U.S. thirst for oil could send Africa on Mideast's
path
G. Pascal Zachary
Sunday, January 29, 2006
Kribi, Cameroon -- Standing on a rocky African beach, at the
base of a gorgeous waterfall, I am peppered with requests from
African men. One is peddling a canoe ride. Another wants to sell
me some polished shells. A third asks if he can be my guide. A
fourth wants me to visit his art shop. A larger group of men play
a game of cards, passing the time.
These men are poor, a condition not unusual in these parts but
made more painful by their awareness that a short distance across
the water sits a mammoth offshore oil terminal run by ExxonMobil,
The men crowd around me and ask me why does the pipeline, which
carries oil underneath their coastal village and out to sea, employ
so few people -- and none of them. They suspect, they say, that
they are members of the wrong tribe, that the government cares
nothing about them, and that ExxonMobil prefers foreign workers.
I know the truth. These men are not needed. They lack the right
skills and, anyway, very few people are needed to keep the oil
flowing.
I cannot share my rude truth with these men for I fear their
anger. When I tell them I am not an employee of ExxonMobil but
a journalist, they are unsatisfied. They crowd around me, agitated.
To them, I am simply an American, a representative from the country
consuming African oil.
I plot my escape, and, when safe in my four-wheel drive, I have
time to ponder how high a moral price are we gas-guzzling Americans
willing to pay for an uninterrupted flow of crude oil?
The question keeps popping up around the world as the United
States, which relies on foreign oil for nearly 60 percent of its
needs, scrambles to secure sources. The Faustian bargains made
by the U.S. government with repressive oil-producing Muslim states
of the Persian Gulf are well known. We now face an endless war
in Iraq; an Iran striving for nuclear technology; a Saudi Arabia
incubating anti-American terrorists and perhaps teetering on the
verge of collapse.
Can the United States avoid repeating in Africa this dangerous
pattern of first cosseting oil dictators and then suffering a
painful blowback?
That's the big question that looms over America's growing oil
dependence on tropical Africa. Depicted by rock stars and philanthropists
as mired in disease, disorder and malnutrition, Africa is nevertheless
America's fastest-rising source of imported oil. Already, three
of the top 15 foreign oil suppliers to the United States are African,
and the region could provide as much as 25 percent of U.S. imports
by 2025.
It is imperative that the United States forge a new bargain with
Africa's oil-producing countries. Africa is the poorest part of
the planet and it would be disgraceful for Americans to support
an oil system that reinforces poverty, fuels corruption and promotes
social unrest. Oil could be a boon for Africa, but if mismanaged
this precious resource will ultimately be a source of shame.
The results of America's oil dealings with Africa are troubling
so far. African governments routinely loot oil revenue. People
living closest to the oil wells, meanwhile, are often the poorest
of the poor. This is the story in Angola and Nigeria, two of America's
top seven sources of imported oil.
Trying to write a new script for African oil, international do-gooders
such as the World Bank and Oxfam concocted an innovative plan:
Help those African countries to develop an oil sector only if
they pledge to spend oil revenue wisely.
The impoverished landlocked country of Chad is the first test
of this new way of dealing with African oil. The opening went
well. Chad needed loans to build an oil infrastructure, in particular
a pipeline that would carry its oil hundreds of miles to an Atlantic
port in Kribi, Cameroon, where the oil could be exported. In exchange
for loans from the World Bank and international support for billions
of dollars of needed private investment, Chad passed a law that
bound the government to spend its oil money wisely -- on education
and health, not its military.
Oil started pumping in 2003, under the management of U.S. oil
giant ExxonMobil. Chad's share of the revenue so far is about
$300 million, two-thirds of which the government says it has spent
on social programs.
But last month, Chad's government suspended its oil law, breaking
its promise with the international do-gooders by declaring it
will spend more of its oil money on security and abolish a "future
generations fund," a savings account that was to kick in
when the country's estimated 1 billion barrels of oil are gone.
Observers expect the worst because Chad has a long history of
instability and violence. Critics are upset because there is already
evidence that the Chad government wasn't living up to the deal
anyway.
The World Bank has retaliated by banning any future loans to
Chad. More needs to be done. The U.S. government should urge ExxonMobil,
which has been silent on the Chad issue, to halt oil payments
to the Chad government.
ExxonMobil also needs to pay more attention to the resentment
building along its pipeline. The company may ultimately face the
exhausting problem afflicting Chevron, another big U.S. oil company
that has important operations in Nigeria's Delta region. Kidnappings
of Chevron's workers are routine, the company's oil platforms
and pipelines face regular assault and Chevron's community relations
are strained.
As a result, the trend in Nigeria and neighboring Cameroon is
to shift oil operations offshore as much as possible. But the
relative safety of the sea reinforces the sense that oil companies
want to reduce to a minimum their contact with ordinary Africans.
Oil companies are understandably reluctant to try to reform wayward
governments. But they can do better in Africa by adopting a common
standard in doing business, including a requirement that payments
to governments be made transparent. The trouble is that oil companies
are looking for a competitive advantage, making cooperation difficult.
