Well Wheres the Oil?

[PanzerJaeger]

All through the run up to the Iraq war and into the liberation some people, (I wont call them what they are for fear of being labeled an evil labeler ~;) ), screamed that America was only going into Iraq for the oil. We, the Americans, were scolded for using our army to defend oil pipelines instead of museums and hospitals. We were berated with vague and unsubstantiated links between the administration and "big oil", blah blah blah.

Well oil hit 68$ this morning, who knows where it is now..

Where is all this oil we are supposedly raping Iraq of? Where is the oil we are -according to the bumperstickers i read - trading for blood? Where are all those supposed oil trucks our troops are losing their lives defending going to?

Does anyone seriously still believe this myth?

[Adrian II]

We were berated with vague and unsubstantiated links between the administration and "big oil", blah blah blah.Read (http://news.bbc.co.uk/1/hi/programmes/newsnight/4354269.stm)

[King of Atlantis]

Your correct on this point. I am still against the war, but i have never claimed it was for oil, maybe for a corperation invasion though ~;)

[sharrukin]

Well I don't see what so wrong about going to war for oil.

It is a concrete and clear aim, and was in fact the policy of the US for many years that they would not let the Soviets get a hold of the Middle East. The RDF (rapid deployment force) was created for that exact purpose.

Now I think there are better ways to get oil than invasion. One is to buy it. The Iranians continued to sell oil to the west even after the 1979 revolution. That is one reason I don't think our 'alliance' with Saudi Arabia makes sense.

We went to war with Iraq over the invasion of Kuwait because of oil. The French, British, and others did as well.

The second invasion was not however IMO over oil, or at least it wasn't the primary reason, but I am sure it was considered as a supporting factor. By itself, it would never have been the reason for war.

[Tribesman]

Panzer , you sad man , you really thought(or didn't think) that what mattered was the price of a gallon in your fuel tank .
Don't you realise yet that you don't matter , you are just a pawn that is willing to pass off the governments shit (it doesn't matter what government it is , left/right) ,you get screwed either way .
If you think this stupid conflict was about oil or not , you cannot deny that the oil companies are absolutly creaming it , they are benefitting while you are paying , just like it was under the oil/food bullshit , just as they benefit under trade agreements , just as they benefit under just about everything that goes .
It doesn't matter who is the president , or if the so called left/right are in ascendancy ...you are going to get screwed .

[Red Harvest]

All through the run up to the Iraq war and into the liberation some people, (I wont call them what they are for fear of being labeled an evil labeler ~;) ), screamed that America was only going into Iraq for the oil. We, the Americans, were scolded for using our army to defend oil pipelines instead of museums and hospitals. We were berated with vague and unsubstantiated links between the administration and "big oil", blah blah blah.

Well oil hit 68$ this morning, who knows where it is now..

Where is all this oil we are supposedly raping Iraq of? Where is the oil we are -according to the bumperstickers i read - trading for blood? Where are all those supposed oil trucks our troops are losing their lives defending going to?

Does anyone seriously still believe this myth?

Funny, many supporting the Administration were pointing out that the war/rebuilding would pay for itself in oil. The damage to the production/refining infrastructure was underestimated by the Admin. Post war sabotage/insurgence was underestimated by the Admin--especially its effect on bringing production and refining back on line. Troop requirements to stabilize the country were underestimated by the Admin. Hence oil production from Iraq has not approached what the White House expected.

The lack of real energy policy from 2001 is partially responsible for the oil run up. Oil demand is inelastic, it takes time to move it. Dubya's comment on energy conservation was that "energy conservation isn't the answer." (Wish I had the full text of the quote, I remember when he said it during his great "Energy Policy" summit at the start of his administration.) As a result consumption grew faster than production. OOPS! Conservation is the answer. Production can't keep up despite being given a headstart by Dubya's policy. A number of us predicted this would happen regardless of Iraq. Note also that U.S. production has declined from 9.06 million barrels/day in 2000 to 8.70 million barrels a day in 2004. World production went from 77.8 million BPD to 83.0 million BPD from 2000 to 2004.

I'll tell you where the oil went, it went into that fleet of new larger SUV's. It went toward feeding the reversal in fuel efficiency. It went to other countries like China who are growing rapidly and using more energy than before (and still a small fraction of what we use per capita.)

[RabidGibbon]

Where are the WMD's?

[Ronin]

All through the run up to the Iraq war and into the liberation some people, (I wont call them what they are for fear of being labeled an evil labeler ~;) ), screamed that America was only going into Iraq for the oil. We, the Americans, were scolded for using our army to defend oil pipelines instead of museums and hospitals. We were berated with vague and unsubstantiated links between the administration and "big oil", blah blah blah.

Well oil hit 68$ this morning, who knows where it is now..

Where is all this oil we are supposedly raping Iraq of? Where is the oil we are -according to the bumperstickers i read - trading for blood? Where are all those supposed oil trucks our troops are losing their lives defending going to?

Does anyone seriously still believe this myth?


silly bear.....if oil was cheaper aliburton(whatever the hell the spelling is) couldn´t make enough money out off it ~D

you think this was done so that american´s could buy cheap gas?

[lancelot]

Well Im cynical enough to believe that hikes in oil prices are probably nothing more than a clever marketing ploy to force exactly what is happening-a nice big price increase.


@panzer

Ok, so the war isnt about oil. What do you think the primary motivation is? Do you believe its about the myth of removing nasty dictators or protectinig the innocent?

Its just I find it coincidental that the US isnt really bothered about all the dictators in resource poor African nations (Zimbabwe for instance)...

You take on that?

Ultimately, I just dont believe the US is that selfless..

[Taffy_is_a_Taff]

I drank it,
I admit it, I am am internal combustion engine powered robot.

's true.

[ichi]

oil at $68 bucks a barrel confirms my suspicions, not undermines them. The Saudi's control most of the oil, huge corporate interests control a lot, Iraqi oil is limited due to insurgency damage and mismanagement.

