, according to the US Department of Energy
-- http://www.iht.com/articles/2007/02/19/news/oil.php
This month the new Iraqi hydrocarbon law goes into effect whereby the “international companies” such as Exxon Mobil, Chevron, Conoco-Phillips and Royal Dutch Shell, under Production Sharing Agreements (PSAs), receive up to 75 percent of Iraq’s oil profits indefinitely until the companies decide they’ve been paid enough reimbursement for any initial rebuilding investments. After that, they will receive an unheard-of in the Middle East 20 percent of profits, twice the industry standard. Mission accomplished.
http://rawstory.com/news/afp/US_military_chief_categorically_den_02272007.html
Operations costs in Iraq are estimated at $5.6 billion per month in 2005
-- http://www.ips-dc.org/iraq/quagmire
If Congress votes to appropriate another $160 billion for Iraq in the spring, we'll essentially have given George W. Bush the money he needs to carry the war through the end of his term. That would bring the total war cost, in 2007, to $230 billion
-- http://www.alternet.org/waroniraq/48535/
The cost of the Iraq war (as of feb 2007) is more than $660 billion and growing.
-- http://www.burlingtonfreepress.com/apps/pbcs.dll/article?AID=/20070228/OPINION/702280324/1006
Our minds boggled last week at U.S. government estimates that President George W. Bush’s so-called “war on terror” (including Afghanistan and Iraq) will cost at least $690 billion US by next year.
-- http://torsun.canoe.ca/News/Columnists/Margolis_Eric/2007/02/11/3586742.html
Four years on, the occupation of our Iraqi colony continues to claim a hundred souls a day at a cost of two billion dollars a week.
-- http://www.middle-east-online.com/english/?id=19718
Together with $70 billion bridge funding contained in the defense appropriations bill Congress passed last fall, the war in Iraq will consume roughly $145 billion in FY2007 beyond what would normally be spent on day-to-day military operations. The actual cost of the Iraq war is much higher when considering both direct and indirect costs. Operations in Afghanistan will cost roughly $25 billion.
-- http://www.americanprogress.org/issues/2007/02/lost_opportunities.html
We are now spending $8 billion each month on the occupation of Iraq
-- http://www.thepeoplesvoice.org/cgi-bin/blogs/voices.php/2007/02/14/waging_peace_part
The reality is that Tehran is pushing for nuclear power because, if present trends continue, it will have no oil left for export by 2015. Iran's oil production is in a long-term decline; thirty years ago, Iran produced double the 3.7 million barrels of oil per day it produces today. Even this amount is 300,000 barrels short of the quota set for Iran by the Organization of Petroleum Exporting Countries -- a $5.5 billion a year loss of income for the government. Oil production is projected to fall about ten percent every year if present trends continue while oil consumption will only grow.18 As Mohammed Hadi Nejad-Hosseinian, deputy oil minister for international affairs, admitted: "If the government does not control the consumption of oil products in Iran. . . and at the same time, if the projects for increasing the capacity of the oil and protection of the oil wells will not happen, within 10 years, there will not be any oil for export."19
-- http://mrzine.monthlyreview.org/pham260207.html