From the EIA:

According to the Oil and Gas Journal, Iraq contains 115 billion barrels of proven oil reserves, the third largest in the world (behind Saudi Arabia and Canada), concentrated overwhelmingly (65 percent or more) in southern Iraq. Estimates of Iraq's oil reserves and resources vary widely, however, given that only about 10 percent of the country has been explored. Some analysts (the Baker Institute, Center for Global Energy Studies, the Federation of American Scientists, etc.) believe, for instance, that deep oil-bearing formations located mainly in the vast Western Desert region could yield large additional oil resources (possibly another 100 billion barrels or more), but have not been explored. Other analysts, such as the U.S. Geological Survey, are not as optimistic, with median estimates for additional oil reserves closer to 45 billion barrels.

Some are saying that they have damaged their fields in particular Kirkuk (8.7 Gb of proven reserve)

And now is when the true genius of the neocon vision finally begins to come into focus. We can see another twenty years of chaos in Iraq during which this vast gift to the future (sarcasm intended) remains essentially untouched.

Prior to the first gulf war, Iraqi scientists were trained at the best universities throughout the world. There was plenty of money for oil exploration. The notion that there are vast unexplored regions in Iraq strikes me as crazy. The information has perhaps not been shared with western interests but they have most certainly explored all the promising areas in the country. It is their one valuable resource and they aren't idiots.

A good test of the theory about Bush's motivations will come as Iraq develops its constitution and its policies regarding control over oil. If in fact the invasion was really about oil, the U.S. must insist that the bulk of the oil profits get returned to them in some form. On the other hand the Iraqis would probably want the profits to stay in Iraq. According to the theory in the post, this is the one thing that the U.S. cannot permit.

We can watch the development of the constitution and laws over the next few months to see how this plays out. If Iraq turns into a true democracy, as the U.S. claims to want, it will undoubtedly vote to retain control over its oil assets. Probably the only way the U.S. will be able to prevent that is to keep Iraq from being a democracy and to install a U.S.-backed puppet dictatorship. This would be a prediction of the oil-grab theory so we should have a better idea of whether this is really the American intention in a year or so.

"Though I admit, I truly think a president, faced with the facts of peak oil, from either US party may have taken similar courses between this Scylla and Charybdis, with better or worse strategies and results."

Normally, one might think this. But we are living in interesting times.

I have no doubt that oil was a big reason for going to war. But one has to wonder why then the US handed control of Basra to the Brits - and now, to Iranian-backed fundies. Makes no sense to me.

"A good test of the theory about Bush's motivations will come as Iraq develops its constitution and its policies regarding control over oil".

this is simply untrue and since you've been reading this site you must be aware of this fact. The invasion of Iraq was about oil. And of course it is always nice if there is a certain degree of pillage involved.

But it really gets back to that map of the world that shows all of the places where there are significant petroleum reserves that are underproducing. What can be done to foster foreign investment and increase the production capacity therefore adding to world production capacity? If you start with the premise that Iraq was the grand daddy of underproducing states, the one place on the planet where significant gains in production capacity were possible you recognize its importance. If you look at the deference, the ass kissing that we give to the leaders of Saudi Arabia because of their status as swing producers and then you contemplate bestowing that mantel upon Saddam, you begin to glimpse the real motivation for the war in Iraq.

So, it wasn't a matter of who profited by Iraq's oil (as long as Saddam didn't control it). It was and is simply a matter of assuring that the resource is developed and makes it onto the world market.

Halfin --

There are many that say this has already happened. At least some citizens of Iraq are convinced that everyone haggling over the constitution right now is already a US-backed puppet, and even the interim legislation (that's running things now) strongly favors US companies. Certainly Chalabi was a US stooge.

The insurgency grew in strength and numbers when it became clear that outsiders were going to profit more than Iraqis from their own resources. Contracting rebuilding everything to allied companies was the first clue (Note that they still can't keep water or power on in Baghdad for more than a few hours at a time - a HUGE setback from what they had prior to our latest invasion.)

We've spent years degrading their ability to pump and process oil (by prohibiting "dual use" items, for one thing) so if they want to get their oil bidness running well again, they have to hire somebody to partner with. Enter the US oil companies...