When people said that this was about oil, dude, it wasn't so that cheap plentiful Iraqi oil would flow into your gas tank. 'About oil' means that the current admin's corporate sponsors could get filthy richer.

and it wasn't all about oil. Saddam represented a huge threat to the Saudis, sure, but W also wanted to finish Dad's job, and get us in a war where he could cry 'emergency' and get lots of free passes legally and politically, and also to divert our attention from Enron and ANWR and a lot of other nasty stuff.

ichi :bow:

[Navaros]

All through the run up to the Iraq war and into the liberation some people, (I wont call them what they are for fear of being labeled an evil labeler ~;) ), screamed that America was only going into Iraq for the oil. We, the Americans, were scolded for using our army to defend oil pipelines instead of museums and hospitals. We were berated with vague and unsubstantiated links between the administration and "big oil", blah blah blah.

Well oil hit 68$ this morning, who knows where it is now..

Where is all this oil we are supposedly raping Iraq of? Where is the oil we are -according to the bumperstickers i read - trading for blood? Where are all those supposed oil trucks our troops are losing their lives defending going to?

Does anyone seriously still believe this myth?


it's not a myth. didn't you hear about all the deals Haliburton is getting out of Iraq's oil? several billion dollars

hoarding Iraq's oil does not mean that you will get a better price on oil. it just means that big business will be able to extort you even more.

[PanzerJaeger]

Panzer , you sad man

Hey Tribesman, go fuck yourself. ~:)


To you other guys, thanks for helping me understand your viewpoint. The idea that the war was about lining the pockets of the oil companies is a lot more believable, but it wasnt made clear by the anti-war crowd. Most people I know assume that the "oil theory" has to do with reducing the price at the pump.

Again, thanks for the explanation - people usually make a lot more sense when you hear them first hand. ~:cheers:

Oh and..


Ok, so the war isnt about oil. What do you think the primary motivation is? Do you believe its about the myth of removing nasty dictators or protectinig the innocent?

If you look at the history of the Iraq saga since 1991, Saddam continually attempted to undermine the US and presented himself as an enemy and a threat. History shows that both the Clinton and Bush administrations felt that Saddam was hostile and a real danger - Clinton of course used military action against him several times.

I truly believe that the Bush administration thought that he had WMDs. He made it look that way, and most people in the intelligence world believed it.

I think the liberation was a culmination of years of failed policies and a perceived growing danger - ie the sanctions breaking down and Saddam free to pursue his nuclear program.

[Gawain of Orkeny]

There is little doubt in my mind that the war was about Oil, and Iraq simply presented itself as the best target for that purpose.


Of course the war was about oil in a large part. But not to make Bush and his freinds rich as some hear seem to be saying but to keep the flow of it stable. Again we get very little oil from Iraq. There were so many reasons that could be used to justify invading Iraq. I truly believe it is the centerpiece in the war on terror . The best thing we can do is bring freedom and democracy to that region of the world.

[Gawain of Orkeny]

We, as in the American people, get very little oil from Iraq. The big companies that Bush has handed Iraq off to are, however, getting extremely rich.
THey already are extremely rich. So its yours and other opinions that these people are sacrificing American servicemens lifes to get even richer. Im sorry I dont trust the government but this is more than I can believe. They would be getting richer with far less fuss without invading.

[sharrukin]

I think a large part of it is about the Neo-con faction within the administration wanting a strategic platform in the middle east, and their hopes to use it to destabilize the region and introduce democracy. Things changed along the way and made these goals seem less and less realistic, but this was a part of the reason IMO.

[Proletariat]

With Neo-Cons in power, is it so surprising that we could sacrifice lives for money?

Can you define 'Neo-Con'? Do you think Bush is one?

I have never heard the connotation that a Neo-Con is a capitalist who oils his machine with the blood of the military proletariat before.

[Proletariat]

Much better. That's the tin-foil armored crowd I can recognize.

[sharrukin]

Can you define 'Neo-Con'? Do you think Bush is one?


Bush in my understanding is not a Neocon, but has a fair number of Neocons as advisors.

My understanding was that they described themselves as Liberals mugged by reality?
They generally seem to have similar views to Liberals on many things except military action and some financial aspects.

Is this not the case for most?
What is a Neocon in your opinion?

[Strike For The South]

Neo linkage (http://en.wikipedia.org/wiki/Neoconservatism_(United_States))

IMO the war wasn't started solly for oil but you should always be distrustful with a man like bush for the sole reason of his many big business connections

[Red Harvest]

Much better. That's the tin-foil armored crowd I can recognize.

I have to agree with him on this, Proletariat. Having Dubya and Cheney (who used to run Haliburton) calling the shots has meant that oil company/oil services profitability takes precedence over everything else.

Cheney did some "aggressive accounting" at Haliburton that forced later restatement of earnings and should have gotten him in big trouble. He was lucky with respect to timing. What he did is something that is clearly a no-no. He claimed revenue for cost over runs on major Haliburton projects that were in dispute, and that were not really eligible for repayment since they were fixed-price contracts. Haliburton claimed 100% of the disputed items would be in Haliburton's favor. There is no way to justify that accounting wise, because the disputed items would all have to arisen from customer change orders. The real kicker though is that they didn't bother to disclose the accounting practice change when they started doing it.

Quoting from a lawsuit in the matter.
"On information and belief, by virtue of the Change in Accounting Principle, Halliburton reported unbilled receivables of $98 million for the year ended December 31, 1999, unbilled receivables of $113 million for the year ended December 31, 2000, and unbilled receivables of $234 million for the year ended December 31, 2001, based on unapproved and disputed cost overruns, change orders, and unresolved claims, without disclosing the Change in Accounting Principle to book speculative revenue on unresolved claims and change orders not approved by its customers. The undisclosed Change in Accounting Principle and the revenue recognition arising therefrom violated Generally Accepted Accounting Principles (“GAAP”) because such revenues were not probable and could not be reliably estimated"

The end result of course is to artificially inflate profits. This makes Cheney and other execs wealthier at shareholders (aka "suckers") expense.

