October 01, 2009

Are They Really Oil Wars

By Ismael Hossein-zadeh
July 9, 2008

A most widely-cited factor behind the recent U.S. wars of choice is said to be oil. “No Blood for Oil” has been a rallying cry for most of the opponents of the war. While some of these opponents argue that the war is driven by the U.S. desire for cheap oil, others claim that it is prompted by big oil’s wish for high oil prices and profits. Interestingly, most antiwar forces use both claims interchangeably without paying attention to the fact that they are diametrically-opposed assertions.

Not only do the two arguments contradict each other, but each argument is also wanting and unconvincing on its own grounds; not because the U.S. does not wish for cheap oil, or because Big Oil does not desire higher oil prices, but because war is no longer the way to control or gain access to energy resources. Colonial-type occupation or direct control of energy resources is no longer efficient or economical and has, therefore, been abandoned for more than four decades.

The view that recent U.S. military adventures in the Middle East and the broader Central Asia are driven by energy considerations is further reinforced by the dubious theory of Peak Oil, which maintains that, having peaked, world oil resources are now dwindling and that, therefore, war power and military strength are key to access or control of the shrinking energy resources.

In this study I will first argue that the Peak Oil theory is unscientific, unrealistic, and perhaps even fraudulent. I will then show that war and military force are no longer the necessary or appropriate means to gain access to sources of energy, and that resorting to military measures can, indeed, lead to costly, not cheap, oil. Next, I will demonstrate that, despite the lucrative spoils of war resulting from high oil prices and profits, Big Oil prefers peace and stability, not war and geopolitical turbulence, in global energy markets. Finally, I will argue a case that behind the drive to war and military adventures in the Middle East lie some powerful special interests (vested in war, militarism, and geopolitical concerns of Israel) that use oil as an issue of “national interest”—as a façade or pretext—in order to justify military adventures to derive high dividends, both economic and geopolitical, from war.

Has Oil Really Peaked—and Is It Running Out?

Peak oil thesis, as noted above, maintains that world oil reserves, having reached their maximum capacity, are now dwindling—with grave consequences of oil shortage and high energy prices. While this has led many to call for more vigorous conservation, it has led others to argue in favor of unrestrained exploration and extraction of oil reserves, especially those located in the Alaskan Wildlife regions.

Significant policy and/or political implications follow from the view that oil is running out. For one thing, this view provides fodder for the cannons of war profiteering militarists who are constantly on the look out to invent new enemies and find new pretexts for continued war and escalation of military spending. For another, it tends to disarm many antiwar forces that accept this thesis and, therefore, “internalize responsibility for U.S. foreign policy every time they fill their gas tank. Thus they own the wars.”[1]

The Peak Oil thesis serves as a powerful trap and a clever manipulation in that it lets the real forces of war and militarism (the military-industrial complex and the pro-Israel lobby) “off the hook; it is a fabulous redirection. All evils are blamed on a commodity upon which we are all utterly dependent.”[2]

The fact, however, is that there is no hard evidence that oil has peaked, or that global oil reserves are shrinking, or that the current skyrocketing price of oil is due to a supply shortage. (As shown below, there is actually an oil surplus, no shortage.)

Peak oil theory is not altogether new. It was originally floated around in the 1940s, arguing that world oil reserves would be exhausted within the next two decades or so. It then resurfaced in the 1970s and early 1980s in reaction to the oil price hikes of those years—which were, incidentally, precipitated not by oil shortages but by international political convulsions, revolutions and wars. But it died down once the price of oil fell back to pre-crises levels.

As recent geopolitical convulsions in the Middle East (especially the U.S. war on Iraq, and the resultant booming speculation in oil markets) have triggered a new round of oil price hikes, Peak Oil theory has once again become fashionable. The theory is being promoted not only by war profiteers and proponents of an unbridled domestic oil exploration and extraction, especially in Alaska, but also by some apparently antiwar liberals such as Michael T. Klare and James H. Kunstler.[3]

Peak oil theory is based on a number of assumptions and omissions that make it less than reliable. To begin with, it discounts or disregards the fact that energy-saving technologies have drastically improved (and will continue to further improve) the efficiency of oil consumption. Evidence shows that, for example, “over a period of five years (1994-99), U.S. GDP expanded over 20 percent while oil usage rose by only nine percent. Before the 1973 oil shock, the ratio was about one to one.”[4]

Second, Peak Oil theory pays scant attention to the drastically enabling new technologies that have made (and will continue to make) possible discovery and extraction of oil reserves that were inaccessible only a short time ago. One of the results of the more efficient means of research and development has been a far higher success rate in finding new oil fields. The success rate has risen in twenty years from less than 70 percent to over 80 percent. Computers have helped to reduce the number of dry holes. Horizontal drilling has boosted extraction. Another important development has been deep-water offshore drilling, which the new technologies now permit. Good examples are the North Sea, the Gulf of Mexico, and more recently, the promising offshore oil fields of West Africa.[5]

Third, Peak Oil theory also pays short shrift to what is sometimes called non-conventional oil. These include Canada's giant reserves of extra-heavy bitumen that can be processed to produce conventional oil. Although this was originally considered cost inefficient, experts working in this area now claim that they have brought down the cost from over $20 a barrel to $8 per barrel. Similar developments are taking place in Venezuela. It is thanks to developments like these that since 1970, world oil reserves have more than doubled, despite the extraction of hundreds of millions of barrels.[6]

Fourth, Peak Oil thesis pays insufficient attention to energy sources other than oil. These include solar, wind, non-food bio-fuel, and nuclear energies. They also include natural gas. Gas is now about 25 percent of energy demand worldwide. It is estimated that by 2050 it will be the main source of energy in the world. A number of American, European, and Japanese firms have and are investing heavily in developing fuel cells for cars and other vehicles that would significantly reduce gasoline consumption.[7]

Fifth, proponents of Peak Oil tend to exaggerate the impact of the increased oil demand coming from China and India on both the amount and the price of oil in global markets. The alleged disparity between supply and demand is said to be due to the rapidly growing demand coming from China and India. But that rapid growth in demand is largely offset by a number of counterbalancing factors. These include slower growth in U.S. demand due to its slower economic growth, efficient energy utilization in industrially advanced countries, and increases in oil production by OPEC, Russia, and other oil producing countries.

Finally, and perhaps more importantly, claims of “peaked and dwindling” oil are refuted by the available facts and figures on global oil supply. Statistical evidence shows that there is absolutely no supply-demand imbalance in global oil markets. Contrary to the claims of the proponents of Peak Oil and champions of war and militarism, the current oil price shocks are a direct consequence of the destabilizing wars and geopolitical insecurity in the Middle East, not oil shortages. These include not only the raging wars in Iraq and Afghanistan, but also the threat of a looming war against Iran. The record of soaring oil prices shows that anytime there is a renewed U.S. military threat against Iran, fuel prices move up several notches.

The war also contributes to the escalation of fuel prices in indirect ways—for example, by plunging the U.S. ever deeper into debt and depreciating the dollar, or by creating favorable grounds for speculation. As oil is priced largely in U.S. dollars, oil exporting countries ask for more dollars per barrel of oil as the dollar loses value. Perhaps more importantly, an atmosphere of war and geopolitical instability in global oil markets serves as an auspicious ground for hoarding and speculation in commodity markets, especially oil, which is heavily contributing to the recently soaring oil prices.

As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. . . . Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the ‘tail that wags the dog.’[8]

Wall Street financial giants that created the Third World debt crisis in the late 1970s and early 1980s, the tech bubble in the 1990s, and the housing bubble in the 2000s are now hard at work creating the oil bubble. By purchasing large numbers of futures contracts, and thereby pushing up futures prices to even higher levels than current prices, speculators have provided a financial incentive for oil companies to buy even more oil and place it in storage. A refiner will purchase extra oil today, even if it costs $115 per barrel, if the futures price is even higher.[9]

This has led to a steady rise in crude oil inventories over the last two years, “resulting in US crude oil inventories that are now higher than at any time in the previous eight years. The large influx of speculative investment into oil futures has led to a situation where we have both high supplies of crude oil and high crude oil prices. . . . In fact, during this period global supplies have exceeded demand, according to the US Department of Energy.”[10]

The fact that the skyrocketing oil prices of late have been accompanied by a surplus in global oil markets was also brought to the attention of President George W. Bush by Saudi officials when he asked them during a recent trip to the kingdom to increase production in order to stem the rising prices. Saudi officials reminded the President that “there is plenty of oil on the market. Iran has put some 30 million barrels of oil that it can't sell into floating storage. ‘If we produced more oil, it wouldn't find buyers,’ says the Saudi source. It wouldn't affect the price at all."[11]

And why producing more oil “wouldn’t affect the price at all”? Well, because what is driving the soaring oil prices is not shortage but speculation: “with so much investment money sloshing around in the commodities markets, the Saudis calculate they have no hope of controlling short-term price fluctuations. They blame the recent price run-ups on speculation and fear of shortages [not real shortages], factors they say are beyond their control.”[12]

War for Cheap Oil?

The widely-shared view that the U.S. desire for access to abundant and cheap oil lurks behind the Bush administration’s drive to war in the Middle East rests on the implicit but dubious assumption that access to energy resources requires direct control of oil fields and/or oil producing countries. There are at least three problems with this postulation.

First, if control of or influence over oil producing countries in the Middle East is a requirement for access to cheap oil, the United States already enjoys significant influence over some of the major oil producers in the region—Saudi Arabia, Kuwait, and a number of other smaller producers. Why, then, would the U.S. want to bring about war and political turmoil in the region that might undermine that long and firmly-established influence?

Let us assume for a moment that the neoconservative militarists are sincere in their alleged desire to bring about democratic rule and representational government in the Middle East. Let us further assume that they succeed in realizing this purported objective. Would, then, the thus-emerging democratic governments, representing the wishes of the majority of their citizens, be as accommodating to U.S. economic and geopolitical objectives, including its oil needs, as are its currently friendly rulers in the region? Most probably not.

Secondly, and more importantly, access to oil no longer requires control of oil fields or oil producers—as was the case in times past. For more than a century, that is, from the early days of oil extraction in the United States in the 1870s until the mid-1970s, the price of oil was determined administratively, that is, by independent producers operating in different parts of the world without having to compete with each other. Under those circumstances, colonial or imperial wars of conquest and occupation were crucial to the control of oil (and other) resources.

Beginning with the 1950s, however, that pattern of local, non-competitive price determination began to gradually change in favor of regional and/or international markets. By the mid 1970s, an internationally competitive oil market emerged that effectively ended the century-old pattern of local, administrative pricing. Today, oil prices (like most other commodity prices) are determined largely by the forces of supply and demand in competitive global energy markets; and any country or company can have as much oil as they wish if they pay the going market (or spot) price.[13]

To the extent that competitive oil markets and/or prices are occasionally manipulated, such subversions of competitive market forces are often brought about not so much by OPEC or other oil producing countries as by manipulative speculations of financial giants in New York and London. As was discussed earlier, gigantic Wall Street financial institutions have accomplished this feat through “innovative” financial instruments such as establishment of energy hedge funds and speculative oil futures markets in New York and London.[14]

It is true that collective supply decisions of oil producing countries can, and sometimes does, affect the competitively determined market price. But a number of important issues need to be considered here.

