Is It Really About Oil?

Since the very beginning of the Bush administration's excellent adventure in Iraq, even in the dreaming and planning stages, the old, nagging question was around, insinuating itself into the public consciousness: Is it really about oil? Many think so. The Arab "street" is convinced, and so are millions in the allied Western countries, whose leaders nonetheless give lip service or grudging support to America's obsession with eradicating Saddam Hussein. In America itself, the question is repeated with increasing intensity as the Mideast troop buildup proceeds apace. It underlies every debate about the looming conflict; it is the great unanswered, the elephant in the room.

So, is it, in the end, about oil? Well, not entirely. The manic look in the eyes of George W. Bush, his obvious agitation when Saddam's name comes up, strongly suggests that this has become for him a personal matter, a point of honor, a grudge match that must be settled; psychologically, the president can't not go to war. More than that, the leadership position of the United States as the world's only superpower has been placed on the line; empires can't back off, or they lose their ability to awe and intimidate. Add to this the hubris arising out of America's recent military successes -- Afghanistan, Bosnia, the Persian Gulf War, Panama, Grenada -- and you have an almost irresistible martial impulse.

Despite all that, there remain fundamental geopolitical factors lying just beneath the surface, unspoken but basic, and access to petroleum is one. The Bush administration wants to remake the world, but for reasons beyond simply imposing American values on benighted multitudes oceans away. Spreading democracy and market economics is desirable, but guaranteeing an oil supply is essential. The fact is we're running out; they've got it, and we need it. Material abundance is every bit as integral to the American way of life as the concept of freedom, and the ability to use and waste energy as we see fit is central to our national self-image.

In 1997, according to the Department of Energy (DOE), the US consumed 18.6 million barrels of oil per day, the most of any country in the world and nearly 26% of total global consumption. This is not a new phenomenon, but one decades in the making. Since 1982 alone, American consumption has risen by a third; it is expected to rise another third by the year 2020. The national oil hunger has been particularly pronounced in the transportation sector, which accounts for two-thirds of our usage, and where demand has climbed by 1.4% a year for the past three decades.

Drilling domestically for more oil has always been the answer in the past, but it's no longer viable for the future. Oilmen know that reserves (proven oil deposits) are the name of the game; you can't pump what's not there. Using data provided by the DOE, the World Resources Institute (WRI) calculates that American oil companies have already exhausted 90% of the country's petroleum reserves, which are now down to 21 billion barrels -- just 2% of the world supply.

Crude oil production in the Lower 48, WRI reports, peaked in 1970 and has fallen since by half, as has production on Alaska's North Slope, which peaked in 1988. As a result, Uncle Sam became import-dependent a generation ago and is becoming more so all the time. From around 30% in the early 1980s, imports as a proportion of annual US oil consumption have climbed to 55% today; they are projected by the DOE to reach 70% in 2025, and it is here that Iraq enters the picture.

Iraq, the source of barely 8% of America's foreign oil, is presently a minor factor in the US market -- our leading suppliers are Saudi Arabia, Mexico, Canada, and Venezuela -- and a second-tier producer on the world stage, but Iraq also sits on geological riches beyond comprehension; its estimated 100 billion barrels of untapped crude (10% of the world's total) place it second only to Saudi Arabia in terms of proven reserves. Moreover, as the Guardian of Britain reported last fall, Iraqi sources believe that when fully explored, their country's oil regions will be found to contain over 300 billion barrels -- or more than a quarter of all the oil on earth.

America's petroleum giants have long suspected as much and have operated accordingly. Iraq represented the US industry's first venture into the Middle East. Exxon (then called Jersey Standard or Esso) and Mobil were involved in the hunt for Iraqi oil as early as the 1920s, when they joined a British-Dutch-French consortium formed after World War I to exploit the resources of the defeated Ottoman Empire, from which Iraq was formed by the victorious allies. The so-called Iraq Petroleum Company (IPC) resisted native Iraqi participation in its enterprise and proceeded to manipulate national oil development for the benefit of the syndicate partners, often secretly holding back production (and thus the Iraq government's royalties) in order to restrict world supplies and boost world prices. Such actions by Western multinationals explain much about why "they" hate us.

The party was great for the participating companies while it lasted. An independent financial analysis revealed that the IPC group realized net profits on their assets of nearly 60 percent throughout the 1950s and 1960s. Exxon's share in IPC was estimated to have been worth $130 million on an investment of $14 million in the 1930s, during which time the company made twice in profits what it paid the Iraqi government in royalties. In 1972-73, however, Iraq spoiled things by nationalizing its oil industry and creating the current state-operated Iraq National Oil Company, which has since joined OPEC (Organization of Petroleum Exporting Countries) and engaged in hard-nosed business negotiations with the former syndicate members.

Major petroleum companies have been chafing under the altered circumstances ever since, and there is little doubt that the present Bush-Cheney government of, by, and for oilmen would look favorably upon a re-privatized, non-OPEC Iraqi oil industry following "regime change." So would any puppet rulers that government might install in Baghdad. In December, a key member of the Kurdish opposition to Saddam told the Lehrer NewsHour that the leadership of postwar Iraq would almost certainly privatize the nation's oil sector, opening it up once more to American energy firms. They must be salivating in the boardrooms of Big Oil.

In the meantime, our national appetite for cheap petroleum has precipitated a sharp-elbowed, worldwide search for accessible supplies. American companies are making oil deals (some shady) with the oligarchs of the former Soviet Union. They are pressuring Washington to negotiate expanded US penetration of Canada's oil market through elimination of that country's energy regulations. There is even low-level political "buzz" that we may have to intervene to straighten out the oil crisis in Venezuela -- another US supplier with an inconveniently nationalized industry. Obviously, oil is not solely at issue with respect to Iraq. But is it a large part of the equation? You bet.

Wayne O'Leary is a writer in Orono, Maine.