Blood for oil?

"No blood for oil" was one of the most common slogans used by anti-war protestors during both the original Gulf war and the recent conflict in Iraq. There is quite a compelling case for believing that America may be fighting for control over Iraq's oil if we look at some of the facts.

  • In 2002 Iraq exported around 8 and a half million barrels of crude oil to the USA each month, and half that to Europe. In July 2002 Iraq was the ninth biggest exporter to the US.
  • America imported around twice as much from Britain
  • The USA consumes around 20 million barrels of oil each day, compared to 15 million by the whole of Europe and 5 million by Japan
  • Iraq has the world's second largest oil reserve, with 112 billion barrels waiting to be taken out of the ground.
  • The gulf is the only part of the world where there is a capacity for increased oil production. All the other oil producing countries are extracting less and less each year, and will run out within a few decades.

Now the war is over, discussions are taking place between the US and Israeli governments, as well as potential Iraqi leaders, to build an oil pipeline between Iraq and Israel. This would mean a solution to Israel's energy problems and would allow America easy access to Iraq's oil from an ally other than Saudi Arabia.

This could be important for America given the deterioration in their relations with the Saudis, which was signalled in part in the summer of 2001 when Crown Prince Abdullah said in a letter to George W Bush, "it is time for the United States and Saudi Arabia to look at their separate interests".

Israel, however, is likely to make a more reliable ally given their reliance on American support in the Israel-Palestine conflict.

And the suggestion that Saddam could simply be bribed into supplying the oil to Israel can perhaps be refuted when we consider what the response of the Iraqi people would be to entering into such a relationship with Israel, when Israel is widely hated. Think about the how much money America is spending paying the Colombian government to defend the oil pipeline there, which comes under frequent attack by left-wing guerillas.

There are other issues to look at in relation to the US and control of Iraqi oil. Commentators have suggested that it is not just that America wants access to the oil, but that they want full control of it by US oil companies. This needn't be simply for the benefit of this handful of companies. The American economy would benefit from cheaper oil, as by controlling Iraq, they wouldn't be subject to the pricing decisions of the OPEC cartel.

Rather than trying to beat the price fixers, America may be trying to join them. The Arab states make loads of money out of oil, and perhaps more significantly, by gaining control of the region, America could deny oil to countries they see as global competitors, such as China, whose economy is currently expanding at a massive rate.

The Chinese currency is tied to the dollar, meaning if the dollar goes down in value, the Chinese currency will become cheaper too. The US dollar has indeed been falling in value a great deal recently, which is bad for America as it means less spending power for Americans and more competitively priced Chinese goods when sold in the west.

Iraq recently switched the currency it uses for trading in oil from the dollar to the euro, and other middle eastern countries are considering doing the same thing. Less demand for the dollar would mean more devaluation of the currency, so here we see another reason why America might want control over Iraq.

Those who claim France and Russia opposed the war for selfish economic reasons point out that French petrol company Total and the Russian Lukoil both had contracts to develop Iraqi oil fields. Between them, the contracts give the companies access to 41 billion barrels of oil in reserve. The Iraqis revoked the Lukoil contract in December 2002 after it was revealed that the company had made negotiations with America to keep the oilfield when America was in control of the country. We can see this as a pro-war argument – the Americans were fighting a moral war while those who were against it were only acting out of self-interest. On the other hand, one may think that if oil contracts were so important to those countries in deciding whether or not to back the war, then surely oil must be a significant consideration for the US?


'Shock. This time is just like last time', The Observer,6903,914964,00.html

'Chinese growth hits six-year high', BBC News Online

'The importance of Iraqi oil to the US', Al Jazeera

'The US isn't wedded to Saudi oil', Los Angeles Times

'Israel seeks pipeline for Iraqi oil', The Observer,6903,940054,00.html

'Oil: The Other Iraq War', MSNBC News