[Gawain of Orkeny]

Here heaven forbid you would all HAVE to read this so Ill just provide a link you can ignore ~D

Cheney doesn't gain a penny from Halliburton's contracts (http://www.factcheck.org/article261.html)

[Redleg]

Here heaven forbid you would all HAVE to read this so Ill just provide a link you can ignore ~D

Cheney doesn't gain a penny from Halliburton's contracts (http://www.factcheck.org/article261.html)


What's funny is that many try to make it sound like Haliburton's contracts with the government just started happening. A little research will show that Haliburton has been deeply involved in infastructur contracts where-ever the United States Army is deployed.

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&contentId=A56429-2003Aug27&notFound=true


The LOGCAP contract awarded to Brown and Root in 2001 was the third, and potentially most lucrative, super-contract awarded by the Army. Brown and Root won the first five-year contract in 1992, but lost the second to rival DynCorp in 1997 after the GAO criticized the Army for not adequately controlling contracting costs in Bosnia

http://www.nationalreview.com/york/york070903.asp


In 1997, when LOGCAP was again put up for bid, Halliburton/Brown & Root lost the competition to another contractor, Dyncorp. But the Clinton Defense Department, rather than switch from Halliburton to Dyncorp, elected to award a separate, sole-source contract to Halliburton/Brown & Root to continue its work in the Balkans. According to a later GAO study, the Army made the choice because 1) Brown & Root had already acquired extensive knowledge of how to work in the area; 2) the company "had demonstrated the ability to support the operation"; and 3) changing contractors would have been costly. The Army's sole-source Bosnia contract with Brown & Root lasted until 1999. At that time, the Clinton Defense Department conducted full-scale competitive bidding for a new contract. The winner was . . . Halliburton/Brown & Root. The company continued its work in Bosnia uninterrupted.

http://www.truthout.org/docs_03/082903B.shtml


The LOGCAP contract awarded to Brown and Root in 2001 was the third, and potentially most lucrative, super-contract awarded by the Army. Brown and Root won the first five-year contract in 1992, but lost the second to rival DynCorp in 1997 after the GAO criticized the Army for not adequately controlling contracting costs in Bosnia.

Some need to do more research into the subject before making certain types of allegations. Two companies have been deep into the government's pockets since the start of the LOGCAP contracts - which was not started by this President Bush or Vice President.

[bmolsson]

Redleg, doesn't that make it a rather bad choice of Vice President ??

[Gawain of Orkeny]

Redleg, doesn't that make it a rather bad choice of Vice President ??

Did you know that Gore has a large share of Haliburton stocks? You will have a hard time finding a politicain without ties to some major corporations.

[Redleg]

Redleg, doesn't that make it a rather bad choice of Vice President ??

How so? Because he is tied to a company that has huge governmental contracts.

Hell then several Presidents had no business getting elected.

[Adrian II]

Funny, many supporting the Administration were pointing out that the war/rebuilding would pay for itself in oil. The damage to the production/refining infrastructure was underestimated by the Admin.On the mark again, Red Harvest. The BBC site I linked to explains a lot, most of which was publicly known before the war in Iraq started.

People like James Baker III were among the oil industry 'experts' who helped restore realism to the Neocon policy plans with regard to Iraqi oil. Baker's institute came up with a report (http://bakerinstitute.org/Pubs/iraq_15.html) that addressed the real issues and estimated that restoration of Iraq's oil production woule cost at least five billion dollar and restoration of its electricity infrastructure (a necessary condition for the resumption of oil production) another twenty billion dollar. And it would take years before Iraq would be able to 'pay' for anything with is oil revenues.

Apart from being a former Foreign Secretary, Mr. Baker is a lawyer and the founder of Baker Botts of Riyadh and Houston. Among his clients are Exxon-Mobil and the defense minister of Saudi Arabia. His firm is defending the Saudis in a lawsuit filed by families of 9/11 victims on the grounds that Saudi money helped pay the terrorists. He's Senior Counsel for The Carlyle Group, a company that invests pension funds in defense and telecommunications companies around the world. The Carlyle Group, led by people like Carlucci, Bush senior and Joh Major, is the nation's 10th largest defense contractor and has extensive ties to Enron, Global Crossing, Arthur Andersen, the Saudi royals and the Bin Laden family.

Mr. Baker is also George Bush' favoured negotiator for the Middle East. He has his office at 1600 Pennsylvania Avenue, right next door to George. His job right now is to 'restructure' Iraq's debt. The Saudis have a 30 billion dollar claim on Iraq.

Mind you, I'm not suggesting that Bush policies are exclusively driven by oil. I don't think they are, we've been there and discussed that. But people who want to know about the influence of big oil on the Bush administration should look no further than someone like James Baker III. If they care to look at all, of course.

[Tribesman]

Hey Tribesman, go fuck yourself.
Charming , can I add that to all my posts Panzer ?
Whats up ? don't you like facing the fact that your darling government is screwing you over , thats life , get used to it .

[bmolsson]

How so? Because he is tied to a company that has huge governmental contracts.

Hell then several Presidents had no business getting elected.

Politics and business doesn't fit with each other. No governmental positions should be held by somebody doing business with the government. For this is a rather important thing to keep the creditability and transparancy of a government institution as a presidency.

[The Black Ship]

Its just I find it coincidental that the US isnt really bothered about all the dictators in resource poor African nations (Zimbabwe for instance)...

You take on that?

Ultimately, I just dont believe the US is that selfless..

First, the former colony of Rhodesia is a Birt problem, you know...sphere of influence. Second, Zimbabwe can hardly be described as resource poor. Job poor, yes, but resource poor...