To begin with, although such supply manipulations obviously affect or influence market-determined prices, they do not determine those prices. In other words, competitive international oil markets determine its price with or without oil producers’ supply manipulations. Such supply managements are, however, designed not to create volatility in energy markets, or chronic oil price hikes. Instead, they are designed to stabilize global oil prices because oil exporting countries prefer stability, predictability and long-term planning for their economic development and industrialization projects. Here is how Cyrus Bina and Minh Vo describe this relationship:

As a result, we conclude that the global oil market is the prime mover [i.e., prime determinant of oil price] and OPEC indeed follows its trajectory accordingly and consistently. . . . When market price (both spot and futures) is falling, OPEC decreases its output; when market price is rising, OPEC attempts to increase its output; and when market price is steady, OPEC keeps its output unchanged. . . . And, this is a kind of oil market we have experienced after the dust settled following the crisis of de-cartelization and globalization of oil industry in the 1970s.[15]

Producers’ policy to sometimes curtail or limit the supply of oil, the so-called “limited flow” policy, is designed to raise the actual trading price above the market-determined price in order to keep high-cost U.S. producers in business while leaving low-cost Middle East producers with an above average, or “super,” profit. While for low-cost producers this limited flow policy is largely a matter of making more or less profits, for high-cost U.S. producers it is a matter of survival, of being able to stay in or go out of business—an important but rarely mentioned or acknowledged fact.

A hypothetical numerical example might be helpful here. Suppose that the market-determined, or free-flow, price of oil is $30 per barrel. Further, suppose this price entails an average rate of profit of 10 percent, or $3 per barrel. The word “average” in this context refers to average conditions of production, that is, producers who produce under average conditions of production in terms of productivity and cost of production. This means that producers who produce under better-than-average conditions, that is, low-cost, high productivity producers, will make a profit higher than $3 per barrel while high-cost, low efficiency producers will end up making less than $3 per barrel. This also means that some of the high-cost producers may end up going out of business altogether. Now, if the limited flow policy raises the actual trading price to $35 per barrel, it will raise the profits of all producers accordingly, thereby also keeping in business some high-cost producers that might otherwise have gone out of business.

Furthermore, supply manipulation (in pursuit of price manipulation) is not limited to the oil industry. In today’s economic environment of giant corporations and big businesses, many of the major industries try, and often succeed in controlling supply in order to control price. Take, for example, the automobile industry. Theoretically, automobile producers could flood the market with a huge supply of cars. But that would not be good business as it would lower prices and profits. So, they control supply, just as do oil producers, in order to manipulate price. During the past several decades, the price of automobiles, in real terms, has been going up every year, at least to the tune of inflation. During this period, the industry (and the economy in general) has enjoyed a many-fold increase in labor productivity. Increased labor productivity is supposed to translate into lower costs and, therefore, lower prices. Yet, that has not materialized in the case of this industry—as it has in the case of, for example, pocket calculators or computers.

Another example of price control through supply manipulation is the case of U.S. grain producers. The so-called “set aside” policy that pays farmers not to cultivate part of their land in order to curtail supply and prop up price is not different—nay, it is worse— than OPEC’s policy of supply and/or price manipulation.

It is also necessary to keep in mind that OPEC’s desire to sometimes limit the supply of oil in order to shore up its price is limited by a number of factors. For one thing, the share, and hence the influence, of Middle Eastern oil producers as a percentage of world oil production has steadily declined over time, from almost 40 percent when OPEC was established to about 30 percent today.[16] For another, OPEC members are not unmindful of the fact that inordinately high oil prices can hurt their own long-term interests as this might prompt oil importers to economize on oil consumption and search for alternative sources of energy, thereby limiting producers’ export markets.

OPEC members also know that inordinately high oil prices could precipitate economic recessions in oil importing countries that would, once again, lower demand for their oil. In addition, high oil prices tend to raise the cost of oil producers’ imports of manufactured products as high energy costs are bound to affect production costs of those manufactured products.

War for Expensive Oil?

Now let us consider the widely-shared view that attributes the Bush administration’s drive to war to the influence of big oil companies in pursuit of higher oil prices and profits. As noted, this is obviously the opposite of the “war for cheap oil” argument, as it claims that Big Oil tends to instigate war and political tension in the Middle East in order to cause an oil price hike and increase its profits. Like the “war for cheap oil” theory, this claim is not supported by facts. Although the claim has an element of a prima facie reasonableness, that apparently facile credibility rests more on precedent and perception than reality. Part of the perception is due to the exaggerated notion that both President Bush and Vice President Cheney were “oil men” before coming to the White House. But the fact is that George W. Bush was never more than an unsuccessful petty oil prospector and Dick Cheney headed a company, the notorious Halliburton, that sold (and still sells) services to oil companies and the Pentagon.

The larger part of the perception, however, stems from the fact that oil companies do benefit from oil price hikes that result from war and political turbulence in the Middle East. Such benefits are, however, largely incidental. Surely, American oil companies would welcome the spoils of the war (that result from oil price hikes) in Iraq or anywhere else in the world. From the largely incidental oil price hikes that follow war and political convulsion, some observers automatically conclude that, therefore, Big Oil must have been behind the war.[17] But there is no evidence that, at least in the case of the current invasion of Iraq, oil companies pushed for or supported the war.

On the contrary, there is strong evidence that, in fact, oil companies did not welcome the war because they prefer stability and predictability to periodic oil spikes that follow war and political convulsion: “Looking back over the last 20 years, there is plenty of evidence showing the industry’s push for stability and cooperation with Middle Eastern countries and leaders, and the U.S. government’s drive for hegemony works against the oil industry.”[18] As Thierry Desmarest, Chairman and Chief Executive Officer of France’s giant oil company, TotalFinaElf, put it, “A few months of cash generation is not a big deal. Stable, not volatile, prices and a $25 price (per barrel) would be convenient for everyone.”[19]

It is true that for a long time, from the beginning of Middle Eastern oil exploration and discovery in the early twentieth century until the mid-1970s, colonial and/or imperial powers controlled oil either directly or through control of oil producing countries—at times, even by military force. But that pattern of colonial or imperialist exploitation of global markets and resources has changed now. Most of the current theories of imperialism and hegemony that continue invoking that old pattern of Big Oil behavior tend to suffer from an ahistorical perspective. Today, as discussed earlier, even physically occupying and controlling another country’s oil fields will not necessarily be beneficial to oil interests. Not only will military adventures place the operations of current energy projects at jeopardy, but they will also make the future plans precarious and unpredictable. Big Oil interests, of course, know this; and that’s why they did not countenance the war on Iraq: "The big oil companies were not enthusiastic about the Iraqi war," says Fareed Mohamedi of PFC Energy, an energy consultancy firm based in Washington D.C. that advises petroleum firms. "Corporations like Exxon-Mobil and Chevron-Texaco want stability, and this is not what Bush is providing in Iraq and the Gulf region," adds Mohamedi.[20]

Big Oil interests also know that not only is war no longer the way to gain access to oil, it is in fact an obstacle to gaining that access. Exclusion of U.S. oil companies from vast oil resources in countries such as Russia, Iran, Venezuela, and a number of central Asian countries due to militaristic U.S. foreign policy is a clear testament to this fact. Many of these countries (including, yes, Iran) would be glad to have major U.S. oil companies invest, explore and extract oil from their rich reserves. Needless to say that U.S. oil companies would be delighted to have access to those oil resources. But U.S. champions of war and militarism have successfully torpedoed such opportunities through their unilateral wars of aggression and their penchant for a Cold War-like international atmosphere.

When Vladimir Putin first became president of Russia he was willing to allow American energy companies to continue with the one-sided contracts they had drawn up during Boris Yeltsin’s presidency. Putin built a seemingly trusting relationship with George Bush who looked into Putin’s soul and liked what he saw. The two leaders grew even closer in the aftermath of the 9/11 attacks on World Trade Centre and the Pentagon—when Russia provided “help for America’s invasion of Afghanistan.” Soon after this generous cooperation, however, “Bush repudiated the anti-ballistic missile treaty in the belief that America could develop the technology for winning a nuclear war. This posed a huge strategic threat to Russia.”[21]

Describing the heavy-handed, imperial U.S. policy toward Russia, Stephen F. Cohen writes: “The real US policy has been very different—a relentless, winner-take-all exploitation of Russia's post-1991 weakness. Accompanied by broken American promises, condescending lectures and demands for unilateral concessions, it has been even more aggressive and uncompromising than was Washington's approach to Soviet Communist Russia.”[22]

Bush’s withdrawal from the ABM treaty not merely posed an existential threat to Russia but was almost a betrayal of the trust that Putin had put in him. This led to Putin’s disenchantment with America. “Eventually he seems to have decided that every time America transgressed against Russian interests he would retaliate by stopping another American company from exploiting Russian resources.”[23]

During the past few decades, major oil companies have consistently opposed U.S. policies and military threats against countries like Iran, Iraq, and Libya. They have, indeed, time and again, lobbied U.S. foreign policy makers for the establishment of peaceful relations and diplomatic rapprochement with those countries. The Iran-Libya Sanction Act of 1996 (ILSA) is a strong testament to the fact that oil companies nowadays view wars, economic sanctions, and international political tensions as harmful to their long-term business interests and, accordingly, strive for peace, not war, in international relations.

On March 15, 1995 President Clinton issued Executive Order 12957 which banned all U.S. contributions to the development of Iran’s petroleum resources, a crushing blow to the oil industry, especially to the Conoco oil company that had just signed a $1 billion contract to develop fields in Iran. The deal marked a strong indication that Iran was willing to improve its relationship with the United States, only to have President Clinton effectively nullify it. Two months later, sighting “an extraordinary threat to the national security, foreign policy and economy of the U.S.,” President Clinton issued another order, 1259, that expanded the sanctions to become a total trade and investment embargo against Iran. Then a year later came ILSA which extended the sanctions imposed on Iran to Libya as well.

It is no secret that the major force behind the Iran-Libya Sanction Act was the America Israel Public Affairs Committee (AIPAC), the main Zionist lobby in Washington. The success of AIPAC in passing ILSA through both the Congress and the White House over the opposition of the major U.S. oil companies is testament to the fact that, in the context of U.S. policy in the Middle East, even the influence of the oil industry pales vis-à-vis the influence of the Zionist lobby.[24]

ILSA was originally to be imposed on both U.S. and foreign companies. However, in the end it was the U.S. companies that suffered the most due to waivers that were given to European companies after pressure from the European Union. In 1996 the EU pursued its distaste of ILSA by lodging complaints with the World Trade Organization (WTO) against the U.S. and through adopting “blocking legislation” that would prevent EU companies from complying with ILSA. Meanwhile, the contract that Iran had originally signed with Conoco was awarded to TotalFinaElf of France for $760 million; the deal also left the door open for Total to sign an additional contract with Iran for $2 billion in 1997 with their partners Gazprom and Petronas.

In May of 1997 major U.S. oil companies such as Conoco, Exxon, Atlantic Richfield, and Occidental Petroleum joined other (non-military) U.S. companies to create an anti-sanction coalition. Earlier that same year Conoco’s Chief Executive Archie Dunham publicly took a stance against unilateral U.S. sanctions by stating that “U.S. companies, not rogue regimes, are the ones that suffer when the United States imposes economic sanctions.” Texaco officials have also argued that the U.S. can be more effective in bringing about change in other countries by allowing U.S. companies to do business with those countries instead of imposing economic sanctions that tend to be counterproductive.

