Blood for Oil
Is the war in the Middle East really being waged for oil?
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| Skeptoid #32 March 12, 2007 Podcast transcript | Listen | Subscribe |
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The War on Terror and anti-American sentiment in the Middle East has raised our gasoline prices to an all-time high. Or has it?
Everyone knows that most of our oil comes from the Middle East, which is why we're so heavily dependent upon them for our energy. And when they don't like us, for example when we bomb them, they jack up our prices to hit us where it really hurts. Or so I've always heard. But is any of that really true?
More than a third of our petroleum, about 37% of our total usage, is produced domestically by our own oil companies. I'm not sure why people seem to forget about those guys, ExxonMobil and Chevron and all of them; you may resent them but they are the principal source of our non-foreign-dependent energy. So this means that only a bit less than two thirds of our petroleum is imported. That still means most of our petroleum comes from OPEC, right? Wrong. Most of our petroleum imports come from non-OPEC countries; 56% of it, in fact. Of that 56%, the majority is from Canada and Mexico, who are about as far removed from the Middle East as can be. The rest of it is from other random places like Angola, Russia, the Virgin Islands, and Brazil, all of whom are friends of ours. So exactly where is all this leverage from anti-US exporters coming from?
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You probably assume that it comes from the OPEC countries, who provide the remaining 32% of our petroleum. Well, here's the next monkey wrench. Of that 32%, almost none comes from hostile Middle East countries. The biggest supplier is Saudi Arabia, a relatively Westernized country that's our biggest ally in the region. Number 2 is Venezuela (in more ways than one); their president may be headed for a rubber room but they're hardly a Middle Eastern terrorist nation. Number 3 is Nigeria, and I'll bet you didn't know that they had an industry other than sending emails promising millions. Number 4 is Algeria, and what's left comes from Iraq, which isn't allowed to hate us any more now that we occupy them. In fact, less than 1% of our petroleum comes from hostile Middle East countries.
No blood for oil, say the anti-war protesters. I'm against the war too, but I'm interested to hear that particular claim defended. Yes, the United States does launch some pretty unpopular military actions in this world, but not against anyone who provides any significant part of our oil. No blood for oil. Looks great on an anti-war protest sign. Sounds great on 60 Minutes. But what's it based on? I don't know.
So I don't understand. Since none of our oil supply is dependent on these Middle Eastern countries we're always fighting with, how come that fighting affects our gas prices? Sounds like a smoking gun to me. Clearly, we wouldn't be fighting them if we weren't getting some oil out of it somewhere, say the conspiracy theorists. Maybe the Saudis are behind it. Maybe attacking Iraq is a way to please Saudi Arabia. Well, if it is, the fighting sure didn't improve our gas prices much. From what I can see, we've gained nothing by attacking Iraq. We certainly haven't won any free oil or earned any favoritism discounts. So why do the conspiracy theorists draw this connection? I don't know. None of it makes any sense to me.
Yet, something has driven up the gas prices. Whose word do we accept unconditionally: the government's, or that of the anti-US conspiracy theorists? Maybe a liberal dose of skepticism is due. Maybe all of these people are speaking with an agenda, rather than with responsible critical analysis.
An advertisement in the New Yorker magazine costs a lot more than an advertisement in People Magazine, despite the fact that People Magazine reaches many more readers. A Porsche Turbo costs almost twice what a Porsche Carrera costs, even though they're 98% identical. A Rolex contains the same parts as a Timex but costs a hundred times as much. Has the world gone mad? When did prices suddenly jump off the sanity wagon? Since when do companies charge a penny more for their products than their production cost?
Prices are driven by markets. Markets are driven by human beings. Human beings are driven by emotions. Emotions, like fear, explode when we get into a war. When we get into a war in an oil-producing region, petroleum markets in those regions go insane. Stockholders get nervous. Traders freak out. Prices climb the tree like mad to escape the tsunami. Everyone between you and the guy who connects the hose to the well in Yemen becomes terrified, and oil becomes the most prized commodity on the planet. It's simple, it's obvious, it's organic, and it's Economics 101. It's not blood for oil and it's not a Halliburton conspiracy. It's a fact of world economics, and the tidal force of the world economy is the strongest superpower on Earth: greater than Dick Cheney, greater than Osama bin Laden, greater than anti-war protesters. The US administration wishes it could control oil prices like this.
I'm well aware that this little outburst of mine is not going to change the mind of anyone who believes that the war in the middle east is all about oil. I know that plenty of listeners are going to find fault with my research and point out that we did in fact get seven barrels of oil from a hostile country ten years ago. I know that many listeners are going to drag out the tired old adage that if Iraq produced pencils instead of oil, the Gulf War would never have happened. I know that many listeners are going to point out that regardless of short-term price hikes, it's essential for the US long-term energy strategy to have a strong military presence in the Middle East. I know I can't change your mind. What I can do is to encourage you to be skeptical for a moment. What I can do is to encourage you to look up, on your own, where our oil actually comes from. When you see how little of it comes from the Middle East, and especially how almost none of it comes from the hostile parts of the Middle East, I hope that you will at least re-examine the blood for oil claim. Is that small percentage of oil truly more important than virtually everything else about our country, to the point where we'd infuriate everyone in the world, plus most of our own people, to wage a war? I'm not a politician and I don't claim to know what the war is really about, but when I look at the oil question skeptically, it just doesn't emerge as a logical cause. I'm not claiming to have the answers and I'm not even claiming to be right, but I am claiming to have thought about it more, and personally done more independent research into the sources of our petroleum, than most people who simply parrot the blood for oil slogan because it's a great sound bite and because it's an easy and trendy way to be anti-Bush. I'll give you a great starting point for your own research, an article by the engineering editor of Road & Track, and you'll find the link for it in the online transcript of this episode.
