Oil Change International

Exposing the true costs of fossil fuels

War & Terror

The Bush Administration, backed up by a chorus of pundits, vehemently denied that oil provided any part of the rationale for the U.S. war in Iraq. However, in August 2002, Dick Cheney told the Veterans of Foreign Wars why Saddam had to be removed: “Armed with an arsenal of these weapons of terror and a seat at a top ten percent [sic] of the world’s oil reserves, Saddam Hussein could then be expected to seek domination of the entire Middle East, take control of a great portion of the world’s energy supplies…” Clearly, Cheney did not think that oil was irrelevant.

The Iraq war is only the latest example of decades of U.S. military involvement and covert action in oil producing regions. Since the 1973 Arab oil embargo, successive U.S. administrations have equated national security with access to, and control of, oil – particularly in the Persian Gulf, which holds two-thirds of global oil reserves. In other words, as long as we need oil, we need the Persian Gulf. Faced with this unpleasant fact, every President since Carter has chosen to defend U.S. “access” to the Persian Gulf.

U.S. Oil “Diplomacy”

The development of hydrocarbon law in post-invasion Iraq serves as a telling example of how the United States exerts its influence to increase access to oil. A 2005 report by Platform London, Oil Change, and partners ‘Crude Designs: The Rip-Off of Iraq’s Oil Wealth‘ reveals that the U.S. State Department played a large role in developing proposed Iraqi oil policy, gearing it towards benefiting U.S. multinational oil corporations.

The proposed Iraqi Oil Law, which was reviewed by the U.S. government, major oil companies, and the International Monetary Fund in 2006 before a draft was even shown to the Iraqi Parliament in February 2007, would take much of the control of oil away from the Iraqi government. The proposed law:

  • Allocates the majority of Iraq’s oilfields – accounting for at least 64 percent of the country’s oil reserves – for development by multinational oil companies.
  • Sets no minimum standard for the extent to which foreign companies would have to invest their earnings in the Iraqi economy, partner with Iraqi companies, hire Iraqi workers or share new technologies.
  • Creates the potential for international oil companies to be offered some of the most corporate-friendly contracts in the world, including production-sharing agreements (PSAs) – the oil industry’s preferred model agreements. PSAs are roundly rejected by the top oil producing countries in the Middle East because they grant long-term contracts (20 to 30 years) and greater control, ownership and profits to the companies than other models.

The law was approved by the Iraqi cabinet in February 2007, however, discussion of the law has been repeatedly delayed and still has not passed the parliament. A recent announcement that Iraqi oil reserves are higher than previously thought will likely spur on discussion of the oil law once again.

For more on this important topic, read Greg Muttit’s useful book: Fuel on the Fire.  Naomi Klein called it a “secret history of the war”.

Costs of U.S. Foreign Policy for Oil

Estimates of how much the decision to defend oil supplies has cost the U.S. taxpayer have always been hard to come by.  About a decade ago, Greenpeace and Earthtrack published a study indicating that the cost of defending oil supplies were at least $10 billion annually. A more recent peer-reviewed study from Roger Stern, an economic geographer at Princeton, outlines an even greater cost of $7.3 trillion over 30 years.

War, Cost, and Carbon

The report, Climate of War, released by Oil Change International on the fifth anniversary of the war in Iraq in March 2008, begins to quantify some of the impacts of the Iraq war in terms of energy and climate change.  The report found that:

  • In 2006, the US spent more on the war in Iraq than the whole world spent on investment in renewable energy. The projected total U.S. spending on the Iraq war could cover all of the global investments in renewable power generation that are needed between now and 2030 in order to halt current warming trends.
  • Between 2003 and 2007, the Iraq war was responsible for at least 141 million metric tons of carbon dioxide equivalent (MMTCO2e), equal to the emissions from putting an additional 25 million cars on the road in the United States. If the war were ranked as a country in terms of annual emissions, it would emit more carbon dioxide than 60 percent of all countries on the planet.

These calculations are not to suggest that greenhouse gas emissions are the most important impact of war. Nor are they to suggest that a more energy-efficient military would be more effective or justified in its actions. However, in a process comparable to estimating the true cost of the war in dollar terms, these numbers present an aspect of war’s impact that has been largely ignored.

Conflict and Violence Over Oil

The Middle East is not the only place where oil resources contribute to conflict and violence. An Oxfam report found that oil export dependent nations tend to suffer from unusually high rates of corruption, authoritarian government, government ineffectiveness, military spending, and civil war. Another report by Michael Ross found that oil wealth can undermine a country’s economy and politics, fund insurgents, and aggravate ethnic grievances.