Alas, Washington’s perverse, misguided and ineffectual policy of economic sanctions for political purposes—often in compliance with the wishes of some powerful special interests—continues unabated. “Even with the increased pro-trade lobbying efforts of the oil industry and groups like USAEngage, whose membership ranges from farmers and small business owners to Wall Street executives and oilmen, the lack of support from Washington and the Bush administration could not allow them [major oil companies and other non-military transnational companies] to overtake or counteract the already rolling momentum of AIPAC’s influence on Middle East policy or the renewal of ISLA.”[25]

Despite the fact that oil companies nowadays view war and political turmoil in the Middle East as detrimental to their long-term interests and, therefore, do not support policies that are conducive to war and militarism, and despite the fact that war is no longer the way to gain access to oil, the widespread perception that every U.S. military engagement in the region, including the current invasion of Iraq, is prompted by oil considerations continues. The question is why?

Behind the Myth of War for Oil

The widely-shared but erroneous view that recent U.S. wars of choice are driven by oil concerns is partly due to precedence: the fact that for a long time military force was key to colonial or imperialist control and exploitation of foreign markets and resources, including oil. It is also partly due to perception: the exaggerated notion that both President Bush and Vice President Cheney were “oil men” before coming to the White House. But, as noted earlier, George W. Bush was never more than an ineffective minor oil prospector and Dick Cheney was never really an oil man; he headed the notorious Halliburton company that sold (and still sells) services to oil companies and the Pentagon.

But the major reason for the persistence of this pervasive myth seems to stem from certain deliberate efforts that are designed to perpetuate the legend in order to camouflage some real economic and geopolitical special interests that drive U.S. military adventures in the Middle East. There is evidence that both the military-industrial complex and hard-line Zionist proponents of “greater Israel” disingenuously use oil (as an issue of national interest) in order to disguise their own nefarious special interests and objectives: justification of continued expansion of military spending, extension of sales markets for military hardware, and recasting the geopolitical map of the Middle East in favor of Israel.

There is also evidence that for every dollar’s worth of oil imported from the Persian Gulf region the Pentagon takes five dollars out of the Federal budget to “secure” the flow of that oil! This is a clear indication that the claim that the U.S. military presence in the Middle East is due to oil consideration is a fraud .[26]

While anecdotal, an example of how partisans of war and militarism use oil as a pretext to cover up the real forces behind war and militarism can be instructive. In the early stages of the invasion of Iraq, when the anti-occupation resistance in Iraq had not yet taken shape and the invasion seemed to be proceeding smoothly, two of the leading champions of the invasion, Secretary of Defense Donald Rumsfeld and his deputy Paul Wolfowitz, often boasting of the apparent or pre-mature success of the invasion at those early stages, gave frequent news conferences and press reports. During one of those press reports (at the end of an address to delegates at an Asian security summit in Singapore in early June 2003), Wolfowitz was asked why North Korea was being treated differently from Iraq, where hardly any weapons of mass destruction had been found. Wolfowitz’s response was: "Let's look at it simply. The most important difference between North Korea and Iraq is that economically, we just had no choice in Iraq. The country swims on a sea of oil."[27]

Many opponents of the war jumped on this statement, so to speak, as corroboration of what they had been saying or suspecting all along: that the war on Iraq was prompted by oil interests. Yet, there is strong evidence—some of which presented in the preceding pages—that for the last several decades oil interests have not favored war and turbulence in the Middle East, including the current invasion of Iraq. Nor is war any longer the way to gain access to oil. Major oil companies, along with many other non-military transnational corporations, have lobbied both the Clinton and Bush administrations in support of changing the aggressive, militaristic U.S. policy toward countries like Iran, Iraq and Libya in favor of establishing normal, non-confrontational trade and diplomatic relations. Such efforts at normalization of trade and diplomatic relations, however, have failed time and again precisely because Wolfowitz and his cohorts, working through AIPAC and other war-mongering think tanks such as the American Enterprise Institute (AEI), Project for the New American Century (PNAC), and Jewish Institute for National Security Affairs (JINSA) oppose them.

These think tanks, in collaboration with a whole host of similar militaristic lobbying entities like Center for Security Affairs (CSA) and National Institute for Public Policy (NIPP), working largely as institutional façades to serve the defacto alliance of the military-industrial complex and the pro-Israel lobby, have repeatedly thwarted efforts at peace and reconciliation in the Middle East—often over the objections and frustrations of major U.S. oil companies. It is a well established fact that Wolfowitz has been a devoted champion of these jingoistic think tanks and their aggressive unilateral policies in the Middle East. In light of his professional record and political loyalties, his claim that he championed the war on Iraq because of oil considerations can be characterized only as demagogic: it contradicts his political record and defies the policies he has been advocating for the last several decades; it is designed to divert attention from the main forces behind the war, the armaments lobby and the pro-Israel lobby.

These powerful interests are careful not to draw attention to the fact that they are the prime instigators of war and militarism in the Middle East. Therefore, they tend to deliberately perpetuate the popular perception that oil is the driving force behind the war in the region. They even do not mind having their aggressive foreign policies labeled as imperialistic as long as imperialism implies some vague or general connotations of hegemony and domination, that is, as long as it thus camouflages the real, special interests behind the war and political turbulence in the Middle East.

The oil and other non-military transnational corporations’ aversion to war and military adventures in the Middle East stem, of course, from the logical behavior of global or transnational capital in the era of integrated world markets, which tends to be loath to war and international political convulsions. Considering the fact that both importers and exporters of oil prefer peace and stability to war and militarism, why would, then, the flow of oil be in jeopardy if the powerful beneficiaries of war and political tension in the Middle East stopped their aggressive policies in the region?

Partisans of war in the Middle East tend to portray U.S. military operations in the region as reactions to terrorism and political turbulence in order to “safeguard the interests of the United States and its allies.” Yet, a close scrutiny of action-reaction or cause-effect relationship between U.S. military adventures and socio-political turbulence in the region reveals that perhaps the causality is the other way around. That is, social upheavals and political convulsions in the Middle East are more likely to be the result, not the cause, of U.S. foreign policy in the region, especially its one-sided, prejudicial Israeli-Palestinian policy. The U.S. policy of war and militarism in the region seems to resemble the behavior of a corrupt cop, or a mafia godfather, who would instigate fights and frictions in the neighborhood or community in order to, then, portray his parasitic role as necessary for the safety and security of the community and, in the process, fill out his deep pockets.

No matter how crucial oil is to the world economy, the fact remains that it is, after all, a commodity. As such, international trade in oil is as important to its importers as it is to its exporters. There is absolutely no reason that, in a world free of the influence of the beneficiaries of war and militarism and their powerful lobbies (the armaments and the pro-Israel lobbies), the flow of oil could not be guaranteed by international trade conventions and commercial treaties.

Ismael Hossein-zadeh, author of the recently published The Political Economy of U.S. Militarism (Palgrave-Macmillan 2007), teaches economics at Drake University, Des Moines, Iowa.


[1] Ron Andreas, reporter/researcher, e-mail correspondence with the author.
[2] Ibid.
[3] Michael T. Klare, Resource Wars: The New Landscape of Global Conflict (New York: Holt paperbacks 2002); James Howard Kunstler, The Long Emergency: Surviving the Converging Catastrophes of the Twenty-first Century (Grove/Atlantic, 2005).
[4] Eliyahu Kanovsky, “Oil: Who's Really Over a Barrel?” Middle East Quarterly (Spring 2003).
[5] Ibid.
[6] The Wall Street Journal (17 May 2001); cited in Eliyahu Kantovsky, Ibid.
[7] The Wall Street Journal (10 March 1998); cited in Eliyahu Kantovsky, Ibid.
[8] F. William Engdahl, “Perhaps 60% of Today’s Oil Price Is Pure Speculation,” financialsense.com (2 May 2008)
[9] Ibid.
[10] Ibid.
[11] Stanley Reed, “Help from the House of Saud: Why the leading oil producer wants to cool off the market,” Business Week (29 May 2008)
[12] Ibid.
[13] Cyrus Bina and Minh Vo, “OPEC in the Epoch of Globalization: An Event Study of Global Oil Prices,” Global Economy Journal, Vol. 7, Issue 1 (2007); for a discussion of the theory and history of oil price determination see also, Cyrus Bina, “The Rhetoric of Oil and the Dilemma of War and American Hegemony,” Arab Studies Quarterly 15, no. 3 (Summer 1993); also Cyrus Bina, “Limits of OPEC Pricing: OPEC Profits and the Nature of Global Oil Accumulation,” OPEC Review 14, no. 1 (Spring 1990).
[14] F. William Engdahl, “Perhaps 60% of Today’s Oil Price Is Pure Speculation,” financialsense.com (2 May 2008),
[15] Cyrus Bina and Minh Vo, “OPEC in the Epoch of Globalization: An Event Study of Global Oil Prices,” Global Economy Journal, Vol. 7, Issue 1 (2007).
[16] Gary S. Becker, “Why War with Iraq Is Not about Oil,” Business Week (17 March 2003): 30.
[17] Johnathan Nitzan and Shimshon Bichler. The Global Political Economy of Israel (London and Sterling, Virginia: Pluto Press, 2002).
[18] Melinda K. Ruby, “Is Oil the Driving Force to War?” unpublished Senior thesis, Dept. of Economics and Finance, Drake University, Des Moines, Iowa (spring 2004), 10.
[19] As quoted in Ruby, Ibid., P. 13.
[20] As cited by Roger Burbach, “Bush Ideologues vs. Big Oil: The Iraq Game Gets Even Stranger,” CounterPunch.
[21] Israel Shamir, The Writings of Israel Shamir, Contributor 45
[22] Stephen F. Cohen “The New American Cold War,” The Nation (10 July 2006); as quoted in Shamir, Ibid.
[23] Shamir, Ibid.
[24] Ruby, “Is Oil the Driving Force to War?” pp. 14-15; see also Herman Franssen and Elaine Morton, “A Review of U.S. Unilateral Sanctions Against Iran,” Middle East Economic Survey 45, no. 34 (26 August 2002), pp. D1-D5 (D section contains op eds. as opposed to staff-written articles).
[25] Ruby, “Is Oil the Driving Force to War?” pp. 16-17; see also David Ivanovich, “Conoco’s Chief Blasts Sanctions,” Houston Chronicle (12 February 1997).
[27] The statement was widely reported by many news papers and other media outlets. See, for example, The Guardian (4 June 2003)


Militant Zionism and the Invasion of Iraq

By Ron Andreas
September 22, 2008

Unlike the Western oil majors, the militant Zionist proponents of greater Israel view stability and peace in the Middle East as inimical to their goals. Chaos and strife create the "revolutionary atmosphere" (as Ben Gurion one of the key founders of the state of Israel put it) in which more land and water resources can be taken under their control. This fact explains the motive behind the ceaseless provocations and destabilization that the Israeli military and secret services perpetrate.

The "iron wall" policy established by Ze’ev Jabotinsky prior to the founding of the Jewish state requires the expulsion of Christian and Muslim Arabs from Palestine. Such a goal requires war or other violent means. David Ben Gurion stated, "What is inconceivable in normal times is possible in revolutionary times; and if at this time the opportunity is missed and what is possible in such great hours is not carried out . . . a whole world is lost." This reality, of the necessity for violent upheaval to achieve Zionist aims, exposes which party is the true aggressor in the Middle East.

Ralph Schoenman writes that the goal of capturing the "promised land" requires "Israel to bring about the dissolution and fragmentation of the Arab states into a mosaic of ethnic groupings." This strategy has been put forward by Oded Yinon (an Israeli journalist with links to the Israeli Foreign Ministry) in 1982 in the World Zionist Organization’s publication Kivunim. Here’s what Oded Yinon had to say on Iraq:

"The dissolution of Syria and Iraq into ethnically or religiously unique areas, such as in Lebanon, is Israel’s primary target on the Eastern front. Iraq, rich in oil on the one hand and internally torn on the other is guaranteed as a candidate for Israel’s targets. Its dissolution is even more important for us than that of Syria. Iraq is stronger than Syria. In the short run, it is Iraqi power which constitutes the greatest threat to Israel."