Then again, perhaps I should stop reading conspiracy theories at bedtime...

The oil belongs to Iraq, a fact which has been acknowledge by the U.S. (I don't have an immediate reference, unfortunately). The U.S. has long given up on the idea of profiting from the Iraq debacle, other than by establishing several permanent military bases to help protect the flow of crude from the ME. It doesn't mean that corporate interests won't profit - for example, see the chart of Haliburton below.

http://finance.yahoo.com/q/bc?s=HAL&t=5y&l=on&z=m&q=l&c=

Haliburton has done well in the market over the past three years, as have most oil companies, so it is moot whether the HAL Iraq contracts have really contributed beyond the contribution from the rise in oil prices.

That's right, seems to me it's always been about access and continuing fungibility, folks. We're wealthy, we can afford it...as long as we can get access to it...

SW: "It was and is simply a matter of assuring that the resource is developed and makes it onto the world market"

Gotta quible with this one. This may have been the case in the past, but if you agree that the Bush administration has been aware that oil supplies would be getting tight from its early days, THE important thing is that the US makes sure it gets all the oil it desires.

After all, the American way of life is not only not negotiable ('41), but it is also sacred ('43 via Ari Fleischer). There's your causa belli.

PG: I agree. All we want is access, just so long our "access" has a kind of American exceptionalism attached to it.

It seems to me that the American occupation of Iraq is about more than access to oil. It's about control - hegemonic control. As Noam Chomsky asserts:

Shortly after the invasion of Iraq, Zbigniew Brzezinski, one of the more astute of the senior planners and analysts, pointed out in the journal National Interest that America's control over the Middle East "gives it indirect but politically critical leverage on the European and Asian economies that are also dependent on energy exports from the region." If the United States can maintain its control over Iraq, with the world's second largest known oil reserves, and right at the heart of the world's major energy supplies, that will enhance significantly its strategic power and influence over its major rivals in the tripolar world that has been taking shape for the past 30 years: US-dominated North America, Europe, and Northeast Asia, linked to South and Southeast Asia economies.

I hope this hasn't been posted already. I haven't had time today to read through all the posts on Iraq here, so if it's a duplicate, please forgive me. I thought you might be interested in this geology article that has lots of nice color images of rock layers in Iraq, and ends with what I consider a bomb shell, that Iraq's reserves are MUCH smaller than everyone thinks. Maybe I'm misinterpreting it. What do you folks think?

http://www.searchanddiscovery.co...ong03/ index.htm

from near the end:

Ultimate recovery from the giant fields of Iraq is estimated to be 85 [billion]BOE; for comparison, the estimate for North Dome Gas Field in Qatar is 160 [billion] BOE, and 97 [billion] BOE for Ghawar Oil Field in Saudi Arabia. Remaining recovery, or reserves, for the Iraqi giant fields is estimated to be 41 [billion] BOE (Horn, 2003), or approximately one-half of the ultimate recovery.

As I pointed out here, Iraqi production is down from pre-invasion numbers and fluctuates month to month based on political factors and the insurgency. In addition, Simmons stated that he thought we'd be lucky to get 2 to 3 mbd out of there over the next 10 to 15 years. He also mentioned that the big fields (Rumaila) are damaged.

I think the US objective was to keep the oil flowing through a "proxy" government in Iraq that would appear independent of American influence. Permanent military bases were part of this equation. However, this objective has plainly failed, at least for now, and realistically will continue to fail for years to come.

Now that Bush has made Iraq the focal point of the clash between civilizations, he has essentially ended up shooting himself in the head. Iraq has a new pipeline deal with Iran -- yes, that's right, Iran -- where Iraq will ship crude to Iran and Iran will ship refined product back because Iraq is so short of refinery capacity. Iran will pay for the pipelines and facilities. Iranian influence will continue to strengthen in the Shia' south as time goes by. The Kurds may cut a separate deal in the north but most of Iraq's oil is in the south.

By the way, just for fun I've started up a little poll in the Oil, Destiny and Jihad thread on what oil prices will be on Labor Day weekend. Just in case you want to test you peak oil powers of prognosticaton now that we're near $64/barrel.

