Drinking Iraq's Milkshake

Spencer Ackerman takes a look at the substantial problems facing oil companies looking to do business in Iraq. Some contracts were handed out recently, but those "aren't production contracts, but preliminary technical contracts" and really pumping oil would need to wait on Iraq writing a hydrocarbon law and the security situation improving to the point where Western companies are prepared to send their people over. The larger issue, though, is that to make big money in Iraq you'd have to make big infrastructure investments in Iraq. Investments with an uncertain payoff:

The oil conglomerates "are the toughest negotiators," said Martha Brill Olcott, a former Unocal adviser now at the Carnegie Endowment for International Peace. "They'll work out a contract that insulates themselves from political risk. That's where countries get upset -- they paid too great a price to protect Western companies from political risk. That's a problem: Iraqis might agree to one set of terms now, but you can imagine in 2015, if we're lucky and it's stable [in Iraq], then they'll say, 'Why the hell did we agree to these terms?'"

Now I'll be quick to agree that this isn't the only factor at play, but it seems to me that a healthy portion of what's driving interest in a long-term US military presence in Iraq is precisely a desire to continue exercising "influence" in Iraq such that we can mitigate the political risk faced by your friendly neighborhood oil companies. Western companies don't like it when their developing world investments are lost to nationalization, and their desire to prevent this from happening has often had a powerful pull on American foreign policy.

Comments

"Now I'll be quick to agree that this isn't the only factor at play,"

That's cause you're a puss.

Here's the other factor: the United States is interested in preserving strategic control over one of the world's largest oil reserves because doing so immensely strengthens the United States global position vis-a-vis other emerging, high-energy consuming Powers.

Posted by Mark | July 10, 2008 3:25 PM

How come these oil companies aren't paying for the invasion and occupation? I thought Republicans are all about "user fees"!

Posted by Dan F. | July 10, 2008 3:28 PM

"Western companies don't like it when their developing world investments are lost to nationalization, and their desire to prevent this from happening has often had a powerful pull on American foreign policy."
Which is a shame, since American citizens would still be able to buy oil at market rates regardless of whom we're buying it from. Only a few rich people who run oil companies would be adversely affected - they'd have to be satisfied with a few billion less in profits.

Posted by bobbo | July 10, 2008 3:32 PM

I thought Republicans are all about "user fees"

They are. We get used, and they get their fees.

Posted by phil | July 10, 2008 3:41 PM

bobbo wrote: "Which is a shame, since American citizens would still be able to buy oil at market rates regardless of whom we're buying it from. Only a few rich people who run oil companies would be adversely affected - they'd have to be satisfied with a few billion less in profits."

Rich people and people who work in the oil industry, like myself. I've worked in relatively low-level oil jobs in Nigeria, Angola, and Brazil. My brother has done so all over Africa, Venezuela, Kazahkstan, and elsewhere. There are an army of American oil workers--many of whom work for service companies like Schlumberger and Weatherford (as opposed to E&P or integrated companies like Exxon), who benefit from working in foreign countries for national oil companies as contractors. Considering how much money we as a nation send to those countries, it's nice if at least a few American oilfiled workers can send some back. It's not just fat cats who benefit.

Posted by RWB | July 10, 2008 3:53 PM

bobbo wrote: "Which is a shame, since American citizens would still be able to buy oil at market rates regardless of whom we're buying it from. Only a few rich people who run oil companies would be adversely affected - they'd have to be satisfied with a few billion less in profits."

Rich people and people who work in the oil industry, like myself. I've worked in relatively low-level oil jobs in Nigeria, Angola, and Brazil. My brother has done so all over Africa, Venezuela, Kazahkstan, and elsewhere. There are an army of American oil workers--many of whom work for service companies like Schlumberger and Weatherford (as opposed to E&P or integrated companies like Exxon), who benefit from working in foreign countries for national oil companies as contractors. Considering how much money we as a nation send to those countries, it's nice if at least a few American oilfiled workers can send some back. It's not just fat cats who benefit.

Posted by RWB | July 10, 2008 3:57 PM

Western companies don't like it when their developing world investments are lost to nationalization, and their desire to prevent this from happening has often had a powerful pull on American foreign policy.

The Venezuelan re-nationalization of recently privatized utilities and petro industries is the only reason Bush has put Chavez high on his shit list. That's a damn powerful pull from Exxon Mobil, Chevron, ConocoPhillips (petro), Brandes Investment Partners (telecom), AES Corp (electricity), and most of the investment banks on Wall Street.

Posted by cmholm | July 10, 2008 4:36 PM

it seems to me that a healthy portion of what's driving interest in a long-term US military presence in Iraq is precisely a desire to continue exercising "influence" in Iraq such that we can mitigate the political risk faced by your friendly neighborhood oil companies.

Sure, but really we're talking about investment by any oil companies, whether they are American, European, Chinese, Saudi Arabian, etc. No one is going to put their capital in unless they are convinced it will be protected for a long time. It is in our interest to get oil pumping, which requires that capital.