I understand Panzer's point, if you can lambaste Bush for the lack of WMD then the same scrutiny can be shown upon those that claimed "all about the oil"...can't you?

Fair is fair.

[Proletariat]

The Tin-Foil accusation is pretty trite, considering the proven (and to be fair: tin-foil-esque) actions of the US Government both in the past and present.

Huh? How does that make anything trite?



Is this not the case for most?
What is a Neocon in your opinion?


Your description is about as accurate as any, for a term that's become a trite (yes, GC. That word has a definition and an appropriate way of using it, unlike your quote above.) buzzword for anything right-wing FR related.



The end result of course is to artificially inflate profits. This makes Cheney and other execs wealthier at shareholders (aka "suckers") expense.

If this was all true, it'd be appaling. If it's true, why isn't there some Democrat leading a prosecution charge?

[Redleg]

Politics and business doesn't fit with each other.

When has this ever been true. Business in one form or another has been in the pockets of the government - or in the socialist states ran by the government.



No governmental positions should be held by somebody doing business with the government. For this is a rather important thing to keep the creditability and transparancy of a government institution as a presidency.

Yes I agree with this - but that is an idealistic opinion.

[Red Harvest]

If this was all true, it'd be appaling. If it's true, why isn't there some Democrat leading a prosecution charge?

I don't know, it absolutely perplexes me. Why doesn't the country get interested in these things? Not as stimulating as a BJ story? Bush's insider trading and failure to carry out his duties as head of the audit committee were ignored when his daddy was in office. He sold out shortly before the problems were revealed. The SEC gave him a pass. That has never gotten adequate scrutiny and never will.

Several of the parties settled with the SEC on the Haliburton deal. I don't know what became of shareholder lawsuits. The regulatory types under Dubya didn't seem all that interested (I know, we are all shocked by that... ~;) ) The regulators can pass it off as small potatoes, accept the standard "he didn't know" defense, "it seemed OK" at the time defense, etc. A lot of the prosecutions and settlements have been coming from folks like Spitzer anyway rather than from the Feds. I've not seen all that much reform considering the magnitude of the financial scandals and the trillions that investors lost.

The facts are pretty clear since the SEC forced Haliburton to restate earnings as a direct consequence (after Cheney left), and Cheney was CEO when this occurred. My company was working on projects with the same E&C firm (KBR portion of Haliburton) among others and I can tell you that unless KBR could point to some "customer change request" that produced the cost over run, they knew they had to eat it. Even the amounts on a change request would be negotiated and might not be accepted. The idea of booking 100% of the overruns as revenue is not defensible, and there is no way they can deny knowing that.

I don't believe such men have the ethics required for the offices they hold, and they've done an excellent job of proving that to me.

[Red Harvest]

Did you know that Gore has a large share of Haliburton stocks? You will have a hard time finding a politicain without ties to some major corporations.

Was Gore ever CEO of Haliburton?

[Redleg]

Was Gore ever CEO of Haliburton?

nope - but Gore is just as tied into big business as the next politician


Gore currently serves as President of the American televison channel Current and Chairman of Generation Investment Management, sits on the board of directors of Apple Computer, and serves as an unofficial advisor to Google's senior management. Although speculation about a possible presidential run in 2008 still continues, he has publicly claimed that he does not plan to return to politics.

http://en.wikipedia.org/wiki/Al_Gore


Mr. Gore served as the Vice President of the
United States of America from 1993 to 2001. Mr.
Gore spent 24 years as an elected official,
serving 8 years in the US House of
Representatives and 8 years in the US Senate
before his election as Vice President. Since
leaving government, Mr. Gore has been involved
in teaching at the university and post-graduate
level and in private business in the fields of
financial services and technology. He is on the
Board of Apple Computer and has served for
four years as Senior Advisor to Google. He is
also Chairman of INdTV.
Mr. Gore is the author of the critically acclaimed
book, “Earth in the Balance” and took the lead
on environmental issues for the Clinton-Gore
White House, including breaking the deadlock to
secure international agreement on the Kyoto
Treaty. For 8 years, he also chaired the
President’s Council for Business and
Sustainable Development and co-chaired, with
the Premier of China, the US-China Bi-National
Commission on Sustainable Development. He is
a graduate of Harvard University.

http://www.generationim.com/media/pdf-generation-bios.pdf

Coupled with the fact that he is the son of a career politician.

[lancelot]

First, the former colony of Rhodesia is a Birt problem, you know...sphere of influence. Second, Zimbabwe can hardly be described as resource poor. Job poor, yes, but resource poor...


The colonies have been independent for like 50 odd years, I really dont see their being former colonies has anything to do with it.

I also dont think your point is valid..

If Zimbabwe is in Britains sphere of influence and not americas then what the hell is the US doing in Iraq?!?

By the criteria you mention Britain alone should be in Iraq.

[Byzantine Prince]

Well other politicians having ties to Haliburton doesn't excuse Cheney who when he was CEO dealt with Iraq through the Cayman Islands even though the US and the UN had imposed economic Sanctions on Iran. ~;)

Also the fact that him and Bush are getting filthy rich off of this war whould be a clear give away of why they went in. I think anyone with an unclouded mind can see this.

[Adrian II]

Also the fact that him and Bush are getting filthy rich off of this war whould be a clear give away of why they went in. I think anyone with an unclouded mind can see this.Getting filthy rich? I suddenly feel very clouded. Could you elaborate?

[Redleg]

Well other politicians having ties to Haliburton doesn't excuse Cheney who when he was CEO dealt with Iraq through the Cayman Islands even though the US and the UN had imposed economic Sanctions on Iran. ~;)

Care to provide proof of such a statement



Also the fact that him and Bush are getting filthy rich off of this war whould be a clear give away of why they went in. I think anyone with an unclouded mind can see this.

