December 19, 2002 7:37 AM

How badly do we want low gas prices?

'Crude' conspiracy? No: Facts don't support theory of U.S. 'oil grab'

A popular theory now, as it was during the Gulf War, is that we are planning to invade Iraq for the oil. Truth or ficition? Fiction, if you believe Daniel Yergin.

If oil is the question, Iraq is not the answer.

Some people say the Iraq crisis has been manufactured to cloak an "oil grab" by the United States and the American oil industry. Others believe that a liberated Iraq will flood the world market with cheap oil and provide a quick fix for concerns about our energy security.

These perspectives, while very different, are based on a fundamental misperception -- of both scale and timing. Yes, Iraq is a major oil country, with the world's second-largest known reserves. But in terms of production capacity, Iraq represents just 3 percent of the world's total. Its oil exports are on the same level as Nigeria's. Even if Iraq doubled its capacity, that could take more than a decade. In the meantime, growth elsewhere would limit Iraq's eventual share to perhaps 5 percent, significant but still in the second tier of oil nations.

The future of the Iraqi oil industry after Saddam, if there IS an "after Saddam", is anything but clear. If American oil companies become major players, and that is a huge "IF", the amount of oil available will likely not have the effect that Americans are looking for- paying less at the gas pump. God, we're such a self-centered bunch, aren't we??

It is conceivable that, over the long term, Iraqi oil might, when combined with increased and more efficient output from other nearby regions, stabilize or decrease oil prices. The outlook of the region's oil market "after Saddam" is so uncertain as to be impossible to predict at this point.

Americans might not realize this, but we still pay the lowest prices at the gas pump of any developed nation. I've been to countries where paying $8-$10 a gallon is the rule, not the exception. With that in mind, I'm not going to argue over paying $1.35 a gallon, and I certainly don't want to go to war for cheaper gasoline. Bombing Iraq into the Stone Age wouldn't accomplish that goal anyway. Iraq is largely already there.

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This page contains a single entry by Jack Cluth published on December 19, 2002 7:37 AM.

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