Indeed, some oil companies are actually government agencies. China's
state-owned oil company, for instance, recently agreed to pay
$2.3 billion for a stake in a Nigerian oil and gas field.
Because oil companies can't be expected to monitor international
morals, the U.S. government must intervene. The Bush administration
should begin by asking Chad President Idriss Deby to reverse his
government's decision to break its oil promises. The United States
might even threaten to cut off all military aid to Chad, which
is part of a five-year $500 million Pentagon program to assist
nine African governments in expanding their military capacity,
purportedly to help in the war on terrorism.
Nigeria and Angola can also benefit from U.S. pressure. These
superstars of African oil should be asked to account completely
for their oil revenues -- and allow international inspectors to
see where these governments claim to be spending their money.
Nigeria recently released an audit of payments made to the government
from large oil companies for 2003 and 2004. The audit, while incomplete,
suggests that some Nigerians see the need for greater accountability.
The Bush administration should support a wider audit, covering
all Nigeria's revenues, which exceeded $30 billion last year.
For the foreseeable future, America can't get along without African
oil, and revenue from oil sales can help Africa in its long and
difficult climb from poverty and disorder. But America must avoid
replaying the same pattern in Africa as it has created in the
Persian Gulf. America can be a smart consumer, prodding its suppliers
to improve their behavior. That will mean tough decisions for
Americans who too often seem willing to purchase oil at any moral
price.
G. Pascal Zachary is a fellow of the German Marshall Fund,
researching African affairs. He teaches journalism at Stanford
University. Contact us at insight@sfchronicle.com.
by Jeff Cohen
Published on Monday, May 16, 2005 by CommonDreams.org
Looking for an easy way to protest Bush foreign policy week after
week? And an easy way to help alleviate global poverty? Buy your
gasoline at Citgo stations.
And tell your friends.
Of the top oil producing countries in the world, only one is a
democracy with a president who was elected on a platform of using
his nation's oil revenue to benefit the poor. The country is Venezuela.
The President is Hugo Chavez. Call him "the Anti-Bush."
Citgo is a U.S. refining and marketing firm that is a wholly
owned subsidiary of Venezuela's state-owned oil company. Money
you pay to Citgo goes primarily to Venezuela -- not Saudi Arabia
or the Middle East. There are 14,000 Citgo gas stations in the
US. (Click here http://www.citgo.com/CITGOLocator/StoreLocator.jsp
to find one near you.) By buying your gasoline at Citgo, you are
contributing to the billions of dollars that Venezuela's democratic
government is using to provide health care, literacy and education,
and subsidized food for the majority of Venezuelans.
Instead of using government to help the rich and the corporate,
as Bush does, Chavez is using the resources and oil revenue of
his government to help the poor in Venezuela. A country with so
much oil wealth shouldn't have 60 percent of its people living
in poverty, earning less than $2 per day. With a mass movement
behind him, Chavez is confronting poverty in Venezuela. That's
why large majorities have consistently backed him in democratic
elections. And why the Bush administration supported an attempted
military coup in 2002 that sought to overthrow Chavez.
So this is the opposite of a boycott. Call it a BUYcott. Spread
the word.
Of course, if you can take mass transit or bike or walk to your
job, you should do so. And we should all work for political changes
that move our country toward a cleaner environment based on renewable
energy. The BUYcott is for those of us who don't have a practical
alternative to filling up our cars.
So get your gas at Citgo. And help fuel a democratic revolution
in Venezuela.
If attack succeeds, Baghdad's
output could top kingdom's
Robert
Collier, Chronicle Staff Writer
Sunday, February 16, 2003
Ras Tanura, Saudi Arabia -- Pipes, ducts,
tanks, towers and an infinite variety of refining, storage and
shipping facilities stretch for miles along the desert seashore,
resonating with a low, almost imperceptible hum.
This is the heart of the Saudi oil empire,
an empire that has made the conservative kingdom an indispensable
U.S. ally in the Mideast.
To talk about the place is to make superlatives
seem almost banal -- Ras Tanura is the world's largest petroleum
products export facility, owned by the world's largest oil firm,
in a nation that is the world's largest petroleum producer.
But Saudis are worried that their empire
may soon be eclipsed by a powerful new challenger rising out of
the ashes of war -- Iraq.
If a U.S.-led invasion succeeds in overthrowing
Saddam Hussein's government and installing a pro-American regime
in Baghdad, Iraq's immense, largely untapped oil wealth will be
opened to foreign investment and the country could become the
major economic powerhouse in the region, casting a long shadow
over Saudi Arabia.
"If the United States takes over Iraq
and Iraqi production rises dramatically, Saudi Arabia will lose
position in the market and political influence with the United
States," said a strategic planning executive for Saudi Aramco,
the state-owned oil monopoly.
Such an outcome would be a triumph for
the growing anti-Saudi lobby in Washington, which notes that the
country produced Osama bin Laden and 15 of the Sept. 11 hijackers,
and whose religious charities have funded a variety of extremist
anti-Western groups.
"If Iraq gets a democratic government
open to foreign investment, there would be an alternate source
of oil supply to (that of) the Saudis, so we wouldn't have to
defer to their blackmail, their use of the (oil) revenues that
we give them for activities that are very jihadist and dangerous,"
said Frank Gaffney, a Pentagon adviser and president of the Center
for Security Policy, a Washington think tank.
