It�s bound to be a coincidence, but a strange little editorial in the Australian yesterday attacked my argument in Sunday�s Sun Herald that Iraq was an oil war: Oils ain’t just oils, they’re to die for.
“Oil is a crude theory for invasion of Iraq”, the Australian�s headline declared:
The great value of conspiracy theories is that they are immune to evidence. The key argument of the Left about the invasion of Iraq – it was �all about oil� � is essentially a conspiracy theory, tied up with the oil links of the Bush family along with those of Vice-President Dick Cheney. This argument has never had any purchase on the facts. If the principle concern of the US in Iraq was oil, easily the best policy would have been to keep Saddam Hussein in power, and buy him off.
… But there is something that makes renewed cries of �It�s all about oil� sound even stranger � and, well, it�s all about oil. The price of a barrel of crude crashed through the $US40 ($57) last week for the first time in more than a decade. There are many factors behind the rise, including strong demand in China and the US, and of course the fact the OPEC cartel still controls two-thirds of known reserves. But there is also the invasion of Iraq. If US policy was �all about oil�, then helping drive up the price by a destabilising Middle East war was a strange way of pursuing it. Thanks to the US and its allies, Iraq will once again have a thriving oil industry, at which point it will almost certainly join OPEC. Our actions will end the pain for Iraqis � but not our own pain at the pumps.
What sort of �argument� is happening here, and just who has no �purchase on the facts�?
1. The US did buy Saddam off, kept him in power and financed his war on Iran after its puppet there, the Shah of Iran, was destroyed by revolution. Things went wrong when Saddam invaded Kuwait, and ever since he�s been persona non grata in Washington.
2. We now know courtesy of Bob Woodward, Richard Clarke and others that Bush ordered a war plan to invade Iraq almost as soon as he took office, and that months before S11, Colin Powell announced that Saddam was effectively contained. We also know that from the day after S11, Bush�s people discussed invading Iraq, despite no evidence that it had any connection to S11, and despite advice that war on Iraq would divert America from the war on terrorism.
3. The editorial avoids addressing the respectable argument that the world is running out of oil!
4. Former lieutenant-colonel in the U.S. Air Force Karen Kwiatkowski, who worked near the Bush people�s special plans unit to tart up intelligence on Iraq�s WMDs, said of the real reasons for war:
The neoconservatives pride themselves on having a global vision, a long-term strategic perspective. And there were three reasons why they felt the U.S. needed to topple Saddam, put in a friendly government and occupy Iraq. One of those reasons is that sanctions and containment were working and everybody pretty much knew it. Many companies around the world were preparing to do business with Iraq in anticipation of a lifting of sanctions. But the U.S. and the U.K. had been bombing northern and southern Iraq since 1991. So it was very unlikely that we would be in any kind of position to gain significant contracts in any post-sanctions Iraq. And those sanctions were going to be lifted soon, Saddam would still be in place, and we would get no financial benefit.
The second reason has to do with our military-basing posture in the region. We had been very dissatisfied with our relations with Saudi Arabia, particularly the restrictions on our basing. And also there was dissatisfaction from the people of Saudi Arabia. So we were looking for alternate strategic locations beyond Kuwait, beyond Qatar, to secure something we had been searching for since the days of Carter � to secure the energy lines of communication in the region. Bases in Iraq, then, were very important � that is, if you hold that is America�s role in the world. Saddam Hussein was not about to invite us in.
The last reason is the conversion, the switch Saddam Hussein made in the Food for Oil program, from the dollar to the euro. He did this, by the way, long before 9/11, in November 2000 � selling his oil for euros. The oil sales permitted in that program aren�t very much. But when the sanctions would be lifted, the sales from the country with the second largest oil reserves on the planet would have been moving to the euro.
The U.S. dollar is in a sensitive period because we are a debtor nation now. Our currency is still popular, but it�s not backed up like it used to be. If oil, a very solid commodity, is traded on the euro, that could cause massive, almost glacial, shifts in confidence in trading on the dollar. So one of the first executive orders that Bush signed in May  switched trading on Iraq�s oil back to the dollar. (Soldier for the Truth: Exposing Bush�s talking-points war)
5. Yes, the US policy was flawed – remember, the neo-cons thought they’d go in, beat Saddam, and be out in a year with the booty. Has the Aus. forgotten its own propaganda?
6. And has it forgotten the words of its owner Rupert Murdoch, who pronounced before the war:
The greatest thing to come out of this for the world economy, if you could put it that way, would be $20 a barrel for oil. That’s bigger than any tax cut in any country.
Who knows what the future holds? I have a pretty optimistic medium and long-term view but things are going to be pretty sticky until we get Iraq behind us. But once it’s behind us, the whole world will benefit from cheaper oil which will be a bigger stimulus than anything else.
(Bush) will either go down in history as a very great president or he’ll crash and burn. I’m optimistic it will be the former by a ratio of two to one. (Murdoch: Cheap oil the prize)
What is the Aus. doing here? Afraid the truth will finally burst through the propaganda? Trying to preempt Mike Moore’s movie? Whatever it’s doing, it’s deliberately avoided “any purchase on the facts”.
Before more from you on oil, for those of you following the Media Matters challenge of The Bushies’ favourite shock jock Rush “they’re just letting off steam” Limbaugh, see Media Matters. The network which runs his show won’t run the ads! How long before this happens in Australia? Antony Loewenstein recommends Get Me Rewrite! Stories make the world go around. So how come liberals can�t tell one?. Greg O�Connor in Yeronga, Queensland recommends an interview with an American soldier who invaded Iraq and left with bitterness, at Atrocities in Iraq: �I killed innocent people for our government�.
Matt Marshall: Check out this website.