Saddam started pricing his oil in euros, so he had to go. Iran's threatening to so ..... Pricing in dollars is fundamental to US hegemony especially with PO coming

Fred - Can you explain why pricing oil in dollars makes any difference? It would seem that a price is just a price. You can pay in whatever currency you want.

I hear this canard thrown around all the time, but usually with no more explanation than Fred has provided. If anyone has any facts or links that would help me understand this, please post them.

I think a statement like "Pricing in dollars is fundamental to US hegemony" and a claim this is the reason for the war requires some factual support.

This topic has been discussed in more detail on this thread, and for those that are interested is definitely worth a look:

http://www.peakoil.com/fortopic8382.html

Thanks, Anon, I'll be looking that peakoil.com thread over. I've just glanced at it but with regards to Iraq potential reserves, as discussed in PG's post and at the link you reference, I am very skeptical. Also, the geopolitical situation makes development of these unproven reserves very tenuous over the near term -- up to 10 or 15 years out from now.

thanks for the discussion link....

The Other Dave: Your link is not working.

jokerman,

here's a few links. The other reasons for the invasion still hold. imo the dollar pricing thing just helped tip the balance. Imagine if you had to buy oil in yuan; you can't just print them you'd need to buy them. If people didn't need to buy dollars to buy oil it's price would go down. etc etc

http://www.feasta.org/documents/papers/oil1.htm

http://www.thirdworldtraveler.com/Iraq/Iraq_dollar_vs_euro.html

http://www.thinkandask.com/news/thedollar.html

http://www.cpa.org.au/garchve05/1221euro.html

http://www.projectcensored.org/publications/2004/19.html

Fred,

I read the articles but they mostly assert that the dollar is the basis of US hegemony, then seak to prove it with speculation. I realize that this is something you want to believe very badly, so I should leave you alone. However, the assertion is based on a fundamental understanding of economics.

The dollar price is just a price. You have to pick one currency to price in or have to constantly change the numbers in every different currency. If the Saudis quoted the price in Euro terms, we could still pay in dollars. If the Saudis, or anyone else, priced oil in both Euros and dollars, buyers would just look up exchange rates and if it was cheaper (ie. mispriced) the would use that currency to pay.

The articles call the dollar a fiat currency and say that developing countries need to borrow or export to get dollars. Actually they need to borrow or export to get foreign exchange currencies. It don't matter what it is denominated in.

At the end of the day, most of the contracts for oil are denominated in dollars because that is what the world trades in. But so are contracts for other commodities. If the Saudis wind up with too many dollars, they don't need to hold on to them. They can buy Euros instantly (or as I noted above accept payment in Euros). They hold dollars because the dollar remains the world's largest and most liquid currency. You can buy and sell US treasuary bonds in the billions without any trouble. That is not true for the Euro or certainly the Yuan.

Oil is priced in dollars because the dollar is the world's currency, not the other way around.

When (if) other currences develop an equally broad, deep and liquid asset base, an equal portion of international assets will move to them. Whatever symbol Saddam Hussain chose to place before the number on his invoices doesn't make any difference at all.

Jokerman,
If you own the golden goose you'll make sure none of the eggs ever hatch. The liquidity or reserves of any given currency increases or decreases if its the reserve oil currency (oil being a reasonably sized market) so why lose it (from an american point of view), I believe that's why iraq is now back to the dollar standard.

as for developing countries, all world bank, imf loans are in dollars
so I believe thats what meant by saying they borrow in dollars and so in the end, no matter how many foreign exchanges they have to buy dollars to pay them back.

as for liquidity "
The euro government bond market is almost twice the size of the U.S. government market. At the end of June 2005, the size of the euro zone government market was €3.4 trillion, compared to the €1.8 trillion U.S. market.

http://europe.pimco.com/LeftNav/Latest+Publications/2005/Eurosone+Bond+M...

And finally (for me because it isnt really that important and this isnt the right forum)

Thanks for the lessons

Sorry, I don't know why the link isn't working. I should've checked it after posting. Also, I should've included the citation. From this site:

http://searchanddiscovery.com/

add: sandd2s.htm#01%20evaluations

and look for:

GIS in an Overview of Iraq Petroleum Geology, by Jingyao Gong and Larry Gerken, #10043 (2003).