Again care to provide proof - since if there was any - the President and the Vice President both can be impeached and tried for high crimes.
And the politicial opponents of President Bush would of already tried this tact if true.

Some interesting reading that some people are spinning to make the case against Cheney.

http://www.globalpolicy.org/security/sanction/iraq1/oilforfood/2001/0627chen.htm


The subsidiaries, Dresser-Rand and Ingersoll Dresser Pump Co., sold water and sewage treatment pumps, spare parts for oil facilities and pipeline equipment to Baghdad through French affiliates from the first half of 1997 to the summer of 2000, U.N. records show. Ingersoll Dresser Pump also signed contracts -- later blocked by the United States -- to help repair an Iraqi oil terminal that U.S.-led military forces destroyed in the Gulf War.

Former executives at the subsidiaries said they had never heard objections -- from Cheney or any other Halliburton official -- to trading with Baghdad. "Halliburton and Ingersoll-Rand, as far as I know, had no official policy about that, other than we would be in compliance with applicable U.S. and international laws," said Cleive Dumas, who oversaw Ingersoll Dresser Pump's business in the Middle East, including Iraq.

Sites like this are entertaining to look at and to get a viewpoint - but one must be careful in accepting as the truth information from such sites.

http://www.hereinreality.com/carlyle.html

[Red Harvest]

Also the fact that him and Bush are getting filthy rich off of this war whould be a clear give away of why they went in. I think anyone with an unclouded mind can see this.

No, the idea of Bush and Cheney "getting filthy rich" isn't accurate. Their friends and the industries that they have the closest affiliations with? Yes, they are profiting from this. Others make money as well, for example I've got gun club & dive buddy friends who do contract security work in the region at times. Cheney profited from financial shenanigans but not in as direct a fashion as the obvious criminal cases in the news. He used the normal route in corporate America: be "aggressive" with the books, get bigger bonuses for perceived (but not actual) performance. Dubya did the same. It's not just the highest level execs, I've had personal experience with the next two levels using the same unethical approach to try to get their *personal* performance bonuses.

The original point of the thread was apparently to prove that the war wasn't about oil, by showing oil prices have shot up anyway. The rapidly rising oil price was being used as a refutation to some arguments about the war being about oil (and not something like WMD which turned out to be a farce.) The problem is that the Administration was basing its economic arguments on the oil revenue and projections of how it would help world supply etc. Those projections, like nearly every other economic or schedule projection by the White House, turned out to be bogus.

So why didn't Iraq stabilize world oil prices? First, the production capacity isn't there and is going to take much more work than the White House projected. The Aministration underestimated occupation, infrastructure, and security concerns; we've paid a heavy price in blood for that. The lack of accurate post war planning has threatened the whole venture and could very well leave Iraq skidding into the ditch as soon as we depart. Second, demand is outstripping supply on a worldwide scale. Oil has proven to have a very inelastic demand curve...basic econ tells us the rest.

The line has been that production improvements would make up for oil gluttony. That doesn't seem to be panning out. The oil is becoming more difficult to extract, so *sustained* prices must be far higher to make extra production worthwhile. Supply growth will continue to lag demand to convince folks to add production capacity. Without excess capacity, the world is more vulnerable to any 10 cent dictator or terrorist movement that comes along.

If supply is a problem that even ever higher prices isn't fixing, what is left? Conservation and alternative sources of energy seem like a wise place to focus. Both of these pay additional benefits. They drive new tech, they reduce greenhouse gases, and they promise some environmental improvements. Since they tend to be investment intensive and require lots of construction and research, they also drive the national economy in good ways. It's a case of lifting oneself up by the bootstraps.

[Gawain of Orkeny]

Once more there is no shortage of oil only of refineries. Guess who blocks the building of new ones?

[Red Harvest]

Once more there is no shortage of oil only of refineries.

If there was excess oil and a restriction of refining capacity, then oil prices would fall, but refinery products would shoot up. Instead, the cost of unrefined oil is shooting up.



Guess who blocks the building of new ones?

The Tooth Fairy perhaps? Or the companies themselves? A massive oil company I was doing consulting work for last year to help debottleneck parts of their refineries was at the same time announcing it would close an existing refinery. The goal is to run big plants at full rates year around and reduce overhead of running smaller/older facilities and ones that are no longer close to the crude sources (depleted fields in the U.S. for example.) So the big plants get additional capacity added as needed/projected. Ideally, the companies want to run as close to capacity rates as they can all the time. Running a plant at 75 or 80% rates is economically unattractive. Running at 100% or 105 or 110% of design is what we like to do in the process industries. (Your customers get really happy when you find easy/inexpensive ways to cut through incremental bottlenecks while they are maxed out.)

Do we have refineries shut down around the country? Yes. Is building a completely new plant expensive? DEFINITELY. Would you build one in a country with declining crude production? Seems an awful gamble to me.

Tight refinery production will effect gasoline prices, especially regionally, and especially when something forces an unplanned shutdown. But that is not oil, that is gasoline.

[Gawain of Orkeny]

If it were a free market system you would be correct.


Build oil refineries - Saudi
14/06/2005 12:08 - (SA)
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# G8 to set up 'shock' trust fund

Vienna - Saudi Arabian Oil Minister Ali al-Nuaimi urged consumer countries on Tuesday to build more refineries amid warnings that Opec could do little to stem high oil prices or a shortage of finished petroleum products.

"The supply is here, inventories are building, there is certainly no shortage of supply - so build, build refineries," Nuaimi told reporters.

"Start building refineries and you will solve maybe half of the problem," he added during his traditional morning jog in Vienna, ahead of a meeting of the Organisation of Petroleum Exporting Countries due on Wednesday.

Industrialised countries have been pressing members of the cartel to raise their production ceiling for crude oil by half a million barrels per day (BPD) to 28 million bpd.

But real crude output is already far higher and in some instance running at full capacity, according to ministers and analysts.