I fully expect this episode to be among the least popular, and the most criticized. It's always more popular to be skeptical of the government, than to be skeptical of those who doubt the government. So go ahead, I'm all through talking now; bring it on.
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References & Further Reading
Bromley, S. "The United States and the Control of World Oil." Government and Opposition. 15 Mar. 2005, Volume 40, Issue 2: 225-255.
Chaudhuri, A. Emotion and Reason in Consumer Behavior. Oxford: Butterworth-Heinemann (Elsevier), 2006.
Flynn, S.M. Economics for Dummies. Hoboken: For Dummies (Wiley), 2005.
Maugeri, L. The Age of Oil: The Mythology, History, and Future of the World's Most Controversial Resource. Westport: Praeger Publishers, 2006.
Reynolds, A. "Oil prices: cause and effect." TownHall.com. Salem Web Network, 23 Jun. 2005. Web. 8 Nov. 2009. <http://townhall.com/columnists/AlanReynolds/2005/06/23/oil_prices_cause_and_effect>
Shalizi, Z. "Energy and emissions : local and global effects of the rise of China and India." Research Working Papers of the World Bank. 1 Apr. 2007, N/A: 1-52.
Shermer, M. The Mind of the Market: How Biology and Psychology Shape Our Economic Lives. New York: Holt Paperbacks, 2008.
Reference this article:
Dunning, Brian.
"Blood for Oil." Skeptoid Podcast. Skeptoid Media, Inc.,
12 Mar 2007. Web.
12 Mar 2010. <http://skeptoid.com/episodes/4032>
Discuss!
5 most recent comments | Show all 76 comments
Remember, you should always read with skepticism the comments of anyone too lame to put their real name & city.
Even if it's just 1% of their oil, that's still 1%! Oil prices are very inelastic in economics terms. This means that a small change in products, produces big changes in the cost of oil. Even so, at the least, oil from Iraq can feed the war machines requirements. So why not? 1% is 1%, it's better than 0% production boost is it not? Furthermore, it may serve as a deterrent, if you go against the US consider yourself open to war with us.
No one would ever dare impose trade embargoes against the USA. It would cost them too much money. The US knows this. Imagine what would have happened to a country like Japan, if they had gone in and taken over Iraq and secured oil supplies. How would the US react? Sanctions, embargoes, etc. Furthermore, there are plenty of 'terrorist' nations in Africa. Nigerian scams that constantly take money away from American's, but does the USA go in and takeover the country? No, they get oil from Nigeria, this keeps them happy.
Chadzuka, Aussie
January 10, 2010 12:43am
When I see the US being compared to Switzerland, I'm not sure if I want to laugh or cry... both! South America would surely appreciate to be left alone for once, at least that's what they say. But any vision of US isolationism, at the height of its military power, is an illusion, and one that's not likely to be shared by your decision makers. ;) George W. Bush was a disappointment, but imagine what a "good" demagogue could do.
The "Blood for Oil" hypothesis as I understand it has never been about benefiting the US people, but certain big oil companies, as other commenters have already pointed out. Recently there has been much malicious joy about how Russian and Chinese companies are getting the lion's share of Iraq's oil concessions, but Exxon-Mobile/Shell didn't do that badly, either.
"Blood for Oil" is a pretty catchphrase, much more to the point than "Agression Against a Subjective Noun". But to take it literally is stupid. Geo-politic strategies are usually formulated by think tanks, I'm told. Not any one lobby group or ideologue determines the future course of a country or a conglomerate like the EU. While oil, or any other resource, plays a significant role, there are other benefits to be had from exerting control over parts of the world. I'm sure there are good reasons for building and maintaining military bases where they are. So reducing the US's presence in North Africa to oil is simplistic, but basically correct.
A.L., Augusrg, Germany
January 16, 2010 8:07am
BTW I don't quite agree with Brian on this topic (just to clear up any confusion from my last post). It's better to debate on the correct grounds instead of something that wasn't said. Contrary to what was claimed in this episode middle eastern oil does affect our prices even if we get relatively no oil from there. The big driver is world demand for oil since other countries are consuming the stuff also. My contention is that the us went into Iraq and support hideous regimes to keep world supply up. Also into Iraq to allow Exxon etc to plunder that countries reserves (refering directly to the law that was pushed through giving Exxon a no bid contract that future govt can't discontinue)
Robert Mcbride, Columbia, MD
January 21, 2010 10:32am
I'd be interested to hear why Hugo Chavez is "headed for a rubber room", Brian. He's improved the country tremendously since taking office and is a far better leader than the previous leaders.
Jordan, England
February 23, 2010 6:31pm
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I agree with your points. I guess you could say their government is better behaved in relation to our interests. But it terms of being westernized as a society, I would say Iraq (under Saddam), Iran, and many others are more westernized. Even in comparison to the middle east, Saudi Arabia is horrible in terms of civil liberties and human rights. Its actually the only country in the entire world where women cannot legally drive. Just imagine what else they can’t do. I’d be interested to see a poll on how many Saudis support Bin Laden. I think the world would be shocked at the result.
I’ve agreed with almost everything Brian has said, but that one took me by surprise.
Jordan, Overland Park Ks
December 03, 2009 1:52pm