"As shown in the database of giant fields of Iraq (Table 1) (M.K. Horn, 2003), there are 28 giant fields in Iraq; 27 are classified as oil fields. Discovered in 1953, the largest field is Rumaila (Figure 15), 9th largest in the world (3rd largest oil field) with 22 BOE. It is in Southern Iraq and the Arabian sedimentary province. Kirkuk (Figures 8 and 9), the second largest Iraqi field with 17 BOE, is in Northern Iraq and the Zagros province. Discovered in 1927, it is the 17th largest field (8th largest oil field) in the world. Ultimate recovery from the giant fields of Iraq is estimated to be 85 BOE; for comparison, the estimate for North Dome Gas Field in Qatar is 160 BOE, and 97 BOE for Ghawar Oil Field in Saudi Arabia. Remaining recovery, or reserves, for the Iraqi giant fields is estimated to be 41 BOE (Horn, 2003), or approximately one-half of the ultimate recovery. More than a decade ago, ultimate recoverable petroleum reserves of the Arabian Plate region was estimated to be almost 900 BOE, with approximately 98% being in the Zagros and Arabian sedimentary provinces (Beydoun, 1991)."

Or stitch these together:
http://www.searchanddiscovery.com/
documents/gong03/images/gong03.pdf

Fred,

I enjoyed the Pimco link. It is interesting that the Euro bonds are becoming so deep. Shouldn't this worry the US a thousand times more than what currency Iraq denominates its invoices in? A $3.8 trillion dollar alternative source for investment is a greater threat to dollar hegemony that carry trade on oil invoices.

Regarding my point about treasury bill liquidity, this quote from your article agrees:

"The only remaining area of weakness is the lack of depth in the T-Bill market, where the U.S. remains clearly ahead and where Europe has quite a bit of catching up to do given the obvious limitations in terms of liquidity."

At the start of the year, it did look as if the Euro had the potential to compete with the dollar. However, the constitution break up threw a monkey wrench in it as it introduced a long term risk. Personally, I would like to see some competition for the dollar as a global currency because I think the easy money is hurting us.

However, my original point remains accurate. The dollar price quote is just a price quote. The Saudi (or other oil producers) can convert and hold whatever currency they want. It seems they (and the Chinese) want dollars.

The IMF and others do make Euro loans. The head of the IMF is by tradition a European and is selected by Europeans.

Did no one in this discussion thread note the Iran/Iraq oil for refined product deal I alluded to above? Or that Iraqi export production is down and very unstable? That the whole deal has been basically falling apart? That the "insurgency" is on the rise and very likely to make the oil production exports from Iraq

Hello????????

Hello, TOD People!

Did no one in this discussion thread note the Iran/Iraq oil for refined product deal I alluded to above? Or that Iraqi export production is down overall and very unstable? That the whole invasion deal has basically fallen apart vis-a-vis Iraqi oil production and exports? That the "insurgency" is on the rise, more successful now than ever and very likely will make the oil production exports from Iraq even shakier in the future?

What the hell are you people talking about???

Dave: You are a shoe in for crybaby of the day with that post.

"Crybaby of the day"? I'll admit to being a little peeved that posters here are not actually talking about real ongoing events. Things are going just great in Iraq, is that what you mean? The points I brought up were not significant? I thought a little focus on reality might be a good thing but that's obviously not the case....

Why pay attention to reality in Iraq when there's all this other normal bullshit we can talk about? For example, PG's cited article talks about oil pipelines from the northern Iraqi regions to supply Israel. Is this going to happen?

Equivalently, is Hell Going to Freeze Over?

Dave: no I think you're right. Hell's not even tepid yet.

I think all of this is trying to get a handle on the incentive structure and vision that is driving the policies of the PTB.

Usually, if I have seen the sitcom before, the PTB comes through in the last second kills the bad guy and gets the girl, flaunting her in the face of the nay/doom/perilsayers.

Usually the PTB do this by having some ace in the hole that they play in the last ten minutes or having some deus ex machina on their side. Of course, these endings are also usually good for the PTB, but not everyone else, mind you.

