| IRAQ WAR - LOOKING GLASS NEWS | |
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ExxonMobil, Shell Neck-in-Neck in War Oil Sales |
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from ConsumersForPeace.org
Entered into the database on Saturday, June 17th, 2006 @ 14:19:55 MST |
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From the first year of the Bush Administration in 2001, through the
run-up to the Iraq War in 2002 and in the first year of the occupation, 2003,
ExxonMobil was the top seller of petroleum products and services to the
Pentagon, taking in about $2 billion in taxpayer money for those threeyears.
However, in 2004, Royal Dutch Shell was the number one top seller for the year.
With Shell's continued high level of sales in 2005, it became the overall
top seller of petroleum to the U.S. military between 1999 and 2005, at $4.08
billion, compared to ExxonMobil's $3.90 billion for the same period. Close behind these firms in total sales to the U.S. military was BP (British
Petroleum) at $3.54 billion for the 1999 - 2005 period. The next largest
seller to the Pentagon was Valero, at $1.87 billion for the same period.
ExxonMobil, Valero and other U.S. oil companies not only lost market share
to BP and Shell but to the Middle East oil producer nations of Abu Dhabi,
Bahrain, Kuwait, Saudi Arabia and Qatar. Since the 2002 preparations for the
Iraq invasion and through 2005, the Pentagon has purchased a total of $2.15
billion in petroleum products from national oil companies of these countries
in sales registering among the top 10 suppliers of each year. This represented
about 14 percent of the $15.2 billion in total sales by the top 10 sellers
from 2002 to 2005. Other major foreign sellers of petroleum products to the Pentagon were Saangyong
(Korea) and Motor Oil Hellas (Greece). Russia's Lukoil is believed to have
been a major seller to the U.S. military through Refinery Associates of
Texas. The military sales information was provided to Consumers for Peace.org by the
Defense Energy Support Center (DESC) and appears in tables at the end of
this article. Officials of DESC and other observers say that the petroleum contracts are
generally based on the best price and the proximity of the petroleum products
to the U.S. forces needing them. Hence, purchases from the Middle Eastern
oil companies have increased with the level of U.S. military activity in
Iraq. In a number of cases, based on reports by the Center for Public Integrity,
it appears that a significant proportion of purchases from the Middle Eastern
companies have come through no bid contracts, for reasons of urgency and
sole sources. A DESC spokesperson said that no-bid contracts often become
subject to bid over time if the need continues for the products from a certain
area. The heavy proportion of foreign petroleum sales to the U.S. military raises
a question of how dependent that military is on foreign oil. The DESC spokesperson
and another expert say that the U.S. can get all its oil from U.S. firms
if necessary, but transportation and storage costs would dramatically increase
the cost. Much of the oil sold by U.S. firms comes from crude pumped in
other countries; it is not clear what constraints would be placed on the
military if it could use crude pumped only from U.S. territory. Iraq Profits, More to Come? The DESC statistics show that the Iraq invasion and occupation of been profitable
for ExxonMobil and other of the world's largest oil oil corporations in
terms of direct sales to the U.S. military. In addition, uncertainty in the world oil market caused by the Iraq War and its unpredictable effects on oil production and shipments from the Middle East have been major factors in pushing oil prices to the $70 a barrel level, a level that has brought enormous profits to major oil companies. The Iraq War has a key factor resulting in an estimated $7 billion in unearned war profits for ExxonMobil out of its record $36 billion profit in 2005, according to Dean Baker, co-founder of the Center for Economic and Policy Research in Washington, D.C. We have not obtained estimates of such unearned profits for other oil firms. However, a report on the cost of the Iraq War, published in January, 2006 by Linda Bilmes, of Harvard University, and Joseph Stiglitz, Noble Prize-winning economist at Columbia University, estimates that $25 billion was lost by U.S. consumers in 2005 because of oil market conditions traceable directly to the Iraq War. The major oil firms are looking beyond immediate returns in Iraq, hoping to get highly profitable access to Iraq's oil reserves, said to be the second largest in the world after those of Saudi Arabia. Crude Designs, published by the British group Platform, reports that the U.S. State Department was involved before the occupation in drafting model oil agreements to be used by the "new" Iraqi government, agreements that, if signed, would bring major oil companies huge profits compared to what is available from other nations. Greg Muttitt, author of the report, told Consumers for Peace that Lukoil, Shell, ConocoPhillips and ChevronTexaco, may have an even keener interest in Iraq than ExxonMobil, because of their own individual needs. TOP TEN SELLERS OF PETROLEUM PRODUCTS AND SERVICES TO THE U.S MILITARY Source: Defense Energy Supply Center Fiscal year 2005 Spending in millions.
Fiscal year 2004
Fiscal year 2003
Fiscal year 2002
Fiscal year 2001
Fiscal year 2000
Fiscal year 1999
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