De Bush Bende 38

'Most important, though, is to spread the word to as many people as possible.
How much money will big oil companies make in Iraq, how much money and blood
will US citizens lose?

Can those with economic background or research skills give me a better
picture of this issue. These are my rough calculations based on bits and
pieces of information on oil production costs, royalties etc.

According to a study by Prof R. Dobie Langenkamp (Director, National
Energy-Environment Law and Policy Institute University of Tulsa College of
Law):

“Iraq has reserves of at least 112 billion barrels. The significance of this
number is often overlooked. Imagine all the oil reserves in the U.S., the
North Sea, China, the Caspian Sea, and West Africa all combined under one
jurisdiction. This oil is not to be found under high seas in 1,000 feet of
water or more, in arctic snows, in equatorial jungles or in third world
conditions where men and material must be brought in from great distances.
Iraq’s oil is on land in a flat, temperate, geographically compact area and
at a depth which is commonly drilled without difficulty. Iraq is not a
third world country and possesses considerable experience and skill in
petroleum development.”(www.beg.utexas.edu/energyecon/documents/
behind_the_gas_pump/Langenkamp_FullPaper.pdf)

Iraqi oil production costs are the lowest anywhere but of course do not
include security because that is picked up not by the oil companies but by
US taxpayer funded; as one retired general put it, the US army has become
corporate mercenaries paid by tax payers. So far we have spent $400 billion
for securing Iraq and that is not counting billions more separate issues.
Projects like the separately funded $600 million US “embassy”: a large US
city that will serve to house all the 8000 imperial employees of the US who
will use it as a base not just to control/manage Iraq but be the epicenter
of US power in West Asia. The cost of production in Iraq for oil companies
is estimated at $1/barrel. But even if one doubles that to $2 and the
current price of Iraq crude on the market is $52-60/barrel, this means that
at a minimum there are $50 per barrel profit. It is not clear where this
money has gone in the past nearly four years (roughly $150 billion in
profit, perhaps congress will find the guts to investigate?) but I am more
interested in a forward looking projections/understanding.

The draft oil bill pushed by the US (and mentioned in Bush’s speech) offers
Big oil companies production rights for 20 years at a mere 12.5% royalties
to the Iraqi government
http://www.time.com/time/world/article/0,8599,1576593,00.html) . The delay
in approval is not about whether to accept the 12.5% (this was not
negotiable) but about how to divvy up the 12.5% among the provinces (as Bush
clearly pointed out)! The US imposed that number of 12.5% based on deep see
royalties on US oil companies in the Gulf of Mexico but this is a rip-off
because:
1) Deep see drilling costs about 20 times higher than surface drilling
2) American and British oil companies pay significant local tax and incur
significant other expenses (e.g.; on environmental issues0 that they do not
have to do in Iraq.
3) US law promotes sharing of US natural resources with US companies not
foreign companies.

OK so this leaves the oil companies with roughly $44/per barrel. But what
about exploration costs you say: well much of Iraq oil is located in well
designated and discovered areas and close to the surface, the cost would be
minimal. But even if it triples the cost to $3 , that would still leave
$43/barrel profit. OK say $40 to account for the $100-500 million executive
pays of these companies/administration etc. At a minimum of 3 million
barrels per day production, this is $120 million per day profit or $43,800
million per year or $876 billion for the 20 years at a minimum (if no new
field development happens). But this is assuming production remains as is.
Iraq actually has reserves estimated at 120-300 billion barrels. Taking an
intermediate/low level of 150 billion barrels and an extraction rate of
2/3rd means roughly 100 billion barrels total x $44/barrel profit, that
means $4.4 TRILLION. The bottom line is that it appears the Big oil
companies are about to make between $1 to $4.4 trillion over the next 20
years if Bush succeeds in his plan (he says “win in Iraq”). If he fails,
that money could be used for the Iraqi people AND the security for oil
company profits would Corporate greed would not be watered by US and Iraqi
blood and fertilized by our taxes. For those with backgrounds or research
skills, I would love to have more information or corrections to this
guestimation of the oil loot. Email me.

Addendeum: the following link a brief history of Iraq oil policy under the
leadership of Kassem before CIA asset Saddam Hussain tried to assainate hjm
and later Baath party with Saddam being key succeded in ousting him.
http://www.globalpolicy.org/security/oil/5873nation.htm

Mazin Qumsiyeh'

Zie: http://www.qumsiyeh.org/