In public declarations, Saudi officials
insist they are not worried about Iraqi competition. "We
hope there will be enough demand to absorb new production, whether
it be from the Caspian or West Africa or Iraq," said Abdulatif
Al-Othman, the executive director of Saudi Aramco. "The more
the merrier."
But privately, many Saudi officials wring
their hands.
"Saudi Aramco doesn't like this, but
of course we can't talk about it," said the company's planning
executive, who wished to remain anonymous. "Some analysts
say Iraq could eventually become No. 1."
Iraq has 113 billion barrels of proven
reserves, second only to Saudi Arabia's 262 billion barrels. Iraq's
potential remains largely unexplored because of the disruption
of the past two decades of war and economic sanctions. The U.S.
Energy Department estimates that Iraq has as much as an additional
220 billion barrels in undiscovered reserves, bringing the Iraqi
total to the equivalent of 98 years of current U.S. annual oil
imports.
FOREIGN OIL COMPANIES
It is widely assumed that U.N. economic sanctions would be quickly
lifted after the ouster of the Hussein regime and that the new
U.S.-installed government would invite foreign oil companies into
Iraq.
"Iraq cannot do without opening to
foreign investors," said Fadhil Chalabi, executive director
of the Center for Global Energy Studies, a think tank in London.
Chalabi's career includes stints as secretary-general
of the Organization of Petroleum Exporting Countries and Iraqi
deputy minister of petroleum. He is considered a leading candidate
to be installed as czar of Iraq's energy industry in a postwar
administration that is certain to be heavily influenced, if not
directly run, by the U.S. government.
Chalabi also is a leading proponent of
selling off the state-owned Iraqi oil industry to foreign investors.
"Without privatization, there is no hope for the oil industry
to solve the country's dire economic and social situation, "
he said in an interview with The Chronicle.
Chalabi points out that the new government
will desperately need quick cash.
The cost of rebuilding the country will
be sky-high, as much as $100 billion, according to some estimates.
So far, there's little American public
support for spending U.S. tax dollars on Iraq's reconstruction,
and it's unlikely that Arab and European nations will foot the
bill, as they did in the 1991 Gulf War, particularly if a new
war is not backed by another U.N. Security Council resolution.
As a result, analysts say, most of the
cost will have to be borne from Iraqi oil revenues.
When added to Iraq's $120 billion foreign
debt -- much of it left over from the 1980-88 war against Iran
-- the result is a huge burden.
Chalabi estimates that if the best-case
scenario holds -- a quick victory by U.S. forces and little damage
to the country's oil fields -- Iraq could raise its production
from the current level of 2.8 million barrels per day to 7 million
barrels per day by 2008. Eventually, he says, Iraqi output will
top 10 million barrels per day, more than Saudi Arabia's.
'A LOT OF FANTASY'
But Robert Mabro, director of the Oxford Institute for Energy
Studies, cautions that "there is a lot of fantasy going around"
about Iraq's oil future.
"It depends on many factors. Will
Saddam blow up the oil fields in the first days of the invasion?
Will he shoot missiles at Kuwait's oil installations? How much
damage will be done during the war, and how long will it last?
It's too speculative."
In part because of these uncertainties,
accusations that oil is a leading motive behind the Bush administration's
drive toward war are wrong, in the view of many analysts.
"If we just wanted to grab Iraq's
oil, we would just get rid of the sanctions and do business with
Saddam, who would be more than willing to sell his oil to us,"
said Gaffney. "And if we just wanted cheap oil, we'd invade
Venezuela."
What seems more certain is that in the
short term, a war with Iraq will cause at least a moderate jump
in oil prices -- although less of a jump than expected only a
month ago. At that time, Venezuela was paralyzed by anti- government
protests that shut down its oil exports, the fifth highest in
the world. If Iraq's production had been taken off the world market
at the same time as the Venezuela shutdown, prices could have
spiked to $50 per barrel or more, driving American gasoline prices
well above $2 per gallon.
Now, with Venezuela's production expected
to be back near normal next month -- assuming there are no further
political disruptions -- the "Iraq effect" will be more
moderate, oil experts say, perhaps a rise to $40 per barrel, unless
Kuwait's exports are affected.
PRICE WARS
In the long run, as increased Iraqi production enters the market,
prices could be driven down as far as the low teens by a price
war between Iraq and Saudi Arabia, according to Fareed Mohamedi,
chief economist of Petroleum Finance Co., a Washington consulting
firm.
"Rather than sticking within their
quota and give up their market share to the Iraqis and others,
the Saudis are likely to increase production to drive down prices
to push other high-cost producers off the market," Mohamedi
said.
However, such a price war is likely to
result in decreased revenues for the Saudis, which could lead
to social instability in a country that has already experienced
sharp drops in living standards since the highs of the 1980s,
along with increasing levels of joblessness. Unemployment is likely
to grow further because of the country's high birth rate and its
reliance on low-wage laborers from Pakistan, Bangladesh, India
and Yemen.