The empirics, as we see them to this point, point to the lack of any plot twists, yes. No ace in the hole, no deus ex machinas.

But surely, we know there's going to be some along the way, it's part of the fun to me of watching all of this unfold.

But I agree, a pipeline to Israel and democracy pervading in the Middle East: that's a pretty major plot twist...but it might really be a part of the (perhaps misguided *laugh*) vision that's driving the plans 20, 30 years down the road.

What's a PTB?

Thanks for the link PG.

SW - I'm not sure you understand the point of my posts ("The notion that there are vast unexplored regions in Iraq strikes me as crazy.") - I'm not saying that there are vast unexplored regions (though I think its open to question as to to how much, if any, oil is under the western desert).

The point (from "The Control of Oil") was that possibly vast amounts of oil was discovered in Iraq in the 1950's and 1960's (on top of what we know about) and that information about these discoveries was suppressed. Read through my 3 original posts (linked to from the latest one).

Dave - There are a few pipelines discussed in my post though I focus on the Tapline. It goes west (to Lebanon) but people were talking about rebuilding it (its not operational now) and routing via Israel - partly to supply israel (and lessen the obligation the US is currently under to supply them) but mostly to make sure this oil flows west more easily (much like the "Pipelineistan" pipe from the Caspian to Turkey.

As for the comment - "I'll admit to being a little peeved that posters here are not actually talking about real ongoing events. Things are going just great in Iraq, is that what you mean? " - what post did you read ? There is plenty of discussion about ongoing events there...

And finally, I think people need to do some more reading to understand the importance of pricing oil in US$ to the value of the US$. And then think about the new Iranian oil bourse with euro denominated contracts.

Big Gav: [Dave,] what post did you read ? There is plenty of discussion about ongoing events there...

Well, I had in mind the one I wrote the other day.

best

In November, 2003, the New York Times did an article -- which unfortunately wasn't followed up by any others that I know of -- about the abysmal state of iraq's oil fields. I don't have a link (I think ASPO cited it the following January?)

They quoted Iraqi managers saying that Saddam demanded output for foreign exchange, and knew nothing about geology or oilfield technology -- oil workers did as he said or paid the price. They were doing things like pumping oil back into the aquifer to boost pressure (!), and permanently damaging the fields. Managers quoted said they expected ultimate recoverable oil to be in the range of 8 to 12% of total resources.

Within days of this article coming out, Bush did a 180. Instead of a leisurely privatization/colonization, he announced that there would be elections and we would be pulling out.

I consider this one of the most under reported stories of the century. As you will recall, neocons were sure that Iraqi oil production could be dramatically boosted, and would pay all the costs of the occupation. This is why Bush & co. didn't want to "share the loot" with the Europeans.

The unhappy news about the dismal state of Iraqi fields, coupled with the sunni uprising, has destroyed the neocon vision, and has seriously eroded Bush's position. Depending on the outcome of the Plame investigation -- which of course is intimately linked with the war and why we're there -- Bush's administration may be destroyed, and the Republican party may implode.

Whatever the reasoning behind the invasion and bollixed occupation, it is all history now. It's difficult to imagine any production increase in the forseeable future, and even more difficult to see how it will benefit the US automobile owner.

If anything, by reducing Iraqi production by about 1M bpd, Bush has succeeded in moving peak oil up by some period of time.

PTB=Powers that be.

and Dave, the point is that all of this stuff on Iraq (and as the piece I just linked to suggests, Iran) needs to get integrated. Your piece was a piece of the puzzle, BG's is more speculative, and then this piece by Clark that I linked to is an interesting piece of it as well. What do we get out of all three of those pieces...that's the most important thing to figure out, because I think they had some common threads, did they not?

also, just posted that Clark piece out in front, if you want to continue the discussion there...

Re: Jim Burke's "the abysmal state of iraq's oil fields" and all the other (true) things you said...

Thank you for that nice analysis of stuff going on in Iraq.

That was me. Also: "The unhappy news about the dismal state of Iraqi fields, coupled with the sunni uprising, has destroyed the neocon vision, and has seriously eroded Bush's position".

