Q, good article but I think the validity of its point of view should be tested against what I believe are the underlying motivations of the Bush Administration in pushing for an overthrow of the Saddam regime. The article concludes with the statement that:
"Iraq's investment gameplan could change completely if sanctions are lifted or the United States succeeds in ousting Saddam for his alleged weapons of mass destruction.
But even the most open-minded, Western-leaning Iraqi technocrats are likely to drive a hard bargain.
'Iraqi oil officials do not see themselves as backward or disadvantaged and having to give away the store," said Amy Jaffe, President of AMJ Energy Consulting in Houston.
"But if the government feels desperate for investment, terms would have to be commercial to get deals done quickly.' "
If, in fact, the primary underlying goal of Bush-Cheney is not to help the Iraqi people or aid in the war against terror, but rather to assure a secure source of cheap energy for the next decade or two, then that statement is naive. The "new" government in Iraq might find itself totally dependent upon the U.S. and in a poor position to drive a hard bargain. There may well be long term lease agreements enforceable by the U.S. government. This would not only provide a source of abundant, cheaper oil under our control, it would also seriously undercut the ability of OPEC to control prices and, of course, it would place the major oil companies in a position to make huge profits once again.
The belief that the price of oil will not be immediately effected if this scenario starts to unfold seems unrealistic to me. If the world expects that there will be a substantial increase in the supply of cheap, high grade oil in two or three years, the price of oil today will drop dramatically as any producers with extra capacity increase production to sell at today's prices rather than wait for tomorrow's more abundant supplies to undercut pricing.
I can only speculate that this may occur. It does, however, seem consistent with some of the decrease in exploration at a time when the short term price of oil remains high, and it certainly provides a better explanation for the administration's push on Irag than the explanation offered by Bush and his staff.
I sold the last of my oil holdings today, (keg), because I have a suspicion that there are a lot more knowledgeable investors in the industry and I don't want to try to trade with them.
It's an interesting issue and I hope my cynical view turns out to be erroneous, but the subtle signs say to watch out. Ed |