"An oil price crash would be painful
here, no matter how much the government has in foreign assets,"
said Brad Bourland, chief economist at the Saudi American Bank
in Riyadh.
Still, Saudi Arabia may be better positioned
to weather an oil price war than almost any oil-producing nation,
including Iraq, say energy analysts. Its cost of production is
believed to be less than $1 per barrel, and Saudi Aramco enjoys
a sterling reputation among buyers worldwide as reliable and quality
conscious.
"For those advocating a rapid restructuring
of the Iraqi oil sector with massive foreign investment resulting
in rapidly growing output levels, the unintended consequences
could be much lower oil prices, lower oil revenues for the new
government in Baghdad and a host of political problems around
the world," said Mohamedi.
Ironically, Saudi Arabia and its neighbors
could emerge stronger than ever from "regime change"
in Iraq. Many analysts say that because of price wars and dwindling
oil reserves in other regions, the Persian Gulf's share of the
world's crude oil supply -- currently about 25 percent -- could
rise to as much as 40 percent over the next decade.
"For those who see Iraq as a means
to lessen dependence on the Saudis, in the end the world might
become more dependent on Saudi oil," Mohamedi said. "So
much for supply diversity as a policy."
US plans to ditch industry
rivals and force end of Opec, write Peter Beaumont and Faisal
Islam
Sunday November 3, 2002
The Observer
The leader
of the London-based Iraqi National Congress, Ahmed Chalabi, has
met executives of three US oil multinationals to negotiate the
carve-up of Iraq's massive oil reserves post-Saddam.
Disclosure of the meetings in October in
Washington - confirmed by an INC spokesman - comes as Lord Browne,
the head of BP, has warned that British oil companies have been
squeezed out of post-war Iraq even before the first shot has been
fired in any US-led land invasion.
Confirming the meetings to US journalists,
INC spokesman Zaab Sethna said: 'The oil people are naturally
nervous. We've had discussions with them, but they're not in the
habit of going around talking about them.'
Next month oil executives will gather at
a country retreat near Sandringham to discuss Iraq and the future
of the oil market. The conference, hosted by Sheikh Yamani, the
former Oil Minister of Saudi Arabia, will feature a former Iraqi
head of military intelligence, an ex-Minister and City financiers.
Topics for discussion include the country's oil potential, whether
it can become as big a supplier as Saudi Arabia, and whether a
post-Saddam Iraq might destroy the Organisation of Petroleum Exporting
Countries.
Disclosure of talks between the oil executives
and the INC -- which enjoys the support of Bush administration
officials -- is bound to exacerbate friction on the UN Security
Council between permanent members and veto-holders Russia, France
and China, who fear they will be squeezed out of a post-Saddam
oil industry in Iraq.
Although Russia, France and China have
existing deals with Iraq, Chalabi has made clear that he would
reward the US for removing Saddam with lucrative oil contracts,
telling the Washington Post recently: 'American companies will
have a big shot at Iraqi oil.'
Indeed, the issue of who gets their hands
on the world's second largest oil reserves has been a major factor
driving splits in the Security Council over a new resolution on
Iraq.
If true, it is hardly surprising, given
the size of the potential deals. As of last month, Iraq had reportedly
signed several multi-billion-dollar deals with foreign oil companies,
mainly from China, France and Russia.
Among these Russia, which is owed billions
of dollars by Iraq for past arms deliveries, has the strongest
interest in Iraqi oil development, including a $3.5 billion, 23-year
deal to rehabilitate oilfields, particularly the 11-15 billion-barrel
West Qurna field, located west of Basra near the Rumaila field.
Since the agreement was signed in March
1997, Russia's Lukoil has prepared a plan to install equipment
with capacity to produce 100,000 barrels per day from West Qurna's
Mishrif formation.
French interest is also intense. TotalFinaElf
has been in negotiations with Iraq on development of the Nahr
Umar field.
Planning for Iraq's post-Saddam oil industry
is being driven by a coalition of neo-conservatives in Washington
think-tanks with close links to the Bush administration, and with
INC officials who have long enjoyed their support. Those hawks
have long argued that US control of Iraq's oil would help deliver
a second objective. That is the destruction of Opec, the oil producers'
cartel, which they argue is 'evil' - that is, incompatible with
American interests.
Larry Lindsey, President Bush's economic
adviser, recently said that a successful war on Iraq would be
good for business.
'When there is a regime change in Iraq,
you could add three to five million barrels [per day] of production
to world supply,' he said in September. 'The successful prosecution
of the war would be good for the economy.'
Analysts believe that after five years
Iraq could be pumping 10m barrels of oil per day. Opec is already
starting to implode, with member nations breaking quotas in an
attempt to grab market share before oil prices fall.
Russian concern over a future INC-inspired
carve-up of Iraq's oil to the benefit of the US has become so
intense that it recently sent a diplomat to hold talks with INC
officials. At that meeting in Washington on 29 August the diplomat
expressed concern that Russia would be kept out of the oil markets
by the US.
A model for the carve-up of Iraq's oil
industry was presented in September by Ariel Cohen of the right-wing
Heritage Foundation, which has close links to the Bush administration.