"An Iraqi-Iranian war will tear Iraq apart and cause its downfall at home even before it is able to organize a struggle on a wide front against us. Every kind of inter-Arab confrontation will assist us in the short run and will shorten the way to the more important aim of breaking up Iraq into denominations as in Syria and Lebanon."

"In Iraq, a division into provinces along ethnic/religious lines as in Syria during Ottoman times is possible. So, three (or more) states will exist around the three major cities: Basra, Baghdad and Mosul and Shiite areas in the South will separate from the Sunni and Kurdish north."

In their struggle to expand the Jewish state in the "land of Israel," Zionists have attempted to portray their interests as coinciding with those of the Western imperial powers. Conversely they have tried to portray their opponents as enemies of those powers. Yet the only business sector of the Western powers that has interests that align with Israel’s convulsive militarism is the military industrial complex. An elaborate structure has been established to forge a de facto alliance between Israel’s war hawks and the US military industrial complex. This alliance is evidenced in entities such as the Center for Security Policy, Washington Institute for Near East Policy, and Jewish Institute for National Security Affairs.

These think tanks and their neoconservative media mouthpieces published a number of policy papers that plainly call for regime change, border change, and demographic upheaval. In 1996 an influential Israeli think tank, the Institute for Advanced Strategic and Political Studies, sponsored a document titled "A Clean Break: A New Strategy for Securing the Realm," which proposed that the Netanyahu regime "should 'make a clean break’ with the Oslo peace process and reassert Israel’s claim to the West Bank and Gaza. It presented a plan whereby Israel would 'shape its strategic environment,’ beginning with the removal of Saddam Hussein . . . to serve as a first step toward eliminating the anti-Israeli governments of Syria, Lebanon, Saudi Arabia, and Iran."

The "study group" behind the policy included Douglass Feith, David Wurmser, and Richard Perle among others. The document was intended for the incoming Israeli government yet many of its planners went on to become influential with the Bush regime.

In an "Open Letter to the President," dated February 19, 1998, a number of neocon lobbyists recommended "a comprehensive political and military strategy for bringing down Saddam Hussein and his regime." Among the letter’s signers were Elliot Abrahms, Richard Armitage, John Bolton, Douglas Feith, Paul Wolfowitz, David Wurmser, Richard Perle, William Kristol, Frank Gaffney, Joshua Muravchik, Martin Peretz, and Steven Solarz. The similarities between the two document’s recommendations draw a stark picture of loyalty to the interests of Israel first and foremost, with the interests of the military industrial complex being served in a secondary way. Many of the same sponsors went on to issue a report titled: "Rebuilding Americas Defenses" which called for an expanded US military presence in the Middle East using Iraq as a stepping stone for regional force application: "While the unresolved conflict in Iraq provides the immediate justification, the need for a substantial force presence in the Gulf transcends the issue of the regime of Saddam Hussein."

Nine days after 9/11, Paul Wolfowitz, Lewis Libby, Donald Rumsfeld, and Dick Cheney of the Project for a New American Century sent a letter to President Bush demanding measures against Iraq, Syria, and Iran " . . . even if evidence does not link Iraq directly to the recent attack, any strategy aiming at the eradication of terrorism and its sponsors must include a determined effort to remove Saddam Hussein from power in Iraq . . . We believe the administration should demand that Iran and Syria immediately cease all military, financial, and political support for Hezbollah and its operations. Should Iran and Syria refuse to comply, the administration should consider appropriate measures of retaliation . . ."

On October 29, 2002 William Kristol and Robert Kagan revealed the unfolding agenda to the readers of the Weekly Standard in an article, ominously titled The Gathering Storm: "When all is said and done, the conflict in Afghanistan will be to the war on terrorism what the North Africa campaign was to WWII: an essential beginning on the path to victory. But compared with what looms over the horizon . . . a wide-ranging war in locales from Central Asia to the Middle East and, unfortunately, back to the U.S [emphasis added]. . . . Afghanistan will prove to be an opening battle . . . But this will not end in Afghanistan. It is going to spread and engulf a number of countries in conflicts of varying intensity. It could well require the use of American military power in multiple places simultaneously."

The radical cabal of Zionists tried to enlist popular support for the wars by alluding to Iraq’s energy resources as Paul Wolfowitz did when he stated, "Iraq sits on a sea of oil." However, after five years of occupation likely costing trillions of dollars, there is little hope of securing any preferential access to, much less, reliable control over any energy resources. Prior to the invasion, Exxon/Mobil was the world’s biggest publicly traded entity, a distinction that now falls on its Chinese competitor, SINOPEC.

While the relative market share of U.S. oil majors has declined, the destruction of Iraqi society, the devastation of its scientific and intellectual institutions, and the dismantling of its industrial infrastructure, all Zionist goals, have been achieved. Similarly, the American economy has been brought to a standstill due to high oil prices resulting from the wars and the current account deficit that is largely a result of borrowing for war spending. Over the course of the occupation, the U.S. dollar has declined in value by nearly 40 percent.

Nobel prize winning economist, Joseph Stiglitz has stated that the sanctions imposed on Iran coupled with the war atmosphere in the Gulf region, in general, has caused investment in and development of new oil production to come to a halt, exacerbating the high prices that result from the constant threats issuing out of Tel Aviv and the neocon institutes in Washington. It remains to be seen whether the non-Zionist elites in the Western world can begin to challenge the endless wars for Israel by at the very least opposing the sanctions against dealings with Iran.


Oil and the Israel Lobby

Reknowned economist M. Shahid Alam offers this excellent critique of Noam Chomsky’s defective analysis of the relative influence of Oil versus the Israel lobby over US foreign policy:

In the slow evolution of US relations with Israel since 1948, as the latter mutated from a strategic liability to a strategic asset, Israel and its Jewish allies in the United States have always occupied the driver’s seat.

President Truman had shepherded the creation of Israel in 1947 not because the American establishment saw it as a strategic asset; this much is clear. “No one,” writes Cheryl Rubenberg, “not even the Israelis themselves, argues that the United States supported the creation of the Jewish state for reasons of security or national interest.”(1) Domestic politics, in an election year, was the primary force behind President Truman’s decision to support the creation of Israel. In addition, the damage to US interests due to the creation of Israel – although massive – was not immediate. This was expected to unfold slowly: and its first blows would be borne by the British who were still the paramount power in the region.

Nevertheless, soon after he had helped to create Israel, President Truman moved decisively to appear to distance the United States from the new state. Instead of committing American troops to protect Israel, when it fought against five Arab armies, he imposed an even-handed arms embargo on both sides in the conflict. Had Israel been dismantled [at birth], President Truman would have urged steps to protect the Jewish colonists in Palestine, but he would have accepted a premature end to the Zionist state as fait accompli. Zionist pressures failed to persuade President Truman to lift the arms embargo. Ironically, military deliveries from Czechoslovakia may have saved the day for Israel.

Once Israel had defeated the armies of Arab proto-states and expelled the Palestinians to emerge as an exclusively Jewish colonial-settler state in 1949, these brute facts would work in its favor. Led by the United States, the Western powers would recognize Israel, aware that they would have to defend this liability. At the same time, the humiliation of defeat had given an impetus to Arab nationalists across the region, who directed their anger against Israel and its Western sponsors.

This placed Israel in a strong position to accelerate its transformation into a strategic asset. In tandem with the Jewish lobby in the United States, Israel sought to maximize the assistance it could receive from the West through policies that stoked Arab nationalism; and as Israel’s military superiority grew this emboldened it to increase its aggressive posture towards the Arabs. Israel had the power to set in motion a vicious circle that would soon create the Arab threat against which it would defend the West. As a result, at various points during the 1950s, France, the United States, and Britain began to regard Israel as a strategic asset.

America’s embrace of Israel did not begin in 1967. Israel’s victory in the June War only accelerated a process that had been underway since its creation – even before its creation. Indeed, the Zionists had decided in 1939 to pursue the United States as their new mother country; they knew that they could use the very large and influential population of American Jews to win official US backing for their goals.

This paid off handsomely in 1948; but thereafter, the United States sought to contain the damage that would flow from the creation of Israel. However, these efforts would be self-defeating; the die had been cast. Israel – not the United States – was in the driver’s seat; and Israel would seek to maximize the negative fallout from its creation. As Israel succeeded in augmenting – within limits – the Arab threat to itself and the United States, the Jewish lobby would regain confidence; it would re-organize to reinforce Israel’s claim that it was now a strategic asset.

We have here another vicious circle – virtuous, for Israel. The Jewish lobby would gain strength as the Arab-cum-Soviet threat to the Middle East grew. When Israel scaled back the Arab threat in 1967, the Jewish lobby would step in to spend the political capital the Jewish state had garnered in the United States. The Israeli capture of Jerusalem in 1967 also energized the Christian Zionists, who, with encouragement from Jewish Zionists, would organize, enter into Republican politics, and soon become a major ally of the Jewish lobby. The sky was now the limit for Israel and the Zionists in the United States. The special relationship would become more special under every new presidency.

Several writers on the American left have pooh-poohed the charge that the Jewish lobby has been a leading force shaping America’s Middle East policy. They argue that the United States has supported Israel because of the con-vergence of their interests in the region. (2) Oil, primarily Saudi Arabian oil, they maintain correctly, is “a stupendous source of strategic power, and one of the greatest material prizes in world history.”(3) Incorrectly, however, they insist that this is what has driven US policy towards the Middle East.

A priori, this is an odd position to maintain, since Britain – up until 1948 – had managed quite well to maintain complete control over Middle Eastern oil, a dominance the United States could not sustain ‘despite’ the ‘strategic support’ of Israel. Successively, they argue, Western control over oil came under threat from Arab nationalism and militant Islamism. Israel has demonstrated its strategic value by holding in check and, later, defeating, the Arab nationalist challenge. Since then, Israel has fought the Islamist challenge to US hegemony over the region.

It may be useful to examine Noam Chomsky’s analysis of this relationship, since he enjoys iconic status amongst both liberal and leftists in the United States. Chomsky frames his analysis of ‘causal factors’ behind the special relationship as essentially a choice between “domestic pressure groups” and “US strategic interests.” He finds two limitations in the argument that the “American Jewish community” is the chief protagonist of the special relationship between Israel and the United States.

First, “it underestimates the scope of the “support for Israel,” and second, it overestimates the role of political pressure groups in decision-making.” Chomsky points out that the Israel lobby is “far broader” than the American Jewish community; it embraces liberal opinion, labor leaders, Christian fundamentalists, conservative hawks, and “fervent cold warriors of all stripes.”(4) While this broader definition of the Israel lobby is appropriate, and this is what most users of the term have in mind, Chomsky thinks that the presence of this “far broader” support for Israel diminishes the role that American Jews play in this lobby.

Two hidden assumptions underpin Chomsky’s claim that a broader Israel lobby shifts the locus of lobbying to non-Jewish groups. First, he fails to account for the strong overlap – barring the Christian fundamentalists – between the American Jewish community and the other domestic pressure groups he enumerates. In the United States, this overlap has existed since the early decades of the twentieth century, and increased considerably in the post-War period. It is scarcely to be doubted that Jews hold – and deservedly so – a disproportionate share of the leadership positions in corporations, the labor movement, and those professions that shape public discourse. Starting in the 1980s, the ascendancy of Jewish neoconservatives – together with their think tanks - gave American Jews an equally influential voice in conservative circles. Certainly, the weight of Jewish neoconservative opinion during the early years of President Bush – both inside and outside his administration – has been second to that of none. The substantial Jewish presence in the leadership circles of the other pressure groups undermines Chomsky’s contention that the pro-Israeli group is “far broader” than the American Jewish community.

