# The War on Iraq and the Oil Factor **URL:** \ **Category:** Great Debates\ **Created:** [January 24, 2003, 5:28pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649 "2003-01-24T17:28:42Z")\ **Posts on this page:** 16\ **Page:** 1
**Author:** ![El\_Zagna](https://avatars.discourse-cdn.com/v4/letter/e/d2c977/32.png) [@El\_Zagna](https://boards.straightdope.com/u/El_Zagna)\ **Post date:** [January 24, 2003, 5:28pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/1 "2003-01-24T17:28:42Z")
This is really a General Question, but since it’s about the pending war in Iraq, why kid ourselves? Whenever the Iraqi war is mentioned someone will say something like “Well, of course it’s all about oil.” That may be the case. I don’t know, and for the porpose of this OP I don’t care. What I _would_ like to know is exactly how fighting this war and presumably winning it will help our oil situation. Once we kick Saddam’s ass, then what? How does that translate into cheaper oil? ---
**Author:** ![El\_Zagna](https://avatars.discourse-cdn.com/v4/letter/e/d2c977/32.png) [@El\_Zagna](https://boards.straightdope.com/u/El_Zagna)\ **Post date:** [January 24, 2003, 5:33pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/2 "2003-01-24T17:33:31Z")
Great. I screwed up right at the get go. This was supposed to be posted in Great Debates. Oh, well, It’ll get moved there soon enough. ---
**Author:** ![bibliophage](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bibliophage/32/7615_2.png) [@bibliophage](https://boards.straightdope.com/u/bibliophage)\ **Post date:** [January 24, 2003, 6:24pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/3 "2003-01-24T18:24:30Z")
Off to GD. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [January 24, 2003, 6:29pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/4 "2003-01-24T18:29:21Z")
> [@](#): > > \*Originally posted by bnorton \* > \*\* Once we kick Saddam’s ass, then what? How does that translate into cheaper oil? \*\* _Not_ fighting the war could mean allowing Iraq to develop a nuclear arsenal. They could use the nuclear threat to take over Kuwait and Saudi Arabia, leading to much more expensive oil. ---
**Author:** ![Debaser](https://avatars.discourse-cdn.com/v4/letter/d/3da27b/32.png) [@Debaser](https://boards.straightdope.com/u/Debaser)\ **Post date:** [January 24, 2003, 7:26pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/5 "2003-01-24T19:26:01Z")
If we wanted oil from Saddam now, then we could buy it from him. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [January 24, 2003, 7:45pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/6 "2003-01-24T19:45:53Z")
The answer is that because of sanctions Iraq is only allowed to sell a fraction of its total capacity for oil. Once the war is over the sanctions will be over and the Iraqi oil will be back on the market, this additional oil will cause the price to go down. Also the oil markets whave been going up due to uncertainty about how the war will play out. Once the war is over and the uncertainty is over, this should cause prices to go down too. Also since whoever is in charge of Iraq will want to pump alot to get money to rebuild the country OPEC will be weakened. This should also cause at least a temporary drop in oil prices. I’m sure a member of the tin foil hat club will be along shortly to give conspiracy based answer. ---
**Author:** ![Fang](https://avatars.discourse-cdn.com/v4/letter/f/96bed5/32.png) [@Fang](https://boards.straightdope.com/u/Fang)\ **Post date:** [January 24, 2003, 7:48pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/7 "2003-01-24T19:48:27Z")
We generally don’t trade with Iraq in oil (outside of the context of the Oil-for-Food program). Increased oil trade with Iraq = greater competition/increased supply = lower prices. Furthermore, American corporations might in the future be administering Iraqi oil fields, after buying them from the new Iraqi government, leading to greater profits for those corporations. However, the price of oil won’t go down as significantly as it would in analgous situations because OPEC helps to fix the price of oil no matter what countries are in business, and in any case other countries do trade for Iraqi oil, meaning that Iraq already supplies plenty of the marketplace. ---
**Author:** ![Apos](https://avatars.discourse-cdn.com/v4/letter/a/838e76/32.png) [@Apos](https://boards.straightdope.com/u/Apos)\ **Post date:** [January 24, 2003, 7:52pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/8 "2003-01-24T19:52:46Z")
The conspiracy real theory is not so much that “we” want oil or stand to benefit any extra from it, but that several big oil-related firms (including Haliburton) stand to acquire the rights to the oil, production, refinement, transport, rebuilding Iraq’s facilities, etc. While it may or may not have a good or bad effect on oil prices, it will undoubtedly be very very profitable for these big firms (many of which are revolving doors for people in the current administration going back and forth between the private and public sectors) They’ve been in negotiation about who gets what after the war for some time now. Sort of a sub-cue issue, but it pops up every once and awhile like in William Safire’s recent Op-Ed in which he accuses France of only wanting to support the war if their oil firms can get in on the action (but of course, WE would never be so craven as to jockey for pump rights on behalf of a few huge firms…) —If we wanted oil from Saddam now, then we could buy it from him.— This is a pretty silly argument. We couldn’t buy it from him without losing huge amounts of face, not mention enriching him further, which is exactly the opposite of what we want. ---
