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High Oil Prices: The Curse of Saddam
By Eric Margolis, Sept. 24, 2000
NEW YORK - The release by the Clinton/Gore team of oil from America's
emergency petroleum reserve may cause a blip in prices and win
Democrats some votes, but it does nothing to solve the long-term oil
crisis. Using the wartime reserve for crass political ends is simply
the latest example of the current Administration's indifference to US
national security.
Steadily rising fuel prices - approaching US$ 40 per barrel - have
driven motorists and truckers across Europe to open insurrection. If
petroleum prices keep rising and shortages develop, Americans, and
even usually passive Canadians, may also stage a modern version of
medieval peasants revolts. No wonder politicians on both sides of the
Atlantic are running scared. The Curse of Saddam has struck.
Western oil consumers take for granted that cheap oil is theirs by
divine right. For them, `normal oil prices' means a return to the good
old days before 1970 when tame Mideast puppet rulers gave away oil at
$2 per barrel in return for protection and blondes.
`How dare those Arabs sheiks raise the price of our oil,' is what many
people angrily mutter - unaware, of course, that most of North
America's imported oil comes from West Africa, Venezuela, and domestic
sources, not the Mideast.
Angry western demands that oil producers lower prices are pure,
unabashed economic imperialism. The Mideast, for example, imports over
50% of its food and 95% of its medicines from western nations
- commodities even more precious and imperative than oil. Do we see
our farmers lowering prices of grains or meats sold to the Mideast?
Or Detroit, Silicon Valley or drug firms slashing export prices of
goods they sell to oil producers? Of course not.
We are simply demanding by right of might that exporting nations, many
of whom rely on oil as their sole source of income, cut their prices
so it costs us less to tank up our road hogs. The United States
produces over 6 million barrels daily: why are there no calls for
American or Canadian producers to slash their wellhead prices?
Amidst all the finger-pointing over who is to blame for high oil
prices, and inevitable pre-electoral threats by the Clinton
Administration, to bomb the usual Iraqis, it is simply amazing that no
one has asked the most obvious question: does the 10-year embargo of
Iraqi oil play a role in this mess?
The answer is, of course. Before Saddam's invasion of Kuwait, Iraq,
which has the Mideast's second largest proven oil reserves after Saudi
Arabia- 120 billion barrels - exported over 3 million barrels per day
and was expanding its petro-infrastructure to export 4.5-5 million
barrels by 2000.
Today, under the decade-old UN sanctions regime, Iraq is allowed to
export up to 2.3 million barrels daily. Iraq is supposed to get half
the proceeds for food and medicine; the rest goes to the UN's
bureaucracy and to Kuwait.
But Iraq's actual exports are considerably lower because the US has
steadily blocked or delayed Iraq's purchase of equipment and spare
parts for its crumbling oil industry.
Now, ironically, western governments fear Saddam may throw world oil
markets into a new crisis by halting Iraq's modest oil exports. World
petroleum consumption has hit 76 million barrels daily. Oil is so
scarce right now that even a minor reduction could trigger an
international panic that could spill over into financial markets. In
short, our punishment of Iraq has come to haunt us.
Another nice irony. During the made-for-TV Gulf War, Americans
thrilled as they watched armadas of macho armored vehicles sweep
across the desert. This ignited consumer lust for tough-looking,
road-warrior vehicles. A friend, psychiatrist Dr. Clotaire Rapaille,
conducted in-depth studies of post-war American auto consumer psyches
for Chrysler and discovered that both men and women wanted
`aggressive' looking extreme cars.
The result: the enormous upsurge in huge, menacing RV's and now,
paramilitary Humvees - both major gas guzzlers. With nearly half the
vehicles on the road getting 12-13 mpg, and with booming economic
times, is it any wonder gas prices are sky high? Dr. Rapaille also
helped conceive Chrysler's new `PT Land Cruiser,' which are selling
like crazy precisely because consumers say it looks `menacing,' and
like a `gangster car of the 30's.'
If Iraq's oil industry was quickly refurbished and allowed to export
at full capacity, there would be no shortage, and prices would fall
sharply. This column predicting way back in 1991 that oil shortages
would ensure if Iraq was kept out of the market. And so they have.
But Iraq's Arab oil `brothers,' as well as competitors Iran and
Russia, don't want Iraq to resume exporting because prices would drop.
Kuwait knows Saddam thirsts for revenge. Israel exerts intense
pressure on the Clinton Administration through its American lobby and
influence over the State Department to keep Iraq bottled up. Britain
wants Iraq shackled to protect its lucrative Gulf markets. No American
politician wants to risk being called `soft on Saddam' or letting him
out of his cage.
None of the above care much that 5,000 Iraqi children die each month
from disease and malnutrition mainly caused by the cruel western
embargo. When asked about this, US Secretary of State Madeleine
Albright replied, in words that will one day come to haunt her and the
United States, it's `a price worth paying.'
This column heartily disagrees. It would be far cheaper and more
humane to lift the embargo, let Iraq export oil, and bribe ogre Saddam
to be good, as Washington has done and continues to do with
nuclear-armed North Korea.
Instead, consumers in Europe and North America are paying the cost,
via high gas bills, of sustaining Iraq's long imprisonment and
prolonging the suffering of its people.
Copyright Eric Margolis 2000
