Signing Statements, The Military-Petroleum Complex and Oil Wars

If you have any doubt as to why we went to war with Iraq, read on.

Contrary to the rule of law and our constitutional system of separation of powers, as stated by the American Bar Association in 2006, President Bush went ahead and issued another signing statement on Tuesday that would allow him to ignore parts of the new military authorization act he signed into law.

Why? To ensure U.S. control of Iraq' oil, of course.

In the authorization bill, Mr. Bush challenged four sections. One forbid the money from being used “to exercise United States control of the oil resources of Iraq”; another required negotiations for an agreement by which Iraq would share some of the costs of the American military operations there.

Bush objected to one section of the bill barring attempts “to exercise United States control of the oil resources of Iraq.” Bush also declared the right to ignore sections of a bill meant to protect oversight at federal agencies; he rejected a provision that would allow inspectors general the right to their own counsel instead of politically appointed attorneys, and he rejected a section that would require the White House to tell lawmakers what each inspector general said about the administration’s budget proposals for their offices.

The signing statements Bush issued are necessary to keep - as Nick Turse calls it, in his book, The Complex: How the Military Invades Our Everyday Lives - The Military-Petroleum Complex, functioning.

The Pentagon awarded Shell a $338 million contract, on September 17th, in addition to the over $1 billion it was already awarded the previous year. The following day on September 22nd, Iraq and Shell officially signed a $4 billion deal to process and market natural gas. The very next day, Shell "established an office in Baghdad.

Bush scored some major points a few days ago when the Iraqi government put 40 billion barrels of oil up for sale...that's 40% of Iraq’s reserves. This is the biggest sale of oil assets ever. All the big players - Exxon Mobil, Shell, Total, BP, and Chevron - who show up regularly on Pentagon's payroll, taking home more than $4.1 billion - are involved.

It should come as no surprise that President Bush is doing all he can to ensure the future profits of oil companies, especially at a time when when the number of oil discoveries are less, the size of those discoveries, smaller, and the demand for oil is greater than ever, across the globe,

Americans use twenty million barrels of oil per day, or seven billion barrels of oil per year, that's 25% of what the world uses. That may not sound like a lot until you consider Americans make up 4-5% of the world population, and that the US reached peak oil in 1970. Our dependence on other countries will continually increase as we import approx. 70-75%, between crude oil and finished products currently.

Is there an oil shortage? I doubt it because by the time we run out of oil, we should have the technology available to harvest energy from the sun. However, shoddy oil infrastructure and waste is a problem.

After the oil price of oil collapsed in 1982, massive amount of down-sizing occurred in the industry leaving us with the "shortage" problem we have today...shortage of equipment and professionals, that is. One deep water rig costs $1 billion and takes 4-5 years to build. There are approximately 500 off shore oil rigs worldwide, today and they are on average about 28-years old...it used to be that oil rigs were retired after 25-years. In addition, there is a shortage of geologists, rig hands, reservoir engineers, drilling crews and seismic crews.

Combine an outdated oil infrastructure with the explosive economic growth of other parts of the world -- China and India -- and you can imagine the problems this might cause. Since these "underdeveloped" countries of yesteryear have morphed into the "developing" countries of today, due to , as Matthew Simmons, author of Twilight in the desert: The Saudi Oil Shock and the World Economy. says, "in a nutshell, the supply is too old and the demand is too new".

If we could contain the economic blueprint -- two or more cars per household, trucking industry, excessive use of electricity etc. -- to the U.S., Canada, Western Europe and more recently Korea and Japan, oil supply wouldn't be so problematic. However with China, India and other parts of the world adopting our wasteful ways, oil supply, demand and waste become an enormous issue.

The Iraq war may only be the beginning of whats to come. For example, the tribes of the Niger Delta are sick and tired of the oil companies taking but never giving back. Movement for the Emancipation of the Niger Delta (MEND) is blowing up pipelines and siphoning off the oil in an effort to rid their country of these greedy companies. Their ultimate goal is to totally destroy the capacity of the Nigerian government to export oil.

What could all this lead too? Oil wars, according to Simmons. But, hasn't that already started? Yes, however, so far we've been spared the brutality. If things continue on the same path...well, let's just say karma's a bitch.

Read more...

Saudi's Cutbacks Raise Oil Concerns

By MICHAEL E. KANELL
The Atlanta Journal-Constitution
Published on: 02/20/07

Drivers who remember those $3-a-gallon days of the past two years, be warned.

