Your recent report that oil prices have reached an all-time nominal high and that
Goldman Sachs has suggested the possibility of a "super spike" in prices
to as high as $105 per barrel ("Crude at all-time high despite Opec's efforts",
April 5) should be of no surprise to anyone who has studied the informed opinions
of US energy experts in the period leading up to the invasion of Iraq. Nor, for
that matter, to anyone who has seen my own observations on future world oil prices
in my recent book Addicted to Oil.
In a crucial report to President George W. Bush by the US Council on Foreign
Relations in April 2001, the president was warned that: "As the 21st century
opens, the energy sector is in a critical condition. A crisis could erupt at
any time . . . Theworld is currently close to utilising all of its available
global oil production capacity, raising the chances of an oil supply crisis
with more substantial consequences than seen in three decades."
With US oil consumption in 2001 at an all-time high (19.7m b/d), import penetration
at 53 per cent, and dependence on Arabian Gulf oil also at an all-time record
(14.1 per cent of total US domestic and foreign supplies), the council stated
that it was absolutely imperative that "political factors do not block
the development of new oil fields in the Gulf" and that "the Department
of State, together with the National Security Council" should "develop
a strategic plan to encourage reopening to foreign investment in the important
states of the Middle East".
But while the council argued that "there is no question that this investment
is vitally important to US interests" it also acknowledged that "there
is strong opposition to any such opening among key segments of the Saudi and
However, there was an alternative. In the words of ESA Inc (Boston), the US's
leading energy security analysts: "One of the best things for our supply
security would be liberate Iraq"; words echoed by William Kristol, the
Republican party ideologist, in testimony to the House Subcommittee on the Middle
East on May 22 2002 that as far as oil was concerned, "Iraq is more important
than Saudi Arabia".
So when, according to the former head of ExxonMobil's Gulf operations, "Iraqi
exiles approached us saying, you can have our oil if we can get back in there",
the Bush administration decided to use its overwhelming military might to create
a pliant - and dependable - oil protectorate in the Middle East and achieve
that essential "opening" of the Gulf oilfields.
But in the words of another US oil company executive, "it all turned out
a lot more complicated than anyone had expected". Instead of the anticipated
post-invasion rapid expansion of Iraqi production (an expectation of an additional
2m b/d entering the world market by now), the continuing violence of the insurgency
has prevented Iraqi exports from even recovering to pre-invasion levels.
In short, the US appears to have fought a war for oil in the Middle East, and
lost it. The consequences of that defeat are now plain for all to see.