In The Future of a Post-Saddam Iraq: A
Blueprint for American Involvement, Cohen strikes a similar note
to Chalabi, putting forward a road map for the privatisation of
Iraq's nationalised oil industry, and warning that France, Russia
and China were likely to find that a new INC-led government would
not honour their oil contracts.
Cohen's proposal would see Iraq's oil industry
split up into three large companies, along the areas of ethnic
separation, with one company in the largely Shia south, another
for the Sunni region around Baghdad, and the last in the Kurdish
north.
WASHINGTON, Nov. 25 — Nearly a dozen years after the Persian
Gulf war, when reliance on Saudi supplies prompted calls for the
United States to diversify its sources of oil, America remains
as dependent as ever on the Saudis, according to government and
industry officials.
The Saudis supply about one-sixth of United
States oil imports. But what gives Saudi Arabia its considerable
political strength is its role as the only producer with the spare
capacity to replace millions of barrels a day of lost oil. That
amount could be drained from the market temporarily by an attack
on Iraq, according to the administration's internal assessments
as well as outside experts.
"The Saudis have by far the largest
amount of unused capacity," Guy Caruso, the head of the Energy
Department's Energy Information Administration said.
Relations between Saudi Arabia and the
United States have been strained since the participation of several
Saudis in the Sept. 11 attacks last year prompted close scrutiny
of the country's role in financing and otherwise supporting Islamic
radicalism. But the Bush Administration's strategic options are
clearly limited by American dependence on Saudi oil.
Saudi Arabia is now producing about eight
million barrels a day, oil executives say. Saudi officials have
said publicly that they could raise their output to 10 million
barrels a day fairly quickly and to 10.5 million within three
months. Most experts, as well as the Bush administration, accept
the Saudi assurances.
If a war halts Iraq's oil exports —
estimated at 1.5 million to 2 million barrels a day — the
situation will be manageable, Mr. Caruso said. But it would be
harder to replace a steeper decline in exports, which could occur
if oil supplies from other Persian Gulf producers were reduced
by terrorist attacks or by prohibitive insurance premiums on oil
tankers.
In an interview, Mr. Caruso said the United
States Strategic Petroleum Reserve and stocks in other countries
represented the other best defense against short-term disruptions.
Established in the 1970's as a response
to an oil embargo by the Organization of Arab Petroleum Exporting
Countries, which is based in Kuwait, the reserve now holds a record
592 million barrels, part of a Bush administration plan to reach
700 million barrels by 2005.
But because of increased American dependence
on imported oil, the length of time the reserve can compensate
for lost imports has declined from a high of 118 days in 1985
to 51 days at the end of last year. Some oil experts advocate
increasing the reserve to one billion barrels.
Alan Larson, under secretary of state for
economic affairs, went to Saudi Arabia last month to secure assurances
that Riyadh would pump extra oil if it were needed, American and
Saudi oil executives say.
Last month Mr. Caruso's office helped prepare
an "oil market contingency planning" book, based entirely
on public data. The Energy Department has restricted the book's
distribution to keep it from Congress and the public, according
to government officials.
In an interview last month, Mr. Caruso
cited a small portion of the book's contents to illustrate the
unique role of Saudi Arabia.
Because there are no reporting requirements
in the international oil industry, capacity figures vary widely.
Mr. Caruso's agency estimates that Saudi
Arabia has slightly more than half the spare production capacity
of 4.5 million to 5 million barrels a day that exists in member
nations of the Organization of the Petroleum Exporting Countries.
A group of experts led by Larry Goldstein,
president of the Petroleum Industry Research Foundation, estimates
that total spare capacity is only three million barrels, and that
the Saudis control two-thirds of that.
In the three months after Iraq's invasion
of Kuwait in August 1990, the largest oil supply disruption in
American history occurred, with the daily shortfall averaging
4.6 million barrels, government records show.
Prices doubled for a time. But the shortage
was largely offset by increased Saudi oil production, which went
from 5.8 million barrels a day in August to 8.5 million by December,
according to data in Energy Department's oil market contingency
planning book.
Some analysts question whether Saudi Arabia
actually has the spare capacity it says it has.
"We all take the Saudi assurances
for granted," said Matthew Simmons, head of Simmons &
Company International, a Houston-based energy advisory firm, but
"the last time Saudi Arabia ever got close to 9 or 10 was
in 1980. Their largest field is 55 years old, and they do not
disclose their field-by-field production data, so we really don't
know for sure."
Government and industry oil experts praise
the administration for its focus on energy security. But they
say it has been too quiet about its plans, given how openly the
issue is discussed in the oil markets and the administration's
own push for more transparent oil markets.
Administration officials say they have
adopted a cautious approach to avoid roiling the markets. "Something
said casually could be misinterpreted and influence the markets,"
said one Energy Department official, who spoke on condition of
anonymity.
More than a half-century ago, the United
States developed a close relationship with the Saudi ruling family,
tacitly if not explicitly trading support for the government for
access to oil.
But the events of Sept. 11 raised fresh
questions in the United States about Saudi Arabia: 15 hijackers
and much of Al Qaeda's finances came from the kingdom.
