Iraq Oil

Interesting news from Doug Henwood, over at Left Business Observer:

“[Eariler this month] the Iraqi government awarded Exxon Mobil and Royal Dutch Shell the right to develop a large field in the southern part of the country. Earlier in the week, the government awarded contracts to BP, China National Petroleum, Eni (the Italian firm), and Occidental. One thing stands out on first glance: only two of the six oil companies I just listed are based in the U.S. But it gets even more interesting on second glance. These are just service contracts—the companies don’t get title to the oil, and therefore can’t add the billions of barrels involved to their own reported reserves. And the Iraqi government isn’t offering the most generous of deals. For example, the Exxon Mobil team had originally rejected the government’s offer of a $1.90 a barrel payment (which is only about 2.5% of the price of a barrel of oil). Exxon had originally asked for twice that rate, but the government held its ground. It’s quite surprising how the Iraqi government hasn’t quite acted like the puppet regime that one might have expected.”

With a lot of people over the years saying that the whole purpose of the US invasion of Iraq was so that giant US companies could steal Iraqi oil, Henwood raises some pretty interesting points. Economists and money types always try to make predictions about the future. However, the thing that always screws them up is the simple fact that people are unpredictable, and when folks are being oppressed, they don’t like to stay that way for long.