There is a second problem with Chomsky’s argument. Implicitly, he assumes that the different pro-Israeli groups have existed, acted and evolved independently of each other; alternatively, the impact of the lobbying efforts of these groups is merely additive. This ignores the galvanizing role that Jewish organizations have played in mobilizing Gentile opinion behind the Zionist project. The activism of the American Jews – as individuals and groups - has operated at several levels. Certainly, the leaders of the Zionist movement have directed a large part of their energies to lobbying at the highest levels of official decision-making. At the same time, they have created, and they orchestrate, a layered network of Zionist organizations who have worked very hard to create support for their aims in the broader American civil society.

American Jews have worked through several channels to influence civil society. As growing numbers of American Jews embraced Zionist goals during the 1940s, as their commitment to Zionism deepened, this forced the largest Jewish organizations to embrace Zionist goals. In addition, since their earliest days, the Zionists have created the organizations, allies, networks and ideas that would translate into media, congressional and presidential support for the Zionist project. In addition, since Jewish Americans made up a growing fraction of the activists and leaders in various branches of civil society – the labor, civil rights and feminist movements – it was natural that the major organs of civil society came to embrace Zionist aims. It makes little sense, then, to maintain that the pro-Israeli positions of mainstream American organizations had emerged independently of the activism of the American Jewish community.

Does our contention fail in the case of the Christian Evangelicals because of the absence of Jews in their ranks? In this case, the movement has received the strongest impetus from the ingathering of Jews that has proceeded in Israel since the late nineteenth century. The dispensationalist stream within Protestant Christians in the United States – who believe that the ingathering of Jews in Israel will precede the Second Coming – has been energized by every Zionist success on the ground. They have viewed these successes - the launching of Zionism, the Balfour Declaration, the creation of Israel, the capture of Jerusalem, ‘Judea’ and ‘Samaria’ in 1967 – as so many confirmations of their dispensationalist eschatology. The movement expanded with every Zionist victory. At the same time, it would be utterly naïve to rule out direct relations between the Zionists and the leaders of the evangelical movement. The Zionists have rarely shrunk from accepting support even when it has come from groups with unedifying beliefs.

Noam Chomsky raises a second objection against the ability of the Jewish lobby to influence policy on its own steam. “No pressure group,” he maintains, “will dominate access to public opinion or maintain consistent influence over policy-making unless its aims are close to those of elite elements with real power (emphases added).”(5) One problem with this argument is easily stated. It pits the Jewish lobby as one “pressure group” – amongst many – arrayed against all the others that hold the real power. This equation of the Jewish lobby with a narrowly defined “pressure group” is misleading. We have argued – a position that is well supported by the evidence – that Jewish protagonists of Zionism have worked through many different channels to influence public opinion, the composition of political classes, and political decisions. They work through the organs that shape public opinion to determine what Americans know about Israel, how they think about Israel, and what they can say about it. This is no little Cuban lobby, Polish lobby or Korean lobby. Once we recognize the scale of financial resources the Jewish lobby commands, the array of political forces it can mobilize, and the tools it commands to direct public opinion on the Middle East, we would shrink from calling it a lobby.

Chomsky quickly proceeds to undermine his own argument about “elite elements with real power.” He explains that the “[elite] elements are not uniform in interests or (in the case of shared interests) in tactical judgments; and on some issues, such as this one [policy towards Israel], they have often been divided.”(6) Yet, despite the differences in their interests, their tactics, and their divisions, Chomsky maintains that these “elite elements” have “real power.” Oddly, these “divided” elites – whoever they are – exercise the power of veto over the multi-faceted Jewish lobby with its deep pockets, hierarchical organizations, and influence over key organs of civil society, campaign contributions, popular votes, etc.

Chomsky’s argument shifts again – a second time in the same paragraph – away from “elite elements” to “America’s changing conceptions of its political-strategic interests” in the Middle East.(6) This suggests a new theory of the chief determinant of US policy towards Israel. At the heart of these “political-strategic interests” is the oil wealth of the Middle East – and the twin threats to American control over this oil wealth from Arab nationalists and the Soviets. Presumably, Israel protects these “political-strategic interests” by holding the Arabs and the Soviets at bay. Chomsky conveniently forgets that the Arab nationalist threat to US interests in the Middle East was – in large part – the product of Israel’s insertion into the region, its ethnic cleansing of Palestinians, and its aggressive posture towards Arabs since its creation. It is unnecessary to account for the Soviet threat, since they entered the region on the back of Arab nationalist discontent. Indeed, had Israel never been created, it is more than likely that all the states in the Middle East – just like Turkey and Pakistan – would have remained firmly within the Western sphere of influence.

In another attempt to convince his readers that oil has driven US policy towards the Middle East, Chomsky claims that the United States was “committed to win and keep this prize [Saudi oil].” Presumably, the United States could not keep this “prize” without help from Israel.

This argument fails because it ignores history. Starting in 1933, American oil corporations – who later merged to form Aramco – gained exclusive rights to explore, produce and market Saudi oil. Saudi Arabia first acquired a 25 percent ownership stake in Aramco in 1973. Had there emerged an Arab nationalist threat to US control over Saudi oil in the 1950s – in the absence of Israel – the United States could have handled it by establishing one or more military bases in Saudi Arabia or, preferably, in one of the Emirates, since American military presence in Saudi Arabia might inflame Islamic sentiments. Far from helping entrench American control of Saudi oil, Israel, by radicalizing Arab nationalism, gave Saudi Arabia the excuse to first gain a 25 percent stake in Aramco and then nationalize it in 1988.

Chomsky claims that the United States was committed to winning and keeping the “stupendous” oil prize. This claim is not supported by the results that America’s Middle Eastern policy has produced on the ground over the years. If the United States was indeed committed to this goal, it would have pursued a Middle East policy that could be expected to maximize – with the lowest risks of failure – the access of US oil corporations to exploration, production and distribution rights over oil in this region. This is not the case.

In creating, aiding and arming Israel, the United States has followed a policy that could easily have been foreseen to produce, as it did produce, exactly the opposite effects. It gave a boost to Arab nationalism, radicalized it, and led within a few years to the Arab nationalist takeover of three of the four key states in the Arab world. In turn, this contributed to the nationalization of oil wealth even in those Arab countries that remained clients of the United States, not to speak of countries that were taken over by Arab nationalists , who excluded the US oil corporations from this industry altogether. In addition, America’s Middle Eastern policy converted the Middle East into a leading arena of wars. It also became a source of deep tensions between the US and the Soviets, since US partisanship of Israel forced the Arab nationalist regimes to ally themselves with the Soviet Union. In the October War of 1973, the United States provoked the Arab nations – because of its decision to re-supply the Israeli army during the war – to impose a costly oil embargo against the United States. In opposition to the pleadings of its oil corporations, the United States has also prevented them from doing business with three oil-producing nations in the Middle East – Iran, Iraq and Libya.(8)

If oil had been driving America’s Middle East policy, we should have seen the fingerprints of the oil lobby all over this policy. In recent decades, according to Mearsheimer and Walt, the oil lobby has directed its efforts “almost entirely on their commercial interests rather than on broader aspects of foreign policy.” They focus most of their lobbying efforts on getting the best deals on tax policies, government regulations, drilling rights, etc. Even the AIPAC bears witness to this. In the early 1980s, Morris J. Amitay, former executive director of AIPAC, noted, “We rarely see them [oil corporations] lobbying on foreign policy issues…In a sense, we have the field to ourselves.”(9)

Why does it matter whether it is oil or the Jewish lobby that determines US policy towards Israel and the Middle East?

The answer to this question has important consequences. It will determine who is in charge, and, therefore, who should be targeted by people who oppose Israel’s war mongering and its destruction of Palestinian society. If US policy is driven by America’s strategic interests – and Israel is a strategic US asset – opposing this policy will not be easy. If Israel keeps the oil flowing, keeps it cheap, and keeps down the Arabs and Islamists – all this for a few billion dollars a year – that is a bargain. In this case, opponents of this policy face an uphill task. Sure, they can document the immoral consequences of this policy – as Noam Chomsky and others do. Such moral arguments, however, will not cut much ice. What are the chances that Americans can be persuaded to sacrifice their “stupendous prize” because it kills a few tens of thousands of Arabs?

On the other hand, if the Jewish lobby drives US policy towards the Middle East, there is some room for optimism. Most importantly, the opponents of this policy have to dethrone the reigning paradigm, which claims that Israel is a strategic asset. In addition, it is necessary to focus attention on each element of the real costs - economic, political and moral – that Israel imposes on the United States. Winning these intellectual arguments will be half the battle won; this will persuade growing numbers of Americans to oppose a policy because it hurts them. Simultaneously, those who seek justice for the Palestinians must organize to oppose the power of the Israel lobby and take actions that force Israel to bear the moral, economic and political consequences of its destructive policies in the Middle East.

M. Shahid Alam is professor of economics at Northeastern University. He is author of Challenging the New Orientalism (2007). Send comments to alqalam02760@yahoo.com. Visit the author’s website at http://aslama.org/ .


  1. “Virtually every professional in the for-eign affairs bureaucracy, including the secretaries of state and war (later, defense) and the joint chiefs of staff, opposed the creation of Israel from the standpoint of US national interests (Rubenberg: 1986, 9-10).”

  2. For criticisms of Chomsky, see James Petras, The Power of Israel in the United States (Atlanta: Clarity Press, 2006): 168-81; and Jeff Blankfort, Damage control: Noam Chomsky and the Israeli-Palestine conflict.

  3. This assessment comes from a 1945 re-port of the State Department (Chomsky: 1999, 17).

  4. Noam Chomsky, Fateful triangle: 13.

  5. Noam Chomsky, Fateful triangle: 17.

  6. Noam Chomsky, Fateful triangle:: 17.Noam Chomsky, Fateful triangle:: 17.

  7. Mearsheimer and Walt, The Israel lobby and US foreign policy (Farrar, Straus and Giroux, 2006): 143.

  8. Mearsheimer and Walt, The Israel lobby: 145.


Militant Zionism and the Invasion of Iraq

Stop Trying To 'Save' Africa

By Uzodinma Iweala
July 15, 2007

Last fall, shortly after I returned from Nigeria, I was accosted by a perky blond college student whose blue eyes seemed to match the "African" beads around her wrists.

"Save Darfur!" she shouted from behind a table covered with pamphlets urging students to TAKE ACTION NOW! STOP GENOCIDE IN DARFUR!

My aversion to college kids jumping onto fashionable social causes nearly caused me to walk on, but her next shout stopped me.

"Don't you want to help us save Africa?" she yelled.

It seems that these days, wracked by guilt at the humanitarian crisis it has created in the Middle East, the West has turned to Africa for redemption. Idealistic college students, celebrities such as Bob Geldof and politicians such as Tony Blair have all made bringing light to the dark continent their mission. They fly in for internships and fact-finding missions or to pick out children to adopt in much the same way my friends and I in New York take the subway to the pound to adopt stray dogs.

This is the West's new image of itself: a sexy, politically active generation whose preferred means of spreading the word are magazine spreads with celebrities pictured in the foreground, forlorn Africans in the back. Never mind that the stars sent to bring succor to the natives often are, willingly, as emaciated as those they want to help.