Opec ministers arriving in the Austrian capital have cautioned that while they are broadly ready to raise their collective production quota for crude, it would have little effect on prices.

The cartel's president, Kuwait's Ahmad Fahd al-Sabah and counterparts from Algeria, Libya and Nigeria signalled they were ready to support the move championed by Saudi Arabia, the world's largest oil producer and widely regarded as the most influential member of the cartel.

An increase now could be a "first stage" towards the fourth quarter when demand is traditionally expected to increase with the onset of winter in the northern hemisphere and higher energy consumption, he said.

But Libya's energy chief Fathi Ben Shatwan echoed a widely held view that the move would be a purely "psychological" gesture.

Nuami dubbed the likely increase of 500 000 bpd "reasonable", and insisted on Tuesday that the market "should be comfortable today with the current supply".

Oil prices had shot up by $2 a barrel on Monday above the $55- mark amid continuing supply fears, partly fuelled by China's growing economy, and low-running concern that high oil prices are undermining global economic growth.

They later eased in Asian trading.

"The world will be more comfortable with prices below $50," Nuaimi said, echoing earlier comments by his Iranian counterpart Bijan Namdar Zangeneh.

He indicated that Saudi Arabia was ready to boost its own production from 9.5 bpd.

"If we have customers, we can put 11 million bpd now," the oil chief added.

But he placed great emphasis on bottlenecks caused by inadequate refinery capacity in consumer countries, pointing out that little or no investment in new refinery plants had been made for about 20 years.

In other words they could provide more crude but whats the use if you cant refine it? Also oil prices are specualtive.

[Red Harvest]

If it were a free market system you would be correct.

Then why hasn't any one else stepped up to the plate to take advantage of the massive profits of simply pumping more? Because it isn't that simple, it is an admission that at best only the Saudi's could have substantial excess capacity. The limitation is on the production side, not the refining side. Globally Production is catching up to refining, but it hasn't passed it yet, and it's done this before, kicking off refining capacity additions.

U.S. refining capacity decreased as plants closed as a result of deregulation back in the '80's. U.S. operating rates increased from 69% (my God that's low!) in 1981 to 87% in 1989, mostly through closures of many small plants and only partially due to demand growth. After further declines in capacity (not necessarily production/demand) things flattened and refining capacity rose from 15.0 million bbl/d in 1994 to 16.9 million bbl/d in September 2004 and actual production was at 90% of capacity at that time.

When folks claim refining capacity in the U.S. has not increasing in the past 20 years or so they, ignore the fact that there was a huge excess back then--even in well in excess of current demand TODAY.



In other words they could provide more crude but whats the use if you cant refine it? Also oil prices are specualtive.

And you believe that bull from the Saudi's? :dizzy2: They want to point elsewhere for bottlenecks. Even his most optimistic statement was, "Start building refineries and you will solve maybe half of the problem" which you know is exaggerated spin, is still only claiming "maybe half." The truth is that the Saudi's don't have enough excess capacity to control price anymore.

Even if I was gullible enough to believe the Saudi line, why would I build a refinery? You've said they have all the pricing power...and I'm just a pawn in this game. If I built it, I wouldn't do it in the U.S. because there is sufficient capacity (and incremental debottlenecking) already. My competitors in the U.S. would murder me economically. Instead, I would be building it where world demand was rising the fastest and economic growth was the strongest...and that is not in the U.S. Building the capacity in the U.S. is not going to help when chemicals *production/manufacturing* is being done overseas. The downstream chemicals demand on the refineries is growing there, not in the U.S. where rates at downstream plants have been depressed since late 1998/early 1999 despite a lot of closures. We moved those plants to Asia and they are not coming back any time soon.

[Gawain of Orkeny]

Then why hasn't any one else stepped up to the plate to take advantage of the massive profits of simply pumping more?

Because they cant do anything with it. They say they could pump more but for what? They cant make anything useful out of it. We didnt suddenly start running out of oil this year to drive prices up like this. Its speculation. They see the demand increasiing and yet no attempt to increase refineries and production. So the price of refined oil goes up as does the value of the crude its made from. Demand is going up while supply cannot keep up. But its the refined product not the crude thats in limited supply. The stockpiles are in good shappe.

[bmolsson]

When has this ever been true. Business in one form or another has been in the pockets of the government - or in the socialist states ran by the government.


It doesn't matter if it never been true or not. It's still not right.



Yes I agree with this - but that is an idealistic opinion.


Sure, it's an idealistic opinion. Doesn't make it less right..... ~:grouphug:

[ichi]

It's an idealist opinion shared by many the world over.

ichi :bow:

[Red Harvest]

Because they cant do anything with it. They say they could pump more but for what? They cant make anything useful out of it. We didnt suddenly start running out of oil this year to drive prices up like this. Its speculation. They see the demand increasiing and yet no attempt to increase refineries and production. So the price of refined oil goes up as does the value of the crude its made from. Demand is going up while supply cannot keep up. But its the refined product not the crude thats in limited supply. The stockpiles are in good shappe.

That falls apart on scrutiny. The only way that works is if the Saudi's have full control and their heavy crude can't be refined by just anyone so they won't produce. But that puts us back to square one... So that would be claiming Saudi's are manipulating high prices, by not allowing refinery capacity addition within Saudi, because the could make money shipping stuff anywhere at even a fraction of these prices. The problem is if the Saudi's truly had more production capacity available it would be EASY to justify big refineries to handle it. Once you have a suitable feedstock pricing arrangement with these very Saudi's you could build it anywhere and still make money off of shipping the refined products--the current price differential is huge. It has moved up $40 bbl from the projections I was disputing 2 years ago as unrealistically low.

If refinery capacity was truly the limitation, then refiners would make a fortune, but oil prices would not be as high. Otherwise, these big multi-nationals *will* add capacity. And China, which controls its own industry would certainly add the capacity.

