Gas, Oil, and Conspiracy

We've commented here and at the Los Angeles Free Press (dot com) on the new Iraqi hydrocarbons law, which will award the lion's share of revenue from oil exploitation in Iraq to Exxon, B.P. and Royal Dutch Shell for the forseeable future. This is assuming, of course, that the corporate giants are actually able to extract and transport the stuff, considering that oil infrastructure is notoriously vulnerable to sabotage.

But Greg Palast's latest commentary on this topic raises the possibility that the oil giants are more interested in keeping Iraqi oil in the ground and off the market than they are in refining and selling it. In his May 20 post at Axis of Logic, Palast says:

"The war has kept Iraq’s oil production to 2.1 million barrels a day from pre-war, pre-embargo production of over 4 million barrels. In the oil game, that’s a lot to lose. In fact, the loss of Iraq’s 2 million barrels a day is equal to the entire planet’s reserve production capacity.

"In other words, the war has caused a hell of a supply squeeze — and Big Oil just loves it. Oil today is $57 a barrel versus the $18 a barrel price under Bill 'Love-Not-War' Clinton."

(Snip)

"And that was the plan: putting a new floor under the price of oil. I have that in writing. In 2005, after a two-year battle with the State and Defense Departments, they released to my team at BBC Newsnight the 'Options for a Sustainable Iraqi Oil Industry.' Now, you might think our government shouldn’t be writing a plan for another nation’s oil. Well, our government didn’t write it, despite the State Department seal on the cover. In fact, we discovered that the 323-page plan was drafted in Houston by oil industry executives and consultants.

"The suspicion is that Bush went to war to get Iraq’s oil. That’s not true. The document, and secret recordings of those in on the scheme, made it clear that the Administration wanted to make certain America did not get the oil. In other words, keep the lid on Iraq’s oil production — and thereby keep the price of oil high."

Historical evidence supports Palast's contention that big oil deliberately limits supplies in order to raise prices and profits. In September of 2005, World Net Daily reported that in the wake of Hurricane Katrina, oil refinery production fell, but the price per gallon of gasoline spiked and the refineries made three times as much per gallon as they did before the hurricane. Their profits were higher, even though they were doing less work and producing less product.

So far from being a failure and a debacle, with big oil's pet hydrocarbons windfall law about to be passed by the Iraqi Parliament, the Iraq War is on the verge of coughing up the anticipated jackpot. Greg Palast concludes that "the war has gone exactly to plan — the Houston plan. So forget the naïve cloth-rending about a conflict gone haywire. Exxon-Mobil reported a record $10 billion profit last quarter, the largest of any corporation in history. Mission Accomplished."