Perhaps most interesting is the language used to describe the Africa being saved. For example, the Keep a Child Alive/" I am African" ad campaign features portraits of primarily white, Western celebrities with painted "tribal markings" on their faces above "I AM AFRICAN" in bold letters. Below, smaller print says, "help us stop the dying."

Such campaigns, however well intentioned, promote the stereotype of Africa as a black hole of disease and death. News reports constantly focus on the continent's corrupt leaders, warlords, "tribal" conflicts, child laborers, and women disfigured by abuse and genital mutilation. These descriptions run under headlines like "Can Bono Save Africa?" or "Will Brangelina Save Africa?" The relationship between the West and Africa is no longer based on openly racist beliefs, but such articles are reminiscent of reports from the heyday of European colonialism, when missionaries were sent to Africa to introduce us to education, Jesus Christ and "civilization."

There is no African, myself included, who does not appreciate the help of the wider world, but we do question whether aid is genuine or given in the spirit of affirming one's cultural superiority. My mood is dampened every time I attend a benefit whose host runs through a litany of African disasters before presenting a (usually) wealthy, white person, who often proceeds to list the things he or she has done for the poor, starving Africans. Every time a well-meaning college student speaks of villagers dancing because they were so grateful for her help, I cringe. Every time a Hollywood director shoots a film about Africa that features a Western protagonist, I shake my head -- because Africans, real people though we may be, are used as props in the West's fantasy of itself. And not only do such depictions tend to ignore the West's prominent role in creating many of the unfortunate situations on the continent, they also ignore the incredible work Africans have done and continue to do to fix those problems.

Why do the media frequently refer to African countries as having been "granted independence from their colonial masters," as opposed to having fought and shed blood for their freedom? Why do Angelina Jolie and Bono receive overwhelming attention for their work in Africa while Nwankwo Kanu or Dikembe Mutombo, Africans both, are hardly ever mentioned? How is it that a former mid-level U.S. diplomat receives more attention for his cowboy antics in Sudan than do the numerous African Union countries that have sent food and troops and spent countless hours trying to negotiate a settlement among all parties in that crisis?

Two years ago I worked in a camp for internally displaced people in Nigeria, survivors of an uprising that killed about 1,000 people and displaced 200,000. True to form, the Western media reported on the violence but not on the humanitarian work the state and local governments -- without much international help -- did for the survivors. Social workers spent their time and in many cases their own salaries to care for their compatriots. These are the people saving Africa, and others like them across the continent get no credit for their work.

Last month the Group of Eight industrialized nations and a host of celebrities met in Germany to discuss, among other things, how to save Africa. Before the next such summit, I hope people will realize Africa doesn't want to be saved. Africa wants the world to acknowledge that through fair partnerships with other members of the global community, we ourselves are capable of unprecedented growth.

Uzodinma Iweala is the author of "Beasts of No Nation," a novel about child soldiers.

Dr. Chu's Energy Bait and Switch

They're short on renewables but they have a new generation of 'improved' and safer nuclear power plants and the costs can be charged

Atheo News - June 13, 2009

The goal claimed by both Obama, during his campaign, and promoters of climate change legislation, was that 25% of America's electricity come from renewable sources by 2025. An alternate rationale given for this goal has been "energy independence".

While competing bills currently before Congress appear to call for 15 to 20 percent of energy to be produced for renewable energy sources, they actually don't require utilities to achieve anything near these figures. The legislation is filled with exemptions and allowances which reduce as much as 40 percent of the requirement if 'efficiency improvements' are adopted. For example, both bills scale back mandates for renewable sources if utilities build new nuclear plants or increase power generation at an existing nuclear plant.

The congressional mandates "are very weak and really will not require any additional renewables beyond what states already are doing," says Mark Sinclair of Clean Energy States Alliance. "It will be meaningless. It's just a gesture."

Marchant Wentworth of the Union of Concerned Scientists came to a similar conclusion, seeing that absolute requirements for renewables, after allowances, would be as low as 8 percent of total electric power generation for each utility. This is hardly a challenge for most utilities in a nation that in 2006 generated almost 10 percent of its electricity from renewable sources, including hydro power.

In other words, the proposed renewable sources requirements amount to little more than shallow symbolism. The current public subsidies and underwriting for nuclear power already make the nuclear choice more economically viable for utilities to maximise return on utility investment. The legislation is, in fact, a thinly vieled mandate for building new nuclear power plants, or to increase output from existing ones. Republicans are offering a different plan that simply calls for building 100 new nuclear plants within the next twenty years.

These plans mirror similar policies across the Atlantic where the government in Britain is rushing a new generation of nuclear power plants, with a goal to begin construction within four years. Both 'energy independence' and climate change were cited as rationales by policy makers there as well.

Obama's Secretary of Energy, Dr. Steven Chu, from Lawrence Berkeley National Laboratory, is a staunch advocate of nuclear power, citing it as "essential" due to global warming while at the same time ignoring the carbon emissions of the "nuclear cycle" that are produced from the mining, milling, enrichment, fuel fabrication and disposal of spent fuel. The new appointee described nuclear power as "carbon free" at his confirmation in January.

Professor Karl Grossman views Chu as a product of a "military-industrial-scientific complex". Incidentally, the Lawrence Berkeley National Labortary from which Chu hails was the original laboratory of the Manhattan Project. After WWII, the Manhattan project was turned into the Atomic Energy Commission which was tasked to promote both military and civilian applications of nuclear technology. David E. Lilienthal, the first chairman of the Atomic Energy Commission, wrote a book in 1963 titled "Change, Hope, and the Bomb", which pushed for food irradiation, nuclear powered airplanes, atomic excavation and other potential commercial uses for nuclear technology under the rubric of "the peaceful atom", an imperative being that there have always been symbiotic connections between military and civilian sectors of the nuclear industry.

Chu is of the notion that nuclear energy is far less dangerous to our health than coal, stating that "The fear of radiation shouldn't even enter into this..." This idyllic notion contradicts several studies which indicate otherwise.

The Radiation and Public Health Project recently published the results of a study which show:

"a uniform pattern of increase in childhood leukemia [standard mortality ratio] from the earlier period to the most recent 20 years for the plants that remain in operation...

...the study, which uses data collected between 1985 and 2004, found a 13.9 percent increase in leukemia death rates of children living near nuclear plants that were built between 1957 and 1970 and a 9.4 percent increase in death rates of children living near nuclear plants built after 1970, compared to the national childhood leukemia death rate..."

The promoters of nuclear energy often assert with authority that nuclear energy has caused fewer deaths than other fuels.

The reality, however, is far less certain because we do not know if we are getting the full story in regards to incidents such as Chernobyl and Three Mile Island. The World Health Organization (WHO) has subordinated its role in protecting health in an agreement with the International Atomic Energy Association (IAEA). The WHO and the IAEA agreed to "inform" and "to consult with each other on the most efficient use of information, resources, and technical personnel in the field of statistics and in regard to all statistical projects dealing with matters of common interest". The IAEA's mission is to "accelerate and enlarge the contribution of atomic energy to peace, health and prosperity throughout the world".

Professor Chris Busby, Science Secretary of the European Committee on Radiation Risk (ECRR) states:
"The subordination of the WHO to IAEA is a key part of the systematic falsification of nuclear risk which has been under way ever since Hiroshima, the agreement creates an unacceptable conflict of interest in which the UN organisation concerned with promoting our health has been made subservient to those whose main interest is the expansion of nuclear power. Dissolving the WHO-IAEA agreement is a necessary first step to restoring the WHO's independence to research the true health impacts of ionising radiation and publish its findings."
Others claim that newer technology is safer, but Chernobyl was state of the art at one time as was Three Mile Island which was only three months old when it melted. Harvey Wasserman writes that:

As news of the accident poured into the global media, the public was assured there were no radiation releases. That quickly proved to be false.

The public was then told the releases were controlled and done purposely to alleviate pressure on the core.

Both those assertions were false.The public was told the releases were "insignificant." But stack monitors were saturated and unusable, and the Nuclear Regulatory Commission later told Congress it did not know--- and STILL does not know---how much radiation was released at Three Mile Island, or where it went...

Mr. Wasserman goes on to detail that while the public was assured by the government that there would be follow up stories and health care provided to victims if needed, in reality, the state of Pennsylvania deleted the incidence of radiation induced cancers from the public record, abolished the states tumor registry, and misrepresented information it could not hide altogether, such as a tripling of the infant death rate in nearby locales. The federal government, meanwhile, did nothing to track the health histories of the residents. Independent surveys, in the meantime, showed substantial rises in the rates of cancers, birth defects, rashes, hair loss, and more. However, these studies are not allowed much play in the media, and even worse, class action lawsuits on the behalf of citizens are denied access to the federal court systems with the claim that there was not enough radiation to do such harm. On the side, Three Mile Island owners settled with some residents under-the- table, with the caveat being that there could be no more public claims made asserting the dangers and the results of the failed nuclear power plant.

All of this occurs while the Obama administration "is starting the process of finding a new strategy for nuclear waste" according to Stephanie Mueller, press agent for the U.S. Department of Energy. After more than half a century seeking a waste disposal solution, and having abandoned Yucca Mountain as a waste repository, the government does not even have an operational plan for the mounting nuclear waste that is being generated, an output that will only increase as more plants are put into production.

Amid continuing reports of the safety risks of nuclear power plants and without any fixed plan for managing waste, Chu and the Obama administration still continue to promote the nuclear option as a safe alternative fuel. Their lack of interest in renewable energy is made clear by their recent slashing of the already miniscule funding for wave and tidal energy research. While they claim on one hand to be working to turn the energy industry into one that relies on safe, renewable sources such as wind and solar power, they are in reality using this as a foil to push the nuclear agenda of the military industrial complex.

Atheo News

Obama rhetoric on Sudan counterproductive for peace

Atheo News - July 16, 2009

President Obama has mimicked the Bush regime's characterization of the Darfur conflict as "genocide" following criticism from the American Jewish World Service (an organization which seems to have Sudan as an almost singular focus).

"When there’s a genocide in Darfur or terrorists in Somalia, these are not simply African problems — they are global security challenges, and they demand a global response" Obama said in his recent speech at the Ghanaian parliament.

Such labeling which is not mirrored by the U.N. will likely impede current peacemaking efforts between rival factions and reduces the influence that the U.S. has over Sudan outside of military means.

In an email response to pro-war activists Obama pledged to ensure tough sanctions:

"As President, I will build on America’s efforts that I previously championed in the Senate. I led in calling for the joint African Union/United Nations peacekeeping force now on the ground, and insisted on comprehensive sanctions against the Khartoum government. Going forward, my Administration will continue this work with unstinting resolve to end the genocide."

"In my discussions with other nations, I will work to ensure that tough sanctions on the Khartoum government continue as a part of a growing global effort involving our allies, interested countries, and other multilateral institutions."
Alex Meixner, director of policy and government relations for the Save Darfur Coalition expects a new policy on Sudan to be announced by the White House soon. The Obama Cabinet includes Susan Rice who germinated the U.S. military Africa Command (Africom) during the Clinton Administration. Rice is considered a Sudan "hawk" and has established a position at the very extreme end of the interventionist spectrum by describing the situation as "ongoing genocide".