Posted by right | July 10, 2008 4:36 PM

Of course, RWB, I was being hyperbolic and demagogic. But my guess is your skills would be marketable all over the world regardless of who your employer is. In any case, I hardly think that the fact that oil companies employ people is an argument for invading oil-rich countries and demanding that American oil companies obtain drilling rights.

Posted by bobbo | July 10, 2008 4:44 PM

That is, for only $100 billion a year in military spending to occupy Iraq, oil companies can make $10 billion a year in profits by extracting oil. And it only costs the oil companies tens of millions in lobbyist fees. Good work if you get it.

Posted by Chris M | July 10, 2008 6:38 PM

The reason the Bush, and any administration that follows, will not bring the troops home is because the oil companies will not go into Iraq without the American security umbrella. It is simple: commit the American troops to remain in Iraq for a definite future period (as we sought in the Status of Forces Agreement) and the oil companies will come in and expend money to extract the oil. The period of time is such as it will take for the oil companies to make a profit on their investment. McCain's 100 year promise sounds about right.

Posted by Llyonnoc | July 10, 2008 7:09 PM

Only major oil companies, without regard to "nationality", have the expertise and investment cash available to repair Iraq's production infrastructure in a timely manner, and bring the huge new fields everyone knows are there on line.

We've got about 50 years before serious alternative energy sources are on line, and the choice is between a gradual transition, or a global crash that would make the Great Depression look mild.

Time to grow up.

Posted by robert powell | July 10, 2008 7:52 PM

This is a whale of an understatement:

"Western companies don't like it when their developing world investments are lost to nationalization, and their desire to prevent this from happening has often had a powerful pull on American foreign policy."

This desire to protect corporate prerogatives not only has a powerful pull, but accounts for virtually ALL of U.S. foreign policy since 1945 (and a good bit of it before then). If we allow for oil companies as well as others, this is the motivation for all our policy in Iran, Iraq, Venezuela, and everywhere else that the U.S. has exercised its foreign policy actions.

Global coups, murder, extortion, state terrorism, and economic oppression are that policy.

Posted by Al Peck | July 10, 2008 9:44 PM

You shouldn't masturbate Powell, it's unseemly.

And as far as the great depression goes, (which if it comes Iraqi oil isn't bailing us out of anyway), how do you suppose being a dead Iraqi compares to 1930s food lines?

Posted by mike | July 10, 2008 10:23 PM

"I think the U.S. influence in Iraq is highly overstated for the last few years," said Makovsky, the former Pentagon Iraq official. "It's their oil. They're making decisions. And they're clearly not doing some things [the administration] liked. It's been very clear for several years now that they want to cut their own path, conspiracy theories aside."

So this is why McInsane whats to stay for 100 years beause it would surely take that long to to wear out the will of the Iraqi people.

Poor little Bushie and trickey Dicky with thier all pyramid scheme energy task force band - it looks like Hunt oil was the only winner in that ruse.

But as blatantly as Obama lied about this FISA Bill - I seriously doubt he'll ever leave Iraq either. Obama KNEW that FISA wasn't a terrorist problem but it is the same game, the very same stuff we've been looking for almost eight long years with Bush, corporations want something so, terror, terror is the cheap excused and than the corporations get everything they wanted, irregardless of what Americans citizens wanted, so Obama is going to get oil deals before leaving this war too, so we're not leaving.

Posted by Me_again | July 10, 2008 10:35 PM

"Time to grow up" - says a child who imagines that we have always been at war with Eastasia and will tell you so at every opportunity.

The reality being that no matter the "need" the United States does not have a right to the oil God so thoughtlessly placed under land inhabited by brown people. Only brain dead thugs like robert powell and Will Allen imagine otherwise. The United States military has no business acting as a power-broker for multi-national oil companies, no matter how many thieves and murderers support that course of action.

Posted by Not as Bloodthirsty as robert powell | July 10, 2008 11:39 PM

Talk about brain-dead thugs. Only simpletons blinded by ideology thing anyone is going to "steal" Persian Gulf oil. It is sold by enthusiastically willing sellers, currently at a very dear price, and is crucial to the economies of the entire industrialized world.

Smarter trolls, please.

Posted by robert powell | July 11, 2008 3:20 AM

Powell, the dumbest fucking troll on this site - and it's questionable whether that's Al or Chris Ford or some other idiot - is smarter than you are.

Because you're just a lying propagandist paid to post the same bullshit day after day on as many blogs as you can reach.

Which is an even more pathetic job than the one I have.

Posted by Richard Steven Hack | July 11, 2008 3:58 AM

It's amazing that the bloodthirsty fucking moron robert powell can type. Hell, it's amazing someone that mindbogglingly stupid manages not to have such stupidity shut down his autonomic system.

Listen you dull-witted baboon, the whole point here is that those "willing sellers" in Iraq are the puppet government of the United States and even they are balking at the terms set by a bunch of foreigners who want to set terms that are not, in fact, "dear."