**Author:** ![Apos](https://avatars.discourse-cdn.com/v4/letter/a/838e76/32.png) [@Apos](https://boards.straightdope.com/u/Apos)\ **Post date:** [January 24, 2003, 7:55pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/9 "2003-01-24T19:55:49Z")
— Also since whoever is in charge of Iraq will want to pump alot to get money to rebuild the country OPEC will be weakened.— You know… I never considered that. If Iraq’s oil is controlled by firms and countries not in OPEC, would it be enough to break their price-setting power? That’s another interesting win for the U.S. and the world oil market. ---
**Author:** ![El\_Zagna](https://avatars.discourse-cdn.com/v4/letter/e/d2c977/32.png) [@El\_Zagna](https://boards.straightdope.com/u/El_Zagna)\ **Post date:** [January 24, 2003, 8:43pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/10 "2003-01-24T20:43:44Z")
> [@](#): > > \*Originally posted by Apos \* > \*\*The conspiracy real theory is not so much that “we” want oil or stand to benefit any extra from it, but that several big oil-related firms (including Haliburton) stand to acquire the rights to the oil, production, refinement, transport, rebuilding Iraq’s facilities, etc. \*\* Is that the way it’ll really work, though? Do we expect Iraq’s new regime to be so appreciative to us that they send all this business our way? I hope I’m not coming across as sarcastic; I’m just trying to figure out how it would work. Are there parallels here to the previous war? Who benefited from rebuilding Kuwait’s oil fields? Did that war drop oil prices or benefit Haliburton? ---
**Author:** ![Squink](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Squink](https://boards.straightdope.com/u/Squink)\ **Post date:** [January 24, 2003, 9:59pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/11 "2003-01-24T21:59:02Z")
Just in case anyone missed it, the oil factor has been kicked around here in great debates: [Is the war on Iraq about oil?](http://boards.straightdope.com/sdmb/showthread.php?s=&threadid=155307) Looking at the GQ’ish side of things, this Russian article about the situation with Iraqi oil, may help clarify what exactly a war will do for us in the United States: [LUKoil Takes Its Oil Case to Iraq](http://www.themoscowtimes.com/stories/2003/01/15/002.html). When Saddam falls, the validity of these foreign contracts will depend to a great extent on the good-will of the american occupiers. ---
**Author:** ![Debaser](https://avatars.discourse-cdn.com/v4/letter/d/3da27b/32.png) [@Debaser](https://boards.straightdope.com/u/Debaser)\ **Post date:** [January 25, 2003, 5:36pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/12 "2003-01-25T17:36:01Z")
> [@](#): > > \*Originally posted by Apos \* > \*\*This is a pretty silly argument. We couldn’t buy it from him without losing huge amounts of face, not mention enriching him further, which is exactly the opposite of what we want. \*\* I don’t think it’s silly at all. If we wanted oil from Iraq so badly that we were willing to go to war with Iraq to get it, and that was the main motivating factor behind going to war, wouldn’t it be easier to simply buy it? I think it’s silly to claim that we are going to war over oil. ---
**Author:** ![Apos](https://avatars.discourse-cdn.com/v4/letter/a/838e76/32.png) [@Apos](https://boards.straightdope.com/u/Apos)\ **Post date:** [January 25, 2003, 7:25pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/13 "2003-01-25T19:25:33Z")
—Do we expect Iraq’s new regime to be so appreciative to us that they send all this business our way?— Iraq’s new regime will be us for at least a while… until we set up a new democracy, a la Panama. —I don’t think it’s silly at all. If we wanted oil from Iraq so badly that we were willing to go to war with Iraq to get it, and that was the main motivating factor behind going to war, wouldn’t it be easier to simply buy it?— As I said, we’d lose face (it would be humiliating). It would establish his control over us, which is not exactly the best message to give to a psychopath. And we DO want Saddam out: so we no longer have to be at his beck and call. ---
