The link to the Washington Post story.
This seems like a very questionable move by the US, what does the SDMB think? Is this really the best for Iraq?
The link to the Washington Post story.
This seems like a very questionable move by the US, what does the SDMB think? Is this really the best for Iraq?
How would he know? The Iraqis haven’t even decided what kind of independent government they are going to use their new-found freedom to elect yet, don’t see how American officials can second guess the decisions that that government will take.
>> Is this really the best for Iraq?
No, but it is best for the USA who will pull the strings of the puppet government. I donot think anyone believes the Iraqis will be truly free. They will be “free” to go along with the USA. That was the objective of the war: Military bases and cheap oil.
I agree with sailor, “military bases and cheap oil”. This will do nothing to ease the concerns of other Middle Eastern countries, quite the opposite probably.
V
It is necessarily nefarious. I detect, though I certainly cannot cite and prove, a certain naivete on the part of our leaders. They seem to believe that, given a choice, all people would be very much like us. Would that it were so.
I recall reading lately that we have discovered, to our collective dismay, that Iraqs oil resources fall short in terms of available money. I expect we will find ourselves passing the hat amongst the “coalition”, and, when that fails, as it must, coming up with excellent reasons for UN contributions. If they tell us to take a flying fuck at a rolling doughnut, as they have every right to do, this is going to be a very, very expensive excercise in nation building. Luckily, this can all be fixed with a very big tax cut.
Damn. Meant to say “not necessarily nefarious.”
Someone should really tell these people that giant conflicts of interest are not regarded as a good thing. I look at this as kind of a union-busting thing. If there’s so much oil in Iraq, and we either run the government or install a friendly one (though this has just been postponed indefinitely), OPEC loses a major market.
Everything sailor said and more.
Anyone who thinks the Iraq war was about liberation, or WMDs, or Saddam Hussein, or hold out hope that the people of Iraq will be free to determine their own fates, is deluding themselves at this point.
I tend to think so, even though it look suspicious.
Iraq needs billions in reconstruction aid, and it has $400 billion in external debt. If Iraq could produce 5 million barrels a day but can’t produce more than 2 million barrels a day under OPEC their profits would be cut drastically. Oil costs $1 a barrel to make in Iraq, and sells for $29. That would mean Iraq should lose out on (if, for example, they could produce 5 but were only allowed to produce 2) $84 million a day, $30 billion a year in revenues.
The world oil market is about 60 million barrels a day. If 2-3 mil barrels of excess oil helps rebuild the iraqi economy while simultaneously building the US economy i am all for it. Pragmatism at its best.
Why not just try to get OPEC to lower its quotas to meet Iraqs new production guidelines (assuming that is good for the world economy. I’d rather not be in favor of something solely because it satiates cynics). If Iraq produces 2 million over quota, have the other OPEC countries cut production by 2 million.
Even if it’s best for Iraq, that seems to me to be a decision that Iraq should make for itself, once the US is completely out of there.
The US has a clear interest in weakening OPEC, keeping the oil spigots open, and the price low. Even if there’s nothing behind them, remarks like this that suggest the US is pulling strings here are appalling. This isn’t the first time we’ve heard stuff like this, either. The more it happens, the more I’m disinclined to give the Administration the benefit of the doubt.
I’ve always believed this war was “about oil” in a very general sense - the sense in that we wouldn’t be the least bit interested in Iraq’s problems if Iraq were located in, say, Central Africa and had no oil or other resources we depended on. But I’ve resisted the notion that it’s been “about oil” in a more direct sense. But the more I hear it from the horse’s mouth, the more I’m inclined to stand corrected.
Certainly not. There are clear reasons why OPEC holds together – there is some advantage for oil producers to cooperate in ‘managing’ oil prices and minimizing price wars.
While OPEC has nowhere near the control over oil prices attributed to it, production coordination, and cooperation with non-members has helped avoid price collapses, which are clearly not in the interest of producer nations, as well as moderate price spikes, again not in their interest they have learned.