Oil prices are up and the world's biggest producer has been cutting back — a recipe for those prices to keep on climbing.

But whether they are still arching skyward by the time summer driving starts depends largely on just why Saudi Arabia has been pumping less crude.

No one outside the kingdom really knows for sure, but some oil experts think the Saudis' oil reserves may not support increased production.

Official Saudi explanations for production cuts cite the recent dips in global prices, arguing that a little shrinkage in supply will help stabilize the market. So when demand accelerates this summer, a little boost to Saudi production would keep prices from soaring.

But what if the Saudis cut back because they had no choice?

"It's going to be a different world if Saudi Arabian production is going into decline," said economist James Hamilton of the University of California, San Diego. "If that is the world we are in, we really need to be making plans."

The price of a regular gasoline averaged $2.10 a gallon in metro Atlanta on Monday, up a dime in a month, according to GasBuddy.com. During that same period, the global price of oil has risen about 14 percent.

Meanwhile, Saudi production is reportedly down about 1 million barrels a day from an average of about 9.5 million barrels a day through much of 2005.

It is not just the decline that is troubling, Hamilton said. "I don't know for sure what the answer is, but I find the facts disturbing."

• Cutbacks started when prices were high.

• The Saudis have been nearly frantic in their recent drilling for more oil.

• Some reports show the Saudis increasingly relying on lower-quality, less valuable oil.

The questions about Saudi Arabia tap into an ongoing controversy.

Nearly all geologists agree that sooner or later the world will reach the midway point in the era of oil, the moment when half the Earth's crude has been pumped. But there is a small, vocal contingent who have been warning that the world is approaching peak oil very soon.

Or is already there.

From the moment "peak oil" arrives, the search will be on for cost-efficient alternative fuels. Meanwhile, producers will have an incentive to hunt for and pump lower-quality or hard-to-find crude.

Relentless economic pressures will send oil — now selling for just under $60 a barrel — steadily toward the stratosphere, Hamilton said. "If Saudi Arabia is in decline, then oil is way too cheap."

Saudi Arabia has long claimed a massive oil reserve and — since the decline of U.S. production and the breakup of the Soviet Union — it has been the global production leader.

But many of Saudi Arabia's fields are more than a half-century old.

In the early 1970s, the Saudis led the Organization of Petroleum Exporting Counties in aggressive action. Some of the goals were political, some strictly about boosting revenue.

But a tripling of oil prices spurred recession among the world's largest economies, who were also OPEC customers. For the next several decades, the Saudis pursued a careful strategy: Keep prices high enough to fill the country's coffers, but not so high that customers get serious about conservation and alternative forms of energy.

The Saudis are not always successful, but hardly anyone else could even make the attempt. Saudi Arabia has been virtually the only producer with enough extra capacity — and discipline — to move the market.

Saudi skeptics, like oil investor turned critic Matthew Simmons, say the Saudis cannot admit that their market power is dribbling away. But the scramble to find more oil, Simmons says, is evidence of desperation.

For their part, the Saudis dismiss the concerns — and many experts back them up.

Amy Myers Jaffe, associate director of the energy program at Rice University in Houston, said that the Saudis are spending enormous amounts of money finding more oil, and they are likely to make up for fields that have peaked — and then some. "They are like people on a treadmill who have to run a little faster," she said.

The Saudis aim to expand capacity by 3 million barrels a day so they can maintain their role, she said. "The Saudis have been explicit. They need more capacity so they can continue to balance the market."

Yet there are other short-term issues, like Iran.

Concern about Iran's ambitions — and a possible confrontation with the United States — only makes it harder to read the Saudis.

Iran is a Shiite state and the world's fourth-largest oil producer. Saudi Arabia is dominated by a Sunni sect that has often been at odds with the Shiites. The two nations are seen as supporters of opposing sides in Iraq, even as they vie for a larger leadership role in the region.

Yet experts say Saudi Arabia, where oil production is relatively cheap, can handle low oil prices better than Iran — whose government has used oil revenue to smooth over recent economic trouble.

So why would the Saudis lower production and raise prices when it serves their Iranian rivals?

It may be, Jaffe argues, that the Saudis do not want to push Iran into a corner yet. It may also be that they want to have lots of extra pumping capacity ready if there is a crisis.

Now, the market is mostly balanced, she argues.

"I'd be surprised to see the price go to $75 a barrel again," Jaffe said. "But if they get into a war and start blowing up each other's oil facilities, the price is going to go way past $75."

Read more...