Here is the actual worldwide spare capacity. Notice anything...
Dept. of Energy Graph of World Spare Capacity (http://www.eia.doe.gov/emeu/steo/pub/gifs/Slide7.gif)

Of course getting to the answer is easy. If refining is the bottleneck, then Saudi should increase production and prove it. If the value of their crude falls, but overall oil prices don't, then they are telling the truth with respect to refining capacity for *Saudi Crude* (and it would be easy to correct by tightening again.) If the prices fall together...and refined products are not effected, then it is clearly a refining problem. If on the other hand both crude and end products fall, then refining is not the issue at all.

[Gawain of Orkeny]

Of course getting to the answer is easy. If refining is the bottleneck, then Saudi should increase production and prove it.

Why should they want to prove it their making a killing they way things are?

[Red Harvest]

Why should they want to prove it their making a killing they way things are?

The Saudi's don't want to prove it because it isn't true in the first place. The Saudi's have wanted to keep the oil price from going this high, as an oil shock ends up causing them pain in the long run. Your/their argument boils down to there not being enough refining capacity for Saudi heavy sour crude. Even if it proved to be true it is such a slight difference between a supposed refining limit and their total current capacity that it is irrelevant. The Saudi's admitted as much in their statement.

Production capacity of lighter crude can definitely no longer keep up. Fields are being depleted too rapidly. That is not a surprise.

You never responded to that surplus capacity graph. The DOE is showing a 2005 *estimated* surplus production capacity of less than 1.5% of the 83 million bbl/day. That is only slightly less than 2004--and from what I'm seeing it has only gotten worse, so the projection of surplus capacity is probably optimistic. Regardless, that is not enough surplus to keep the market stable.

This oil price shock has been different than all the previous, because it is a *DEMAND* price shock. It has not been created by artificial supply restriction. This time, demand has started to outstrip supply. China's consumption grew by 16% last year, and India and the US had substantial growth as well (think it was 6% and 3% respectively.)

[Gawain of Orkeny]

The Saudi's don't want to prove it because it isn't true in the first place. The Saudi's have wanted to keep the oil price from going this high, as an oil shock ends up causing them pain in the long run.

But Bush and his croonies are getting rich from this are they not? Didint they realise invading Iraq would cause this reaction? Sure they say they want to keep prices down. If the price of oil drooped you would say it proves that the war was for oil. Now the price of oil rises and you say it proves the war was for oil. Bush cant win. You habe nomore of an idea of how much oil the Saudis and the rest of the middle east can pump than I do. Besides that why the hell arent we using our own oil. We could get by without any middle eastern oil.

[Ser Clegane]

Besides that why the hell arent we using our own oil. We could get by without any middle eastern oil.

Who is supposed to make the investments for exploiting the oil sands (I assume you are referring to that source)?

Why should the oil companies make the investments if exploiting oil sands would become unprofitable again, should the oil price fall (if it falls again ~;) )?

The oil companies are currently making big profits using the conventional sources, why should they start investing in low margin sources?

Would you suggest that the state makes the investment and risks running the operation at a loss if oil prices fall?

[Gawain of Orkeny]

Who is supposed to make the investments for exploiting the oil sands (I assume you are referring to that source)?

Why should the oil companies make the investments if exploiting oil sands would become unprofitable again, should the oil price fall (if it falls again )?

The oil companies are currently making big profits using the conventional sources, why should they start investing in low margin sources?

Would you suggest that the state makes the investment and risks running the operation at a loss if oil prices fall??


Thanks for proving my point. If there really were a shortage of oil we would be doing these things. I said the same as you why change when your raking in the dough.

[Red Harvest]

But Bush and his croonies are getting rich from this are they not? Didint they realise invading Iraq would cause this reaction? Sure they say they want to keep prices down. If the price of oil drooped you would say it proves that the war was for oil. Now the price of oil rises and you say it proves the war was for oil. Bush cant win.

Here we go again. :dizzy2: My reasoning for the price rise really isn't either of what you stated. It was a demand based issue. However Bush's approach is based on his idea of the oil industry and market and he ignores demands drivers. His reasoning for war recognized what he *believed* were advantages for the oil industry and for funding the war and for price. It's not my fault his price and war funding basis was bogus (not to mention the advertised justification for war.) He didn't really understand the bigger picture when he was involved in running an oil company that was failing, so why would he be expected to be so much wiser now? Cheney was cooking the books for Haliburton before he made them the major contractor without bidding. Either way, high oil price or low, taking over in Iraq was going to increase work and profits for the oil services industry, that much was obvious to anyone.


You habe nomore of an idea of how much oil the Saudis and the rest of the middle east can pump than I do.

Actually I do have a better idea and I've been looking at the DOE projections. I read between the lines better, and I take a wider view of what's going on in energy than you do. Unlike those in the Admin, the oil industry, and yourself, I correctly predicted this run up 2 years ago (though not in its magnitude, I was sticking with trends), when all were saying it was headed the other way. I was looking at all the official projections and they flat out ignored the increasing demand side: China, India and U.S. It didn't make sense since we were seeing some recovery. I warned my own employer that their lack of interest in investment in certain areas was based on illogical projections of pricing trends from the industry. However, the herd instinct prevailed, as did the desire to accept rosy projections. It was the same all over.

I also happen to have read a few reports written recently of the Saudi's trying to put in substantially more capacity to keep up (1.5 to 2.0 million bbl/day) if I remember correctly. And I looked at the considerable rise in production in the region relative to the rest of the world over the past several years.


Besides that why the hell arent we using our own oil. We could get by without any middle eastern oil.

Perhaps it is because that is only a small portion of what is needed? And oil demand/price is largely global, rather than isolated regionally. We are depleting fields and so is Mexico. That's why the burden is shifting to heavier crudes. The capacity on the light side is declining according to the industry. (And it seems to be reflected in the data.)