On the Saudi side, the American military
presence in the country is one factor in the "increasingly
open challenges" to the royal family's control, a recently
released assessment by the Central Intelligence Agency says.
Both governments insist that the relationship
is as strong as ever. But the Pentagon has developed regional
alternatives to the use of Saudi military installations, and a
draft of a secret Congressional report has criticized the Saudis
for not cooperating with Americans investigating the Sept. 11
attacks.
Still, the prospects of a war with Iraq
show how oil continues to bind Saudi Arabia's relationship with
the United States.
The countries' dealings have always been
marked by quiet diplomacy. But according to Bush advisers and
officials, the fear that critics would, perhaps unfairly, link
the administration's policies to the oil industry has added another
layer of secrecy.
"If you are trying to talk about Iraq
and if you were not encumbered by the fear that your actions would
be linked to Exxon Mobil or the oil industry," said one Bush
adviser, who spoke on condition of anonymity, "you'd be talking
about oil issues."
Vice President Dick Cheney tackled the
issue of energy security in the administration's National Energy
Policy report. The report noted that Saudi Arabia's policy of
"investing in spare oil production capacity" had lessened
the impact of oil supply disruptions in any region.
But the report also called for greater
"diversity of world oil production." to avoid possible
instability due to "concentration of world oil production
in any one region of the world."
After Sept. 11, President Bush decided
to increase the American strategic reserve to 700 million barrels.
But some experts say more is needed, in part to reduce the importance
of Persian Gulf producers like Saudi Arabia.
"You want to make it politically impossible
for the Saudis to use their swing capacity as a political club,"
said James Woolsey, President Clinton's first C.I.A. director
and one of the advocates of increasing the reserve to one billion
barrels.
President Bush's national security strategy,
released in September, proposed to "enhance energy security"
by working with allies to "expand the sources and types of
global energy supplied, especially in the Western Hemisphere,
Africa, Central Asia and the Caspian region."
The strategy did not mention the Persian
Gulf, the source of most of the world's known oil reserves and
virtually all of the world's spare oil capacity.
Energy security issues were front and center
two weeks ago in Washington at a conference on the economic consequences
of an attack on Iraq. The conference was sponsored by the Center
for Strategic and International Studies in Washington.
Panel members called for more complete
and understandable data on oil markets, a position supported by
the Bush administration. Energy Secretary Spencer Abraham backed
a Saudi initiative in that area during a forum in Japan.
Experts on the panel said Saudi Arabia's
stated intention to fill in the supply gaps made the outlook for
oil markets more favorable than it was after the sudden Iraqi
invasion of Kuwait in 1990. Moreover, the loss of Iraqi oil exports
would be far less than the loss of 4.5 million barrels a day that
occurred as a result of Iraq's invasion, which halted Kuwait's
production, too.
But the center's analysis included some
new problems and a few unknowns. Commercial petroleum stocks are
much tighter today than in 1990, and there is less ability to
substitute other fuels.
Furthermore, no one knows what President
Saddam Hussein of Iraq might do to his own or his neighbors' oil
fields, or whether sympathetic terrorists might hit oil targets
in the region.
At a time
when the world's attention is focused on the threat of war in
oil-rich Iraq, there's upheaval ahead in another major petroleum-producing
nation: Venezuela.
The stakes are unusually high for the Bush
administration, because any major violence in Venezuela could
cause a sharp rise in world oil prices.
In recent days, the conflict between leftist
President Hugo Chavez and an opposition coalition of political
parties, business groups and labor unions has reached the boiling
point.
Bomb explosions have rocked newspaper offices,
hundreds of thousands of people have clogged city streets, and
more than 100 army officers have camped out in a major plaza of
Caracas, the capital, declaring it liberated territory and calling
on the military to overthrow Chavez.
On Monday, Chavez's allies in the army
high command took the unprecedented step of grabbing control of
the Caracas police, which was loyal to Mayor Alfredo Pena, a fierce
Chavez opponent.
On Thursday, opposition leaders called
for a general strike and lockout by employers to begin Dec. 2.
Although they gave no details, many leaders
said the shutdown will be indefinite, a repeat of the quasi-insurrectionary
stoppage in April that brought about a civilian-military coup
that temporarily ousted Chavez.
Observers in Washington and Venezuela warn
that large-scale bloodshed -- even a civil war -- is not out of
the question.
"Venezuela clearly has crossed a threshold
of violence in the past three or four days," said Riordan
Roett, director of the Western Hemisphere program at Johns Hopkins
University's School of Advanced International Studies in Washington.
"Venezuela is more deeply, bitterly
divided than any other nation in recent memory except for Central
America in the 1980s and Chile in 1973," when the military
overthrew leftist President Salvador Allende. "This is an
extraordinary event for Latin America."
Venezuelan unrest could also set off seismic
waves across the U.S. economy. Venezuela is the fourth-largest
source of imported oil for the United States, and the government
owns several major U.S. refineries and the Citgo chain of gasoline
stations.
Any interruption in Venezuela's shipments
would cause a sudden spike in international oil prices.
Most petroleum experts believe an Iraq
war will push prices temporarily to at least $40 per barrel, so
a meltdown in Venezuela at the same time could send them soaring
much higher.
