Oil and War

Bush's Imperialism and Doctrine

There is a major strategic shift in motion by the US to gain control of Middle Eastern oil reserves.  Given what we read in the media, there really hasn't been a good rationale for this shift other than to contain the development of weapons of mass destruction in the region and/or terrorism.  However, it's been my experience that you always have to "follow the money" to get true insight into how the world works.  Here is some fun with numbers that may explain the situation.

Basic assumptions:

  • The world consumes ~80 millions barrels of oil a day which is ~30 billions barrels a year of oil.  The US consumes 25% of this total.  World per capita oil consumption has stayed fairly static over the last couple of decades and the world population growth is starting to slow with a projected peak of 8 billions people in 2050.
  • There are 1 trillion barrels of "proven" oil reserves globally with 0.5 t in potential "easy to extract" reserves in new areas like the Caspian Sea. 
  • There is an additional 1.5 t potential barrels of oil in "hard to extract" areas like shale.
  • The Middle East represents 2/3rds of proven oil reserves.

All things being open and fungible, the available oil from global proven reserves would last us 30 years (and another 60 if we extract every last drop of potential oil at higher prices).  However, the world is more complicated than that. 

The major complicating factor is that the US is running out of oil.  There is an increasing gap between production and available reserves that will explode in less than a decade.  Currently, the US is the #2 producer of oil behind Saudi Arabia.  US produce ~8 m barrels of oil per day.  That's nearly ~3 b of oil per year (that's 40% of the 7.5 b barrels of oil US consume every year).  US proven reserves are only 22 b barrels.  That is a 7 year supply of oil, with obvious diminishing returns the closer you get to the limits of the fields.  A similar rapid run out is going on in other "safe" sources of oil.  In effect, US are close to becomming nearly totally dependent on oil production from the Middle East.  Note:  the real analysis is a little more complicated than this, but end game is the same.

This is obviously the kind of stuff gruff oil men talk about over scotch and cigars late at night to scare each other. 

The upshot is that in order to meet global demand for oil over the next eight years, production from the Middle East is going to need to increase markedly -- specifically from Iraq, Saudi Arabia, and Iran.  There isn't any way around it. 

This scenario wasn't nearly as scary as it is today until 9/11.  Why?  US felt that Saudi Arabia was a fragile nation, but one they  could trust.  Saudia Arabia's reserves and production capacity could shield US from any potential disruptions inflicted by Iran and Iraq. 

Bush's Doctrine:

"Either you are with us or you’re with the terrorists.” This is the Bush “doctrine,” and it is dangerous nonsense. It’s a piece of moral blackmail, designed to force the people of the whole world to choose between false alternatives. It means that if you refuse to play ball with America, i. e. George W. Bush’s America, that is you deserve to be treated as a member of al-Qaeda Specially. We shouldn't forget, He is a Cowboy and Cowboy solve their conflict with guns not with brain. . Mr. Bush's calculation it now appears that Saudi is as potentially volatile as Iraq and Iran, germany ,France and all other countries which denied Bush aggression.  The are now a shadow member of Bush's "axis of evil."

A good overview of the situation can be seen below.  Here are the players with most in proven reserves:

  • Saudi Arabia: 261,750

  • Iraq: 112,500
  • United Arab Emirates: 97,800
  • Kuwait: 96,500
  • Iran: 89,700
  • Venezuela: 77,685

Note that two of the major sources of oil needed are in Bush's "axis of evil" .  Saudi Arabia is a shadow member.  Venezuela is in turmoil.

So, Bush  (our Cowboy)  made a decision.  He has chosen to intervene before the situation became acute.  We will invade Iraq.  We will have over 100,000 troops there by 2004 and likely well past 2010.  We will use it as a base of operations to enforce continued production of oil by Iraq's new government,  Saudi Arabia, and the UAE.  The die is cast in classic realpolitik. 

The most amazing thing is that there hasn't been any major effort to fund programs or incentivize adoption of alternative sources of energy.  US are marching off to war with little hope of an exit strategy.

For all the triumphalism of the Bush Doctrine, it will meet resistance--not just abroad, but at home. In a July article titled "The American Empire," analysts for Stratfor consulting group asked: "How can a democratic republic and an empire coincide? Once, this was an interesting theoretical question. Now it is the burning--but undiscussed--question in American politics."

The Bush Doctrine has pushed that discussion into the open--and made it clear that we need to oppose not just a U.S. war against Iraq, but to challenge U.S. imperialism in all its forms.


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