This analysis is fundamentally in error, economically, as well as being short sighted. First, the market price is obviously not going to remain the same regardless of how much oil Iraq pumps. More oil on the market means lower prices, given stable demand. Flooding the oil market with an additional 3 million bls is quite clearly, abstracting away from other producer responses, going to lead to a decline in price. It is simply illiterate to multiply prod. level X price to get prod. level 2X price.
Added revenues will clearly, holding demand constant which is relatively reasonable for a short term, reduce per bl revenue significantly. Not sure what we can say about the function, perhaps 2X production garners 2/3P(Prod lvl X), or maybe half as we would have to factor in other producers turning up production in the race to garner more income.
Not only being a near term hit in terms of declining revenue per unit of the resource, such a condition leads to a situation of squandering for a near term “gain” a finite resource. Iraq would be better served in not overproducing to meet near term needs (provoking price declines and thus lower margins), but rather securing promised financing for reconstruction from the US and other donar and lender sources, including refinancing old debt. It makes not a jot of sense to blow a historic relationship with other producers for such short termism.
I direct readers to the EIA’s even handed review of OPEC current policy and quotas here: http://www.eia.doe.gov/cabs/opec.html#opectab
Also current data and projections here: http://www.eia.doe.gov/emeu/steo/pub/3tab.html
No, self serving rationalization at its worst. Formally abandoning OPEC does not serve Iraqi interests, is likely to lead to price collapses and largely in the end benefits disproportionately the US. Bad, short sighted politics.
The Administration needs to muzzle these fools.
The problem, of course, being that the Administration is, in large part, these fools.
Yeah i know, its basic supply & demand. Supposedly that was a major motivation in the Iraq-Kuwait war of 1990. Kuwait was overproducing, destroying Iraq’s economy. However, that is why i stated perhaps for every million of barrels of oil Iraq overproduces, other Opec or non Opec nations could underproduce to keep prices steady.
Again, supply & demand.
Also, attempts to either forgive, hold off or refinance Iraqs debts are being attempted right now.
http://www.timesofmalta.com/core/article.php?id=126398
Phillip Carroll was head of the Royal Dutch/Shell’s operations in the US, so he is obviously qualified to make comments about oil production guidelines. More than either of us.
He never stated that this was going to happen, just that it might be in Iraqs best interest but that it was up to the Iraqi government to decide whether to do it or not. .
That hurts me God, deep down inside.
Both sides are guilty of simplistic reasoning. Collounsbury is right about market effects. And also, oil in the ground is an asset increasing in value. Fifty years from now, it’ll be worth a lot more than it is today as world stocks deplete after we hit our global production peak. So yes, blowing it all out the door now at bargain prices is ‘squandering the future’.
However, what Collounsbury doesn’t consider is the time-value of the asset, and whether short-term reconstruction aid right now is worth more than keeping a resource for later. After all, the reason government’s borrow money (sell off future production, in essense) is because they determine that current needs outstrip the value of the future asset.
For example, it wouldn’t do Iraqis a lot of good to have that oil in the ground if they wound up in a civil war or an economic meltdown that left a million people starving to death.
I don’t know which side to come down on in this debate, but it’s just as silly for Collounsbury to state categorically that this is a stupid idea than it is for the other side to accept at face value that this is in the best interests of Iraq. The best course of action is a lot muddier than that.
Not my day for spelling and punctuation.
That should have been…
the reason governments borrow money (sell off future production, in essence)
It seems to me the way to achieve that is for Iraq to stay in OPEC not to leave. or how is Iraq leaving OPEC supposed to increase Iraq’s influence in OPEC? Iraq leaving OPEC benefits the USA, not Iraq.
It seems to me the way to achieve that is for Iraq to stay in OPEC not to leave. or how is Iraq leaving OPEC supposed to increase Iraq’s influence in OPEC? Iraq leaving OPEC benefits the USA, not Iraq.
This whole line of debate confuses the issue. The economic responsibility for rebuilding Iraq lies with the US. You broke it, you fix it.
It seems to me the way to achieve that is for Iraq to stay in OPEC not to leave. or how is Iraq leaving OPEC supposed to increase Iraq’s influence in OPEC? Iraq leaving OPEC benefits the USA, not Iraq.
(with your own dough)