In August, a poll by the Venezuelan firm
Keller and Associates showed 62 percent of the 1,000 people questioned
believed the country was heading toward civil war, and 25 percent
said they would be willing to fight in that war -- 13 percent
against Chavez and 12 percent on his side. Since then, most observers
believe that passions have grown hotter.
The opposition, which generally represents
the middle and upper classes, claims that Chavez is leading Venezuela
toward a Cuban-style dictatorship.
Chavez, a former army officer who was elected
in 1998 and re-elected in 2000, enjoys strong support from the
poor because he has increased spending on anti-poverty programs.
The opposition demands that Chavez resign
and allow new elections. He refuses to quit and points out that
the Venezuelan Constitution only allows a new election after the
midpoint in his six-year term, or August 2003.
For the past two weeks, Organization of
American States Secretary-General Cesar Gaviria has been overseeing
negotiations between the government and the opposition, but Thursday's
strike call appeared to deal a severe blow to the hopes for peace.
"I'm very, very afraid that a decision
so drastic (the general strike) will not allow us to continue
our efforts with the negotiations, especially to find an electoral
solution to the crisis," Gaviria said.
Opposition hard-liners appear eager for
confrontation and accuse Gaviria of being too soft on Chavez.
"We have told Mr. Gaviria that his
mission's lack of resolve will make civil war almost inevitable,
and that will weigh on his conscience," said Rafael Poleo,
publisher of El Nuevo Pais, a fiercely anti-Chavez Caracas newspaper,
after a recent meeting with the OAS leader.
Roett calls the negotiations useless, and
adds: "This is going to be settled in the street. That's
the best solution we can hope for right now.
"What I think it will come down to
is that Chavez will try to take total power, and the military,
backed by civil society, will move first and take him out."
While the Bush administration has no love
for Chavez, the fears of oil supply disruptions have prompted
U.S. diplomats to warn the opposition to back away from the brink.
On Monday, the U.S. Embassy in Caracas
issued a loud and clear call for moderation: "The United
States again reiterates its rejection of illegal actions, especially
against people or property, with the intent of altering the constitutional
order -- either to overthrow the government or keep it in power
unconstitutionally."
Most Venezuelans believe Washington's focus
on Iraq is key to Chavez's survival.
"The Bush administration isn't interested
in fighting with Chavez now because it needs Venezuela's supply
of oil," said Margarita Lopez Maya, a history and economics
professor at the Central University of Venezuela. "The administration
will wait until it finishes with Iraq, then it will see if Chavez
is making problems."
Trying to make the best of his advantage,
Chavez has offered to sign a treaty with Washington that would
guarantee an unlimited supply of oil to the United States for
20 years at a fixed price.
He also has emphasized that Venezuela will
do its best to keep oil prices down during an Iraq war -- "an
extremely important signal to Washington and to the oil markets,"
according to Mazhar Al-Shereideh, the director of Petroanalysis,
a consulting firm for the oil industry.
"Historically, Venezuela
has always been a steady and reliable source of oil in times of
war and peace. Now, the United States needs Venezuela more than
ever."
1) Introduction: Energy Policy=Foreign
Policy?
2) One Link: Axis of Oil
3) Consumption and Production
4) The Bush Administration and Energy Policy
5) The "War on Terrorism"
6) Iraq
7) Alternatives
8) Credits
9) About the MoveOn bulletin and MoveOn.org
1) INTRODUCTION: ENERGY
POLICY=FOREIGN POLICY?
"Together, oil and coal constitute
the biggest single industry in history."
- Ross Gelbspan, in his book, The
Heat is On
Energy is the keystone of the quality of
life characteristic of much of the modern industrialized world.
It makes our technology possible. It touches our lives in thousands
of ways each day--from the heat we use in our homes, to the materials
that make up the many products we use, to the types of medical
services we enjoy, to the ways we communicate and travel.
Yet we take energy largely for granted.
We treat it as though it will always be available. And we underestimate
its importance in our everyday lives.
Most of our energy comes from oil, gas,
and petroleum products. These non-renewable resources not only
fuel our cars, but they are also used in literally thousands of
ways to support our industrialized lifestyle. They are the key
to the current world economy. But they will not last forever.
By some estimates, oil production may reach its peak as soon as
2003; by other estimates, 2010. Either way, oil production will
most certainly peak within the lifetimes of most people around
today. Meanwhile, we have done little to reduce our dependence
on this source of energy, thereby assuring that the demand will
remain. Once the oil resources of the world begin to diminish,
the price of oil will inevitably rise quite high.
This may explain why oil is important enough
to fight over.
Oil may not be the only reason for a new
Gulf War, but there is little doubt a successful military seizure
of Iraq would have the end result of giving the US control over
Iraq's oil reserves. Not only would this immediately put money
into the pockets of US oil companies, it would also ensure that
Iraq's oil reserves don't fall into the hands of a US competitor
such as China.