The relatively dovish former Bush regime Sudan envoy and USAID chief Andrew Natsios is critical of the position that seems to be unfolding under the new regime:
"Some policymakers continue to call Darfur an ongoing “genocide,” but in fact, the conflict has descended into anarchy. “Darfur today is a conflict of all against all,” Rodolphe Adada, the joint African Union-United Nations special representative, told the U.N. Security Council in April. Between Jan. 1, 2008, and March 31, 2009, he found some 2,000 fatalities from violence, one third of them civilian. The death of some 700 innocent civilians over a 15-month period, while morally repugnant, is not genocide. It is a low-level insurgency. More civilians died in southern Sudan during the past six months than in Darfur over the past 15 months. Despite such facts and extensive U.N. Security Office reports showing that genocide is not an accurate description, President Obama continues to use that weighted term."
A U.S. Government Accountability Office (GAO) review of genocide claims found the estimates of high numbers of deaths related to the conflict to have methodology problems, relying on "too few data points extrapolated to an excessive degree". The three studies which generated the highest numbers of victims were determined to lack objectivity:
"Most experts rated the level of objectivity of the three estimates as low, particularly those by Drs. Coebergh and Reeves. The experts thought that the estimates were more characteristic of advocacy or journalistic material than objective analysis."
Explaining his estimates of victims to the GAO panel Coebergh described his study as a "political statement". Yet these are the figures which are routinely cited as fact by both intervention advocates and Western media reports.

The Recurring Myth of Peak Oil

In case you missed it

October 1, 2008

The Peak Oil theory maintains that world production of conventional oil will soon reach a maximum, or peak, and decline thereafter, with grave socio-economic consequences. Some proponents of the theory argue that world oil production has already peaked, and is now in a terminal decline [1].

Although, on the face of it, this sounds like a fairly reasonable proposition, it has been challenged on both theoretical and empirical grounds. While some critics have called it a myth, others have branded it as a money-making scam promoted by the business interests that are vested in the fossil fuel industry, in the business of war and militarism, and in the Wall Street financial giants that are engaged in manipulative oil speculation.

Regardless of its validity (or lack thereof), the fact is that Peak Oil has had significant policy and political implications. It has also generated considerable reactions among various interest groups and political activists.

While environmental and similar activists have used Peak Oil to promote more vigorous conservation and more energetic pursuit of alternative fuels, the oil industry and its representatives in and out of the government have taken advantage of Peak Oil to argue in support of unrestrained extraction of oil and expanded drilling in the offshore or wildlife regions.

Because of its simple logic and facile appeal, Peak Oil has also led many ordinary citizens, burdened by high fuel bills during periods of energy crisis, to support unrestrained or expanded drilling. According to a recent Rasmussen poll, 57 percent of Americans favor more offshore drilling. Misled and misplaced popular perceptions, in turn, play into the hands of the oil industry and their representatives to lobby for the lifting of the Federal ban on oil production in hitherto restricted regions.

Citing voter anger over soaring energy prices, Senator John McCain of Arizona, the Republican presidential nominee, recently argued that opening vast stretches of the country’s coastline to oil exploration would help America eliminate the dependence on foreign oil. "We have untapped oil reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production," he said. "It is time for the federal government to lift these restrictions" [2].

Perhaps the financial giants of New York and London have benefited the most from the misleading implications of Peak Oil: “As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. . . . Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the tail that wags the dog,” points out William Engdahl, a top expert on energy and financial markets [3].

Just as Peak Oil plays into the hands of manipulative speculators and beneficiaries of fossil fuel, so too can it be used by the champions of unilateral wars and military adventures, as it implies that war power and military strength are key to access or control of the “shrinking” or “soon-to-be-shrinking” oil. It thus provides fodder for the cannons of war profiteering militarists who are constantly on the look out to invent new enemies and find new pretexts for continued war and escalation of military spending—that is, for the looting of the national treasury, or public money.

By the same token that Peak Oil can serve as a pretext for war and military adventures, it can also serve as a disarming or pacifying factor for many citizens who accept the Peak Oil thesis and, therefore, internalize responsibility for U.S. foreign policy every time they fill their gas tank. In a vicarious way, they may feel that they own the war!

Thus, Peak Oil serves as a powerful trap and a clever manipulation that lets the real forces of war and militarism (the military-industrial complex and the pro-Israel lobby), and the main culprits behind the soaring energy prices (the Wall Street financial giants engaged in manipulative commodity speculation) off the hook; it is a fabulous distraction. All evils are blamed on a commodity upon which we are all utterly dependent.

Not only millions of lay-citizens, but also many scholars and academics have taken the bait and fallen right into this trap by arguing that recent U.S. wars of choice are driven primarily by oil and other “scarce” resources. More broadly, they argue that most wars of the future, like the recent and/or present ones, will be driven by conflicts over natural resources, especially energy and water—hence, for example, the title of Michael T. Klare’s popular book, Resource Wars [4].

As a number of critics have pointed out, this is reminiscent of Thomas R. Malthus’s theory of “scarcity” and “overpopulation.” Malthus (1766-1834), a self-styled British economist, argued that the woes and vagaries of capitalism such as poverty, inequality and unemployment are largely to be blamed on the poor and the unemployed, since they produce too many mouths to be fed, or too many hands to be employed.

In a similar fashion, Peak Oil implies that the current crisis in energy (and other commodities) markets is to be blamed, in part, on less-developed or relatively poorer nations such as India and China for growing “too fast” and creating “too much” demand on “scarce” resources. (Similarities between the Peak Oil theory and the Malthusian theory of scarcity are further discussed below.)

Peak Oil Thesis Is Not New: Geology vs. Geopolitics

Peak Oil theory is not altogether new. M. King Hubbert, a well-known geologist, provided a dramatic discussion of the theory in 1956. A year later, Admiral Rickover discussed the end of the fossil fuel era even more emphatically—at the time, he gave oil about fifty more years to run out. Thirty years ago, the Club of Rome predicted an end of oil long before the present day.

Indeed, there is evidence that projections of oil peaking, then declining and running out, have been floated around ever since oil was discovered in the second half of 19th century. For example, the chief geologist of Pennsylvania predicted in 1874 that we would run out of oil in four years—just using it for kerosene [5].

While Peak Oil theory has been around for a long time, it has usually been dormant during “normal” economic times, or “reasonable” oil prices, but has gained heightened currency during periods of energy crisis and high oil prices. For example, Peak Oil became quite popular during (and immediately after) all of the three recent oil crises: the early 1970s crisis, the late 1970s and early 1980s crisis, and the early 1990s crisis.

The obvious reason for the rise in the Peak Oil popularity in the context of those periods of energy crisis was the perception that oil shortage must have played a major role in the respective oil price hikes. It is not surprising, then, that as recent geopolitical convulsions in the Middle East have triggered a new round of oil price hikes, Peak Oil theory has once again become fashionable.

It turns out, however, that oil price shocks of all the previous periods of energy crisis were precipitated not by oil shortages, or any real prospects of oil “peaking and running out,” but by international political convulsions, revolutions and wars: the Arab-Israeli war of 1973, the 1979 Revolution in Iran, and the 1990-91 invasion of Kuwait by Saddam Hussein’s armed forces. Each time, as the turbulent period of war or revolutionary atmosphere ended, higher oil prices of the respective crisis situation subsided accordingly [6].

The current oil price hike too is precipitated not by an oil shortage, as popularly perceived, but by manipulative speculation in energy futures markets—which are, in turn, prompted largely by the unstable atmosphere of war and geopolitical turbulence in the Middle East.

Evidence is therefore unambiguous that, so far, almost all oil price shocks can be explained not by geology, or the so-called Peak Oil, but by geopolitics.

The Paradoxical Reasonableness of Peak Oil: Return of Thomas Malthus

Peak Oil has a prima facie reasonableness that makes it readily acceptable to most people: since oil is a finite natural resource, it is subject to depletion.

But while the rationale behind Peak Oil seems reasonable, it is also seriously flawed and misleading.

One of the major defects of Peak Oil is its facile extrapolation or transition from micro to macro level, that is, an unwarranted generalization or extention of what is true in the case of an existing oil well or oil field to the entire world oil production. It is true that every operating or producing oil well or field increases in production rate until it reaches a maximum or peak flow rate, after which the rate of production enters a terminal decline. It does not follow, however, that global world oil production as a whole must soon reach a maximum and begin to run out afterward—some Peak Oil champions claim that this has already taken place.

Proponents of Peak Oil are quick to point to oil wells or fields that have actually peaked and declined, such as those correctly predicted by geologist M. King Hubbert. They fail, however, to point out the ever newer discoveries of new oil fields and/or other sources of energy that tend to more than offset the depleted ones.

The Peak Oil debate boils down, essentially, to natural versus social limits, or naturally-determined versus socially-determined limits. A similar debate erupted more than 200 hundred years ago over the limits of population growth, on the one hand, and the growth of food supplies, on the other. The debate was prompted largely by a 1778 essay written by the British economist Thomas R. Malthus, titled “An Essay on the Principle of Population.”

Malthus projected an alarming specter of food shortages, hardship, and even starvation “because of faster population growth than food supply.” According to his theory, poverty and distress are unavoidable because, if unchecked, population increases at a geometrical rate (i.e. 1, 2, 4, 8, 16, etc.), whereas the means of subsistence grow at an arithmetical rate (i.e. 1, 2, 3, 4, 5, etc.), thereby leading to inevitable shortages of foodstuff.

As Malthus thus blamed misery and poverty on the poor and the miserable (for giving birth to too many mouths to be fed), he also concluded (logically) that poverty alleviation depended on selective restriction of population growth, that is, curbing the number of the poor and working people.

As checks on population growth, Malthus accepted war, famine, and disease. He also recommended “moral restraint” (marrying late or not at all, coupled with sexual abstinence prior to, and outside of, marriage) as additional checks on the growth of population. His hostility toward the poor was expressed most vividly when he openly argued in favor of dismantling social safety net programs, called “poverty laws”: “We cannot, in the nature of things, assist the poor, in any way, without enabling them to rear up to manhood a greater number of their children.”

By blaming social ills and economic calamities on the poor and working people, Malthus’s views tended, willy-nilly, to exonerate the underlying socio-economic structure, and to prove the inevitability of privation and misery under any social system.

What Malthus failed to see is the fact that growth rates of population and food supplies are not determined purely by nature as fixed, innate, or immutable rates. Instead, they are dynamic categories that can change drastically, depending on the level of economic development, social structure of production, and the state of technology.

Although not identical, the Peak Oil theory is similar to the Malthusian theory in that it too is based on natural, innate, or fixed and immutable limits. There are, of course, limits to everything—energy, food, water, population. But those limits are not absolute or pre-determined, as implied by the Peak Oil thesis. They are perhaps more social than natural limits.

This is why although the Peak Oil theory is not false in saying that there are limits to oil production, it does not explain much. In a real sense, it is a truism. It explains neither the current energy crisis nor any of the past ones. Nor can, therefore, its dire predictions about future global oil production be trustworthy.

More Oil Found than Used Up

Peak Oil misconceptions have many times led to alarmist predictions and dire warnings of an end of global oil production before the current day. Time and again, those forecasts turned out wrong because oil reserves, including proven or cost-efficient reserves, have continued to grow, and more oil wells or fields have been brought under utilization than those peaked and declined. The following is a partial list, as collected by Jason Schwarz, Options Strategist for Lone Peak Asset Management, Westlake Village, CA:

1. An offshore find by Brazilian state oil company Petrobras (PBR) in partnership with BG Group (BRGYY.PK) and Repsol-YPF may be the world's biggest discovery in 30 years, the head of the National Petroleum Agency said. A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil's reserves and make the offshore bloc the world's third-largest known oil reserve. "This would lay to rest some of the peak oil pronouncements that we were out of oil, that we weren't going to find any more and that we have to change our way of life," said Roger Read, an energy analyst and managing director at New York-based investment bank Natixis Bleichroeder Inc.