See, here's what dimwitted clowns like you don't get - we are talking about a finite resource. A deal that looks good today might not be good tomorrow. And you know what? When that resource is gone, not one of you idiots is going to care at all about the people of Iraq. You didn't when you started cheering on their slaughter; the only reason you pretend to now is because you know that the rest of your bullshit excuses have been demolished.

In other words, a deal that somehow prevents the Iraqi people from fully benefiting from their resources is theft. A deal forced on the people of Iraq because there's a great big bully with its boot on the neck of the Iraqi people is theft. Those who support such an arrangement are thieves. Because this is all enforced by violence and the threat of violence those people are also murderers.

Where does that put you mr. powell?

Posted by Not as Bloodthirsty as robert powell | July 11, 2008 5:01 AM

Very elegant and persuasive, bloodthirsty. You have such an obvious grasp of geo-politics and macro-economics I'm surprised you have time to post. Why, you know almost as much about Iraq as The Incredible Hack, which is even less than he knows about how I earn my living.

It's a comfort to know that no matter what party or candidate wins in the foreseeable future, the one thing we can count on is that raving morons like bloodthirsty and hack will only have influence to the extent that they damage policies they support by mere association. Karl Rove absolutely loves wackos like this.

Posted by robert powell | July 11, 2008 11:22 AM

Yes, we will be forever afflicted with bloodthirsty morons like yourself whose knowledge of geo-politics and macro-economics is less than that of Will Allen one of the dimmest clods ever to post anywhere.

The problem you have with my posts is that they actually cut to the heart of your story - they flay the self-image you try to maintain when you tell yourself that "we've always been at war with Oceania. And it really all was for humanitarian reasons – someone needed to stop all those senseless deaths caused by our sanctions, who better than us and what better way than to drop bombs on their heads?" You cannot, without resorting to misdirection and outright lies, justify the assault on Iraq.

As for your brilliant rebuttal, could you point to the line where you explain why it is that the United States Military should be involved in determining the correct recipients of oil wealth? I missed it what with it being buried under your idiotic projection calling people who disagree with your brutal plans of domination and theft insane.

Could you point to your exegesis on geo-politics that explains why the people of Iraq had to die for your right to set the terms of sale on their oil? Or perhaps your learned essay on macro-economics that explains the purpose of military might as an aid to the invisible hand? Perhaps it was the part...well, no there doesn't appear to be any substance to your post at all.

It's almost as if you were trying to demonstrate your total inability to reason.

By the way, please, please, please, learn how to generate a decent insult. "Very elegant and persuasive, bloodthirsty." Really? That's the best you could do? Have some pride fuckwit. Even if that's all you are going to do, "eloquent" is a much better word choice.

Posted by Not as Bloodthirsty as robert powell | July 11, 2008 12:56 PM

I don't have any problems with your posts, bozo. They are a much more eloquent refutation of your credibility than anything someone else could write.

Nations have been going to war over the restraint of trade in vital commodities since there were nations. You should read more books and fewer websites.

But really, keep up the good work. "Humanitarian" supporters of Saddam Hussein's regime are really important exhibits in the nutroots zoo.

Posted by robert powell | July 11, 2008 2:13 PM

The amusing thing is that morons like Powell actually think things are going to turn out well for them.

This is the main reason they're complete morons.

Posted by Richard Steven Hack | July 11, 2008 6:05 PM

But really, keep up the good work. "Humanitarian" supporters of Saddam Hussein's regime are really important exhibits in the nutroots zoo.

Right. The hundreds of thousands of dead Iraqis are my fault. Not the fault of idiots who cheered on the assault on their nation. Not the fault of those who ensured that the real government of Iraq would be chaos. Me. How fucking moronic can one poster be - and yes robert the bloodthirsty that's you.

Then We also have this gem:

Nations have been going to war over the restraint of trade in vital commodities since there were nations.

Here our favorite thief and murderer makes nearly explicit what he literally does elsewhere - this is a war to take the resources away from "those" people. Here's the thing you thickwitted dumptruck of a child: murder has been with us since there has been an us - even (and given how stupid you are, perhaps you didn't notice this) before there were nations. That doesn't mean I won't condemn it.

And look at your almost human euphemism "restraint of trade." Did you know that they call it the "Department of Defense"? It turns out we have a separate department concerned with commerce. If you apply both of your brain cells you might even think of a clever name for it.

It also turns out that the Department of Defense is not (and this will shock you to your core) a part of the Department of Commerce (I know, I should haev given you more time to figure it out, but I'm not patient enough to wait a week for you to sound it out).

In other words, you vile little apologist for butchery, the United States military has no business concerning itself with issues of "restraint of trade." Its purpose is to defend this nation its allies, and under emergency circumstances innocent individuals.

Once again you are back to the idiotic taunt that anyone who opposes your butchery of brown people to steal their resources is a supporter of Saddam Hussein. "Fuck you, you bloodthirsty monster. You have stolen my tax money for the purposes of slaughter. Your life stands as a testament to malice."

Posted by Not as Bloodthirsty as robert powell | July 11, 2008 11:34 PM

Bloodthirsty = 23456

Posted by Karlene | July 19, 2008 2:43 AM