Still, at best, this type of power-grab
will only be beneficial to some, and only in the short-term. Burning
oil and gas pollutes our collective environment, no matter who
controls the oil reserves. Once oil reserves begin to decline,
competition for them will become even more intense, and may result
in conflicts that we can't yet foresee, all with their attendant
environmental and humanitarian consequences. After that, even
those oil reserves that we have today will dwindle and go dry,
and the cost of finding more oil and extracting it will continue
to rise, until it outweighs potential profits, and the amount
of energy needed to recover the oil is equal to or exceeds the
energy in the recovered oil. In the meantime, unless the population
has found some more sustainable way to produce energy, our quality
of life will deteriorate. Experts worry that the lack of availability
of oil could cause the global human population to actually decline.
If the experts are right, we need more
of a solution than squabbling over whatever oil is left. And we
need more of a solution than reducing our dependence on Middle
Eastern oil. We need to start reducing our dependence on oil,
period. We may even need a radical change, a new revolution on
the scale of the industrial revolution, in order to completely
end our use of oil.
It isn't really that controversial of an
idea, after all, that the oil will eventually run out. The controversial
part comes when deciding what to do with that knowledge. The Bush
administration's ties to the oil industry will likely mean that
new policies aimed at ending dependence on oil won't be coming
from the government. So new ideas and environmentally concerned
action will have to come from the grassroots level. It will take
a lot of effort, but it could help ensure a much better future
for many generations to come.
If the experts are right, the sooner we
start, the better.
2) ONE LINK: THE AXIS OF OIL
Cheney, Bush, and the industry form a kind
of "axis of oil" which serves US corporate interests.
In fact, based on consultations with energy industry leaders such
as the CEO of Enron, the Bush administration has determined that
the basis of the US national security is access to oil. Not surprising
then that Iraq is the new target in the "war on terrorism." http://www.commondreams.org/views02/1113-08.htm
Dependence on foreign oil is a result of
this high rate of consumption. In June 2002, Under Secretary of
State Alan Larson testified before the House of Representatives
International Relations Committee that US dependency on foreign
sources of oil will be an "unavoidable component of the energy
supply mix." According to Larson, "We are virtually
self-sufficient in all energy resources except oil, of which we
import 52 percent of our needs. Estimates indicate that over the
next 20 years, U.S. oil consumption will increase by 33 percent
or more than 6 million barrels a day. Depending on many factors,
including the policies we adopt, the Energy Information Administration
estimates that imported oil could grow to 62 percent of our total
oil consumption by 2020." Thus the energy security policy
of the US must "ensure that our economy has access to energy
on terms and conditions that support economic growth and prosperity"
and "ensure that the United States and its foreign policy
can never be held hostage by foreign oil suppliers." http://www.usembassy.it/file2002_06/alia/a2062007.htm
4) THE BUSH ADMINISTRATION AND ENERGY POLICY
The Bush administration is as oil-drenched
as they come, as this article takes care to demonstrate. But what
does this mean? According to the article, "George W.'s ties
to oil don't prove that the industry decides our every foreign
policy move. But they do just about guarantee, for all practical
purposes, that nothing significant will change in American energy
policy. With Bush-Cheney in power, oil addiction is here to stay." http://www.globalresearch.ca/articles/CAV111A.html
This is an excellent overview of a report
on the campaign contributions made by various energy companies
to Democratic and Republican candidates over the past ten years.
Not surprisingly, President Bush was the number one recipient
of campaign contributions from the oil and gas industry in the
last election. Enron was the number one campaign contributor in
this industry, while Exxon Mobil came in second. Bush also received
a large amount of money from the utilities industry. In fact,
his two-year fund-raising total was more than any other federal
candidate has received from electric utilities in the past decade.
There is lots of detailed information here, especially if you
have a little time to explore the charts. http://www.opensecrets.org/pressreleases/energybriefing.htm
Confused by all of the information out
there about Enron? Never fear--here, in point form, is "Enron
at a Glance." Along with other useful information, this list
notes that Enron CEO Kenneth Lay "was appointed to the Bush
transition team where he worked directly with Vice President Cheney
to develop the administration's national energy policies,"
and that "no fewer than 52 former Enron executives, lobbyists,
lawyers or significant shareholders ended up working for the Bush
administration." http://www.thedailyenron.com/enron101/glance.asp
Now that the Republicans have won full
control of both Congress and the Senate, it is far more likely
that they will pass a controversial energy bill which includes
drilling in the Arctic National Wildlife Refuge. http://www.adn.com/front/story/2095762p-2192708c.html
MSNBC takes a look at the Republicans who
will be taking over the environment and energy committees, and
how this is likely to affect policy in 2003, including the energy
bill. http://www.msnbc.com/news/831973.asp
This website offers a critical analysis
of the energy bill, breaking it up section by section with links
and pro/con summaries provided for the various topics covered.
A very useful resource if you have a little time to browse. http://www.energyjustice.net/energybill/
5) THE "WAR ON TERRORISM"
Why do so many people outside of the US
seem to think that the war on Afghanistan is related to oil? This
article gives an overview of a number of sources that examine
the many links between oil policy and events in Afghanistan, and
gives the gist of their arguments on subjects such as the rise
and fall of the Taliban. http://www.afgha.com/
article.php?sid=13313&mode=threa
