Sunday, January 05, 2003

Most Canadians (all my relatives) think that the US plans for Iraq are all about securing oil supply (ref: "Outside Exxon and other oil company offices in St. John’s, protesters performed a "die-in" to highlight the connection between war and oil "). I guess the Canadian National Post likes to be contrarian. In this article debunking the "no war for oil" and no blood for oil catchphrases, there's the standard stuff about how the US already trades food for Iraq oil, and wouldn't stand to gain much directly from an Iraq freed from sanctions because Russia, France and China are much more heavily invested in Iraq oil fields. In addition, there's an interesting point about the essential inconsistency of the oil --> war position:
What makes the "no war for oil" school of thought so weird is that many of its adherents are also advancing the theory that war would be too expensive. The White House estimates the direct costs of a conflict in Iraq would be about $80-billion. But according to Yale economics professor William D. Nordhaus, the real price tage would be as much as $2.5-trillion once the cost of nation-building is imputed. Would the United States get a good return on this 13-digit "investment"? Let's assume Iraq's liberation leads to a long-term oil supply expansion on the scale outlined above, and that the price of crude falls by, say, 10%, as a result. Given the value of U.S. oil imports, that would translate to just $22-billion in annual savings. No profit-seeking CEO would accept this miserly rate of return for such a controversial enterprise.
I'm always dubious when I see arguments against a course of action that are inconsistent with each other. If it's the course of action itself, war, that is so objectionable, go ahead, oppose the war. But a bunch of motivation and cost arguments against the war that are inconsistent with each other weaken the basic position to me. I guess most people don't compare arguments to that extent -- they just see a long list of arguments arrayed against something and are overwhelmed by sheer numbers.
Here are some of the cost-based anti-war arguments, together with their top price: Now the articles on how the war is all about securing oil supply:Now that I've reviewed some of these more carefully than before, I'm really struck by how the oil arguments can go either way. For example, one of the MSNBC articles argues that the US should want to avoid war with Iraq, to avoid a spike in oil prices to $40-$60 per barrel. That would hurt already weakened airlines and could even "push the country into recession". Even the Guardian reports that "A prolonged disruption of world oil markets could cost the U.S. economy up to $778 billion, the researchers estimated. On the other hand, Iraq's huge oil resources could satisfy U.S. needs for imported oil at current levels for almost a century and otherwise benefit the economy by $40 billion. "A ZNet article: "Ironically, while the US and western countries would like to see lower oil prices, on the flip side of the coin higher oil prices mean more income for US oil companies and boosted investment returns for oil-related mutual funds.

So, oil is a consideration for many world players (like France and Russia who are on the security council, and have planned deals in Iraq on hold due to sanctions), but there's no doubt that for the US at least, it's not a simplistic cowboy equation of "let's go in there and get that durned oil". Even Krugman, normally bitterly anti-Bush, and my favourite left-coast liberal weekly alternative news mag The Stranger, recognize that it's not that simple.

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