**Author:** ![kniz](https://avatars.discourse-cdn.com/v4/letter/k/c37758/32.png) [@kniz](https://boards.straightdope.com/u/kniz)\ **Post date:** [January 26, 2003, 7:05pm UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/14 "2003-01-26T19:05:14Z")
> [@](#): > > \*Originally posted by Apos \* > **—Do we expect Iraq’s new regime to be so appreciative to us that they send all this business our way?—** I don’t think “expect” is the right word, but if we (and our supporters) go in and liberate the Iragis wouldn’t it just naturally follow that they would deal with us? > [@](#): > > **Iraq’s new regime will be us for at least a while… until we set up a new democracy, a la Panama.** Hopefully we will not be stuck with this task by ourselves. This is the reason that in the end France will join the coalition. > [@](#): > > **—I don’t think it’s silly at all. If we wanted oil from Iraq so badly that we were willing to go to war with Iraq to get it, and that was the main motivating factor behind going to war, wouldn’t it be easier to simply buy it?—** > [@](#): > > **As I said, we’d lose face (it would be humiliating). It would establish his control over us, which is not exactly the best message to give to a psychopath.** IIRC the oil from Iraq goes to other parts of the world and not to us. This is still important to us since it still counts in the overall amount of oil available worldwide. Let’s pretend that we end up with a sweetheart deal and control Iraq’s oil. It may still be that none is shipped to us, but if other parts of the world are getting more from Iraq, it will increase the oil supply available to us from other sources. Presently, France and Russia have deals with Iraq. France knows that if there is a war she will lose the great advantages she has, so if the war can be avoided that’s great for France. However, if we go to war and France isn’t in the coalition then she will be left out completely and that is the **worst case scenario**. Russia on the other hand is owed $7,000,000,000 and so to get them on the team will cost someone (you get 3 guesses to name who that will be). 😃 ---
**Author:** ![mack](https://avatars.discourse-cdn.com/v4/letter/m/b19c9b/32.png) [@mack](https://boards.straightdope.com/u/mack)\ **Post date:** [January 27, 2003, 3:21am UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/15 "2003-01-27T03:21:46Z")
> [@](#): > > \*Originally posted by Debaser \* > \*\*If we wanted oil from Saddam now, then we could buy it from him. \*\* We already do. > [@](#): > > The remaining 70% of Iraq’s oil is first purchased by companies from many countries, including Cyprus, Sudan, Pakistan, China, Vietnam, Egypt, Italy, Ukraine, and others. Iraqi oil is normally then resold to a variety of oil companies and middlemen before being purchased by end users. During 2001, for instance, nearly 80% of Basra Light liftings, and over 30% of Kirkuk oil, went to the United States, with large importers including ExxonMobil, Chevron, Citgo, BP, Marathon, Coastal, Valero, Koch, and Premcor.\*\* During the first seven months of 2002, the United States imported an average of 566,000 bbl/d from Iraq.\*\* [http://www.eia.doe.gov/emeu/cabs/iraq.html](http://www.eia.doe.gov/emeu/cabs/iraq.html) ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [January 27, 2003, 6:21am UTC](https://boards.straightdope.com/t/the-war-on-iraq-and-the-oil-factor/150649/16 "2003-01-27T06:21:46Z")
_Once we kick Saddam’s ass, then what? How does that translate into cheaper oil?_ Short answer: it doesn’t.\* The Economist magazine reported on a Council of Foreign Relations study in their Jan. 23 issue. > [@](#): > > One report, by the Council on Foreign Relations (CFR) and the James Baker Institute of Rice University, argues that Iraq’s oil is not the prize it seems from afar. Iraq has vast reserves, but its infrastructure is, in the words of Dutch experts who inspected it a few years ago, in “lamentable” condition. A decade of sanctions and under-investment have cut Iraq’s output and done permanent damage. > > In the short run, a war would further disrupt Iraqi production (especially if Saddam Hussein were to destroy oil wells): the result would be greater market power for OPEC and maybe $40-per-barrel crude, says Phil Verleger, an energy economist affiliated to the CFR. After that, even assuming that rebuilding the oil sector were a top priority for a new government, and oil revenues were immediately redirected for that purpose, the CFR-Baker study reckons that it would still take nearly a decade and up to $40 billion to revive Iraq’s oil sector. That could lift Iraqi output to 4.2m-6m barrels per day, up from around 2.5m bpd today. However, it would still fall far short of Saudi Arabia’s whopping output of over 8m bpd today. That is why no truly independent Iraqi government would ever leave OPEC to go for volume instead: the Saudis have so much more oil than anyone that they will always win a price war. Even that scenario is optimistic, since the Iraqis are likely to devote the bulk of their resources to basic infrastructure, rather than development of their oil fields. \*Of course, anything that results in greater oil supply will tend to drive down prices. The preceding merely indicates that the effect will be neither immediate nor overwhelming.