Hi Reid,
As the story suggests, OPEC is concerned about falling oil prices and will very likely limit output tomorrow.
There is a lot of information on OPEC on the DOE site. Iraq is a member, and in fact OPEC was founded in Baghdad almost 45 years ago. Iraq was one of the founding members.
<< Organization of Petroleum Exporting Countries (OPEC) members include Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.>>
eia.doe.gov
It seems you are hopeful that a friendly regime in Iraq might boost production to help the U.S. in a gesture of gratitude. I think this scenario is highly unlikely for a number of reasons, not the least of which is simple business economics.
Iraq has been devastated economically. There are few priorities more important than rebuilding the country economically and physically (infrastructure). So, they will naturally do whatever they can to maximize profits.
Just imagine if you were elected President of Iraq, and were in charge of oil output. Would you intentionally increase oil output, knowing it would mean an economic sacrifice at a time when your country desperately cannot afford it just to help your American friends?
I think being a good and successful businessman, this would be a highly unlikely course of action for you. The first priority is to make money. You can easily square this with your new relationship with the U.S. by telling yourself "hey, they are the strongest economy in the world, and we are one of the weaker ones.... they really don't need the help, and we desperately do, and I would much rather we be self-sufficient than have to rely upon their handouts, which may not always be forthcoming. They will do just fine, even if they have to pay a little higher prices for oil. They will survive, but we need to dig ourselves out of the Bronze Age. Besides, even though we are very grateful they got rid of Saddam, they deserve to foot some of the bill since they contributed to the destruction and disruption in the first place (we can't bill Saddam, after all). And nothing will please the Iraqi people (and so ensure my continued power) more than growing prosperity. So.... I better adjust production to a point where our profits are maximized. If I don't, my political opponents will be sure to point that out, and that might jeopardize my position of power. And we certainly don't need any more political instability. When the Iraqi people become prosperous, they will want to keep me in power, and they will be much less concerned with or tolerant of people blowing up things and shooting at one another, which will make it much easier for me to maintain order."
In other words, I think business/economic realities will put any purely political considerations in the back seat, and I think this is what usually happens. The rhetoric can always be spun in the desired direction, even if the economics say otherwise.
JMVHO.....
Terry |