You are trying to use an isolationist view of U.S. oil pricing. Yet the production and refining are controlled by multi-nationals, not an insulated market. OPEC does what price regulation it can/wants.

This isn't artificial and it isn't a problem created by not building new refineries in the U.S. Putting more crude production capacity on line up North takes time. I've not been following it closely but I heard from some other engineer's that they are presently bottlenecked by recompression capacity. I'm not familiar with their particular equipment, but in other process industries where big compressors were involved they were "critical path" long delivery items and projects like that tend to require quite a bit of lead time. Plus, up there the work/delivery season is likely to be limiting as well.

And ANWR isn't going to make much difference. If it had to make up all the difference the known reserves would be gone in a few years. As it is, the DOE projection for ANWR in 2025 is only about 1.6 million bbl/day by which point it starts to decline (depleted.) This isn't even enough to keep up with demand rise in the U.S. (The "C" word comes to mind again, "conservation.") But it gets worse, because other U.S. production will be about 1 million bbl/day lower by then due to depletion.

This forces the realization that tar sands and shale are going to have to provide more long term, or the Saudi's are going to have to pump a lot more. To do this, oil prices will need to be much higher to support investment--I don't know how high, I've been looking but haven't found anything concrete. I'm guessing between $50 and 75 as a price floor, sustained, but it could be higher. These are still in production development stages. And the CO2 emissions from shale processes are going to be MASSIVE since the oil recovery is very low, and very energy intensive.

But Gawain, I realize I'm not ever going to get anywhere with this conversation, because no matter how deep I dig or what I uncover, you are always going to be able to find some reports that support what you want to believe. There are plenty of them out there. So far they have been uniformly wrong for two years. They will appear "right" again IF there is some event that halts growth, like some sort of global recession. However, that would merely confirm that this has been a demand based issue. And there will always be ripples and spikes. What interests me is long term trends.

[Tribesman]

Sharukin , does that mean that you have ben pulling good money from your accurate predictions, and other oi; investors have also being pulling good money ,m yet the average supporter of this action has not only not made big bucks , but is also paying you big bucks for your forsight?
But they love you , how can you do this to them , do you know how much a gallon costs nowadays ~;)

[Bartix]

http://www.news-record.com/apps/pbcs.dll/article?AID=/20050814/NEWSREC0101/508140313/1001/NEWSREC0201


We went over there, and we're fighting this war, and we're still paying $2.40 a gallon for gas. Eighteen hundred people have died, and nothing has been accomplished. ~:eek:
Must soon invade Japan, they get better milage. :charge:

[Ser Clegane]

Bartix' "Gas expensive. War not work?" thread has been merged with this one as it is on the same issue.

[Gawain of Orkeny]

For any of you interested the price of oil us still cheaper than it was under Carter when all things are taken into consideration gas would have to top 3 dollars a gallon to reach those prices.

[Ser Clegane]

For any of you interested the price of oil us still cheaper than it was under Carter when all things are taken into consideration gas would have to top 3 dollars a gallon to reach those prices.

Hmm ... the crude oil price is at almost 67 USD/bbl - is your statement based on inflation adjustments?

[Gawain of Orkeny]

Hmm ... the crude oil price is at almost 67 USD/bbl - is your statement based on inflation adjustments?

It would have to be considering gas was around a dollar back then dont you think. ~D

[Red Harvest]

For any of you interested the price of oil us still cheaper than it was under Carter when all things are taken into consideration gas would have to top 3 dollars a gallon to reach those prices.

True, but only in the last couple of months of his administration (and into the Reagan admin as memory serves.) The spike was the result of the Iran-Iraq war that started in Sept. 1980 and the hostage crisis that began in Nov. 1979. The economy was a wreck partially as a result of this.

Those were "artificial" supply limitations caused by real disruptions of supply. At present, demand growth is the driver and that is something new.

Gas was $2.58 at the corner last night and the peak in '80 was below the $3 mark. So it looks like we are within 15% of the former peak. Let's hope we don't have any major events like those of 79 and 80. We could be looking at a further doubling.

[Gawain of Orkeny]

I still think the government and the oil companies and opec are all in cahoots and getting rich. "He who controls the spice controls the universe"

[Seamus Fermanagh]

[QUOTE=Red Harvest] Unlike those in the Admin, the oil industry, and yourself, I correctly predicted this run up 2 years ago (though not in its magnitude, I was sticking with trends), when all were saying it was headed the other way. I was looking at all the official projections and they flat out ignored the increasing demand side: China, India and U.S. It didn't make sense since we were seeing some recovery. I warned my own employer that their lack of interest in investment in certain areas was based on illogical projections of pricing trends from the industry. However, the herd instinct prevailed, as did the desire to accept rosy projections. It was the same all over.QUOTE]

I hope you got your futures buys in on time ~:)

[Gawain of Orkeny]

I hope you got your futures buys in on time

He he I was thinking the same thing. He must have it made by now. I dont think any civilian can really know anymore than "they" want you to know.

[bmolsson]

Just read that some experts predicts USD 160 per barrel...... This is not good....

[Papewaio]

Who cares where the oil is. The oil companies are getting twice the gross amount per barrel in just one year (and their net is probably better then twice as much)... demand, demand, demand.

[kiwitt]

Let see now. Companies make profits from selling. Selling the same amount for more = more profits.

Being a real cynic. Oil executives run the US Administration, invade Iraq, generate more instability. Instability increases price of oil (see Arab-Israeli conflicts for precedents). Higher price for oil = more profit for same amount of oil.

Therefore the real reason is not to get the oil but to raise the profits for oil companies.

[Red Harvest]

I hope you got your futures buys in on time ~:)

Unfortunately, I was not playing the futures market and am not presently. Wish I had, but futures are not something I've ever tried my hand at. Options trades, yes, but commodity futures, no. I was switching jobs, moving, and travelling during the critical times. Should have made a bundle. Live and learn.