You could not be more right. I think it is particularly important to recognize that the Sunnis, who controlled the oil revenues under Saddam, are now completely out in the cold....

SW - I do like your theory... just imagine Saddam Hussein as the world's swing producer. Crazy, just crazy... :-D

Dave - Couldn't agree more that we need to look at the whole Iraq picture, but I still think trying to get an accurate handle on the reserves figures is helpful to understand exactly why we went in there and why we are unlikely to leave unless there is no way of staying.

And I agree that the Sunnis are most likely stuffed, unless Iraq goes "federal" and they get to run their own province.

I always think its worth keeping "The Salvador Option" theory in mind when watching the the news on Iraq as the fighting continues...

SW - I do like your theory... just imagine Saddam Hussein as the world's swing producer. Crazy, just crazy... :-D

Remember the pictures of Bush and Abdullah walking hand in hand and kissing in Crawford in the Spring? God only knows how depraved it got when the cameras were off. Now imagine the situation if Saudi Arabia were to go into decline, and Saddam's Iraq were to take its place as the world's swing producer. Imagine the American president forced to roll out the red carpet for Saddam. To kiss the Beast of Bagdad! Imagine if that were to happen while a Bush were the president. Unthinkable.

Of course you can be labeled a conspiracy theorist. But let us stick to facts. Matt Simmons gave a presentation to Cheney's Energy Task force. You remember the energy task force who's inner workings were so important to remain a secret that the case went all the way to the Supreme Court. Although documents were pried out of it showing detailed maps of Iraq's oil fields. So, Simmons warns them that Saudi, who's asses we've been kissing for a few decades is about to go into decline. Where o where are we going to find the production capacity to offset the Saudi decliine? Who's ass are we going to have to kiss next? Do I get three guesses? Then, just as all of this is becoming achngly, mind numbingly clear, like a bolt of lightning, 9/11 happens. It is the perfect pretext. WMDs. ties to terrorists, whatever works, "fuck Saddam we're taking him out". this is the real reason for the Iraq war.

The tragedy here is that now that the blood and treasure has been spent and it has all been done on the basis of deceit it is horribly unpopular. And you know what? They might have tried the truth. The truth is actually more sellable. The fact that the world has nearly reached its peak of petroleum production. That we aren't ready to transition away from fossil fuels. That Iraq sits on the last remaining unexploited chunk of conventional crude oil. That they are going to be the new Saudi Arabia and that we simply could not allow Saddam to control that vital resource. That truth properly explained would have received much greater popular support than all the god damn lies we were told.

SW
What effect would the truth have on the stock market and my 62,000 shares of mostly bank stocks ?

Just a joke, all my spare money is invested in eight donkeys I can slap, scratch, talk to and ride with total confidence they will not kick or bite me.

SW - you comment "And you know what? They might have tried the truth. The truth is actually more sellable. The fact that the world has nearly reached its peak of petroleum production. That we aren't ready to transition away from fossil fuels. That Iraq sits on the last remaining unexploited chunk of conventional crude oil. That they are going to be the new Saudi Arabia and that we simply could not allow Saddam to control that vital resource. That truth properly explained would have received much greater popular support than all the god damn lies we were told."

ThIs is something I totally agree with. The neocon attachment to Machiavellian strategies is going to be their undoing.

If Western governments were being straight with us and moving to deal with the problem in some meaningful way besides this preemptive invocation of the Carter doctrine I suspect more people would actually buy into it. As it is we've all realised they can't be trusted and we're still in the same hole, and getting deeper every day.

If Western governments were being straight with us and moving to deal with the problem in some meaningful way besides this preemptive invocation of the Carter doctrine I suspect more people would actually buy into it.

Of course, then "the beast" (us) might have demanded *gasp* conservation and that wouldn't be nearly as good for Exxon/Mobile's, Haliburton's or GM's quarterlies (read: executive compensation).

Imagine the American president forced to roll out the red carpet for Saddam. To kiss the Beast of Bagdad! Imagine if that were to happen while a Bush were the president. Unthinkable.

Funny, SW. This time it was decided to use Rumsfeld to kick ass rather than kiss it.