Brendan Mooney: I have been following the global Peak oil issue, Oil economics and the Iraq war quite closely and read this essay some time ago. Have a read, it’s quite interesting: Revisited – The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth
Colin Campbell and Kjell Alecklett at ASPO have updated the Peak Oil model, and have now predicted that world Peak Oil will occur in 2008 (not 2010) � see peak oil and its latest newsletter. This model was generated in response to the fact that the Middle East (specifically Saudi Arabia) no longer has sufficient spare capacity to discharge a swing role (over oil prices).
The steepest section of the downward curve, between now and 2020, indicates the critical timeline for any development of alternative energy sources. 12 years is not a long time, and the price of oil will climb steeply during this time. Even more importantly, oil will be needed to R&D other energy sources.
The best introduction to Peak Oil that I have seen is a RealVideo presentation from Dr. Colin Campbell, Founder of the Association for the Study of Peak Oil: A turning point for mankind. If you have broadband, please check it out. It was recorded in Germany in 2000.
There’s nothing like a long term problem to make people’s eyes glaze over.
In theory everyone wants to help curb global warming and pollution. But only if they don’t have to lower their perceived standard of living. At a time when the price of petrol is starting to edge it’s way up to a more realistic price, 6 of the top 10 best selling cars in Australia come with an engine choice of 3 litre V6 or 5 litre V8. At the same time the government is subsidising the purchase of not particularly eco friendly four wheel drive vehicles to the tune of $500 million per year, where the only time the vast majority of the 4WDs go off road is when they drive up the kerb. John Winston must be sweating in his size 7’s, knowing how sensitive those “battlers” in their V8 utes and Pajeros are to petrol prices.
This is just one aspect of oil use – the increasing prevalence of plastic based disposable lifestyles is also a major contributor. But the scale of the addiction is highlighted by the article in the SMH today, where commuters point out they would rather spend 2 hours per day in their car than catch public transport, unless it happened to pick them up at the end of the street, drop them off at the door of their workplace, take half the time of travelling in the car and of course be a reasonable cost. It isn’t just George and Dick who are addicted to oil.
Darrell Stone in Belmont, NSW
I always enjoy reading your Sunday column, but yesterday�s was long overdue.
For some time now, the concerns on the decline of the oil age have failed to reach the mainstream news media. It was pleasing to see chinks in the armour that have limited this discussion. It, and global warming, pose the greatest threat to our future, not terrorism. Our government MPs are too worried about their pension cheques to look at what needs to be done to prepare our society for a future with personal transport only for the wealthy and expensive food for everyone because of the loss of cheap oil.
On alternative energy, the NSW government is playing around with toy power stations to allow for peaks when we turn our air conditioners on. The federal government is going to subsidise oil search programs to the tune of $1.50 for each $1 spent.
If we were to use all of the wheat that Oz produces to make biofuel, it would only satisfy 9% of our demand � and leave us without any bread!
Michael Ekin Smyth
�Peak oil� is like reds-under-the-bed, or �Bolshevik hordes� or any of the many other spectres of doom and destruction that have been trotted out by various demagogues over the years. Like all of them it is based on an element of truth taken out of context and spun to meet other political needs and aims.
Certainly many agree that production from conventional oil sources will peak sometime in the relatively near future – in this decade or perhaps in the next few decades. But, so what?
The �real� price of energy – the percentage of overall global income needed to pay for it – has declined for centuries and is highly likely to continue to do so. Even if the rate of decline of energy cost flattened, or even reversed, markets could quickly adapt.
In 1980 the energy industry made up � ball park � nearly 10 per cent of gross world product. Today it constitutes somewhere between three and four per cent. If oil prices soared by a factor of say 4 � to about 160 dollars a barrel � that would only take us back to 1980 in real terms.
Once oil prices rise above 30 dollars � average over a whole 12 months of trading � the incentives for substitution begin to click in � big time.
Non-conventional oil sources � heavy crudes, oil slates etc � are currently producible at between 14 and 25 dollars a barrel. However given the front loaded investment cycle � it costs a lot to start up these projects � investors are not keen until there is a track record of between 12 and 24 months of consistently �high� prices. That has not, as yet, occurred. If and when it does, large numbers of projects based on non-conventional sources ill start to come on stream.
Other forms of hydrocarbon energy � gas, coal also begin to compete more effectively when prices are consistently above 20 dollars a barrel � in all areas except, of course, the transport market.
In addition, the incentives for alternatives � such as hydro, solar, nuclear and � crucially biofuels – grow exponentially. Biotech is likely to prove to be a crucial factor in the generation of new fuel �resources� within just a few decades. All of that, along with continued improvements in energy efficiency and the introduction of new technologies such as fuel cells, means that even if conventional oil �peaks� the long-term implications for the world economy are limited.
Within the oil market itself the competition from other fuels is just as important an influence on price as the overall supply. So, OPEC continues to be caught in its historic cleft stick. They can drive up prices in the short and medium term � but if those prices stay �high� (currently above say 30 dollars a barrel) � the incentives for competitors become too significant. Then competing conventional sources, unconventional sources and alternatives click in. The result? A price crash � very similar to the one we saw in 1986.
It is certainly true that we will continue to see changes in the energy industry – as we have seen continuously over the last few centuries. The dominance of oil is already over � after all, it makes up less than half the energy market � and it will likely continue to decline over coming decades. It will continue to be a very important isues, worth hundreds of billions each year, but in a global economy near 27 trillion, it has to be seen in context.
> As the basis for a doomster, �end of the world as we know it� movement it doesn�t wash. Nor does it wash as the key to any paranoid anti-democratic, anti-free market and anti-American conspiracy theories.