2. A trio of oil companies led by Chevron Corp. (CVX) has tapped a petroleum pool deep beneath the Gulf of Mexico that could boost U.S. reserves by more than 50 percent. A test well indicates it could be the biggest new domestic oil discovery since Alaska's Prudhoe Bay a generation ago. Chevron estimated the 300-square-mile region where its test well sits could hold up to 15 billion barrels of oil and natural gas.

3. Kosmos Energy says its oil field at West Cape Three Points is the largest discovery in deep water West Africa and potentially the largest single field discovery in the region.

4. A new oil discovery has been made by Statoil (STO) in the Ragnarrock prospect near the Sleipner area in the North Sea. "It is encouraging that Statoil has made an oil discovery in a little-explored exploration model that is close to our North Sea infrastructure," says Frode Fasteland, acting exploration manager for the North Sea.

5. Shell (RDS.A) is currently analyzing and evaluating the well data of their own find in the Gulf of Mexico to determine next steps. This find is rumored to be capable of producing 100 billion barrels. Operating in ultra-deep waters of the Gulf of Mexico, the Perdido spar will float on the surface in nearly 8,000 ft of water and is capable of producing as much as 130,000 barrels of oil equivalent per day.

6. In Iraq, excavators have struck three oil fields with reserves estimated at about 2 billion barrels, Kurdish region's Oil Minister Ashti Horami said.

7. Iran has discovered an oil field within its southwest Jofeir oilfield that is expected to boost Jofeir's oil output to 33,000 barrels per day. Iran's new discovery is estimated to have reserves of 750 million barrels, according to Iran's Oil Minister, Gholamhossein Nozari.

8. The United States holds significant oil shale resources underlying a total area of 16,000 square miles. This represents the largest known concentration of oil shale in the world and holds an estimated 1.5 trillion barrels of oil with 800 billion recoverable barrels—enough to meet U.S. demand for oil at current levels for 110 years. More than 70 percent of American oil shale is on Federal land, primarily in Colorado, Utah, and Wyoming.

9. In western North Dakota there is a formation known as the Bakken Shale. The formation extends into Montana and Canada. Geologists have estimated the area holds hundreds of billions of barrels of oil. In an interview provided by USGS, scientist Brenda Pierce put the North Dakota oil in context: "Of the current USGS estimates, this is the largest oil accumulation in the lower 48. . . . It is also the largest continuous type of oil accumulation that we have ever assessed." The USGS study says with today’s technology, about 4 billion barrels of oil can be pumped from the Bakken formation [7].

In the face of such overwhelming evidence, which seriously undermines the Peak Oil theory, proponents of the theory argue that their thesis is based on “proven,” not all, reserves. Proven reserves are reserves that, given a certain level of technology and a certain amount of investment, are proven or estimated to be economical, or cost efficient. Let us briefly examine this “proven vs. total reserves” argument of the Peak Oil champions.

Proven Reserves Are not a Measure of Future Oil Production: Short-Term Market Imperatives vs. Long-Term Public Policy/Interests

That oil companies would want to invest only in the narrow category of proven, or cost efficient, reserves is understandable; it is a simple business principle. But to base future oil supplies on the currently proven reserves, as Peak Oil theory does, is problematic. It represents a short-term, static view of future oil supplies that implicitly ignores the critical role of new investments and technological innovations that can make profitable, or cost efficient, what is currently considered unprofitable, or cost inefficient.

M.A. Adelman points out that “in 1944 a special expert mission estimated Persian Gulf reserves at 16 billion proved and 5 billion probable. By 1975, those same fields had produced 42 billion barrels and had 74 billion remaining. In 1984, geologists estimated a five percent probability of another 199 billion barrels remaining to be added in the Gulf region. In five years those reserves had already been added” [8].

Market imperatives and short-term profitability measures, thus severely limit oil reserve estimates because they effectively exclude not only huge reserves of unconventional oil, but also vast reservoirs of conventional oil that are not currently profitable. This is obviously a major flaw of the Peak Oil theory, as it judges future supplies of oil by the narrowest definition of oil production: currently proven reserves.

However, just as proven reserves determine the current level of oil production, and therefore of investment, the amount of current investment also plays a crucial role in the determination of the amount of proven reserves in the future. Peak Oil views this mutual relationship as a one-way street, or causality—going from the amount of currently proven reserves to the level of the necessary (or cost efficient) investment, and the global production of oil.

Furthermore, reserves that may be considered unprofitable from the viewpoint of private oil companies may well be economical from the viewpoint of state- or publicly-owned companies. For example, while a private oil company, may find an estimated profit rate of below x or y percent cost inefficient, a publicly-owned oil company might invest in reserves as long as estimated profit rate is not negative.

Indeed, as the experiences of state-owned oil companies in Russia, China, Venezuela, and many other countries show, publicly-owned oil companies often take large short-term losses in pursuit of long-term returns or rewards. Free from short-term market imperative, Russia, for example, has invested heavily in long-term oil projects, with fantastic results that have more than offset the enormous short-term costs of those projects. Here is how Joe Vialls, an expert with first-hand experience in “ultra-deep drilling,” explains:

“In 1970, the Russians started drilling Kola SG-3, an exploration well which finally reached a staggering world record depth of 40,230 feet. Since then, Russian oil majors including Yukos have quietly drilled more than 310 successful super-deep oil wells, and put them into production. Last Year Russia overtook Saudi Arabia as the world's biggest single oil producer, and is now set to completely dominate global oil production and sales for the next century. . . . With no shareholders holding out their grubby little hands for a wad of pocket money every month, the Russian oil industry managed to surge ahead, under-reaming thousands of its older existing onshore wells in less than ten years” [9].

The Role of Technology: a Dynamic, not Static, Process

A major flaw of Peak Oil, as already pointed out, is that it discounts the fact that energy-saving technologies have drastically improved (and will continue to further improve) not only the efficiency of oil production but also of oil consumption. Evidence shows that, for example, “over a period of five years (1994-99), U.S. GDP expanded over 20 percent while oil usage rose by only nine percent. Before the 1973 oil shock, the ratio was about one to one” [10].

Cars, airplanes and other means of transportation have become more fuel-efficient than ever before—though not as much as they could, or should. Both businesses and consumers are also doing a better job of trimming their energy costs. Obviously, this means that our demand for energy does not grow as fast as the growth of our economy. For example, According to the Energy Information Administration, in 1981 the United States devoted nearly 14 percent of its overall gross domestic product to energy; by 2006 that number had fallen to about 9 percent.

One of the results of the more efficient means of research and development has been a far higher success rate in finding new oil fields. The success rate has risen in twenty years from less than 70 percent to over 80 percent. Computers have helped to reduce the number of dry holes. Horizontal drilling has boosted extraction. Another important development has been deep-water offshore drilling, which the new technologies now permit. Good examples are the North Sea, the Gulf of Mexico, and more recently, the promising offshore oil fields of West Africa [11].

The following are some of the recent technological advances that (as described by Red Cavaney, a top oil expert) have dramatically increased the ability not only to find and extract new oil, but perhaps more importantly, to recover more or additional oil from existing reserves that were formerly considered “peaked and dried” under old technologies.

  • Directional Drilling. It used to be that wellbores were basically vertical holes. This made it necessary to drill virtually on top of a potential oil deposit. However, the advent of miniaturized computers and advanced sensors that can be attached to the drill bit now allows companies to drill directional holes with great accuracy because they can get real-time information on the subsurface location throughout the drilling process.
  • Horizontal Drilling. Horizontal drilling is similar to directional drilling, but the well is designed to cut horizontally through the middle of the oil or natural gas deposit. Early horizontal wells penetrated only 500 to 800 feet of reservoir laterally, but technology advances recently allowed a North Slope operator to penetrate 8,000 feet of reservoir horizontally. Moreover, horizontal wells can operate up to 10 times more productively than conventional wells.
  • 3-D Seismic Technology. Substantial enhancements in computing power during the past two decades have allowed the industry to gain a much clearer picture of what lies beneath the surface. The ability to process huge amounts of data to produce three-dimensional seismic images has significantly improved the drilling success rate of the industry [12].

“Primarily due to these advances,” Cavaney further points out, “the U.S. Geological Survey (USGS), in its 2000 World Petroleum Assessment, increased by 20 percent its estimate of undiscovered, technically recoverable oil. USGS noted that, since oil became a major energy source about 100 years ago, 539 billion barrels of oil have been produced outside the United States. USGS estimates there are 649 billion barrels of undiscovered, technically recoverable oil outside the United States. But, importantly, USGS also estimates that there will be an additional 612 billion barrels from reserve growth—nearly equaling the undiscovered resources. Reserve growth results from a variety of sources, including technological advancement in exploration and production, increases over initially conservative estimates of reserves, and economic changes” [13].

Thanks to new technologies, additional oil can now be recovered from the apparently exhausted reserves. Specifically, the peaking and declining of oil from an existing well is not the same as the peaking and declining of oil from the respective oil field or reservoir. While oil production from an existing well is bound to peak and then slow down, “offset wells” can be drilled later into the same field or reservoir to produce more oil. Here is how Vialls explains:

“Now we come to the completely false [or deliberately misleading] claim by Peak Oil shills that production from existing oil wells is ‘slowing down,’ thereby proving that the oil fields are ‘running dry.’ This is so wrong that it is almost breathtaking. Think of this slowing down process in the same way you might think of the engine oil in your automobile. The longer you run the engine, the higher the level of contaminates that get into the oil. The higher the level of contaminates, the higher the level of friction. Sooner or later you have something closely akin to glue coating your piston rings, and the performance of your engine declines accordingly. This is an inevitable mechanical process well known to all automobile owners.

“Henry Ford and others managed to slow down the rate of contamination in engine oils by inventing the oil filter, through which the oil has to circulate each time it passes around inside the engine. A high percentage of the contaminates stick to the filter element, thereby allowing extra miles between oil changes, though heaven help the careless motorist who thinks he can get away without ever changing his clogged oil filter when recommended.

“When oil is extracted from a producing formation underground, it flows out through pores in the reservoir rock, and then into the open borehole, from where it is transported to surface by the production tubing string. So by the very nature of the beast, the bottom section of the well is ‘open hole’ which allows the oil to flow out in the first place, but because it is comprised of exposed and sometimes unstable rock, this open hole section is also continually subject to all manner of turbulence and various contaminates. For example, tiny quantities of super fine silt may exit through the pores but not continue to the surface with the oil, tumbling around in the turbulence instead, until the silt very slowly starts to block off the oil-producing pore throats. Yes, of course there are a variety of liners that can be used to slow down the contamination, but there is no such thing as a Henry Ford oil filter 10,000 feet underground.

“The inevitable result of this is that over time, the initial production rate of the well will slowly decline, a hard fact known to every exploration oilman in the business. However, this is certainly not an indication that the oil field itself is becoming depleted, proved thousands of times by ‘offset wells’ drilled later into the same reservoir. Any new well comes on stream at the original production rate of its older cousins, because it has not yet had time to build up a thin layer of contaminates across the open hole. Though as we shall see it is possible to ‘do an oil change’ on a producing well and bring it back to full production, this is extremely expensive, and rarely used in the west” [14].

Substitutes or Alternative Sources of Energy

Peak Oil is also subject to criticism because it pays insufficient attention to substitutes or alternative sources of energy, both actual and potential. These include solar, wind, non-food bio-fuel, and nuclear energies. They also include natural gas. Natural gas is now about 25 percent of energy demand worldwide. It is estimated that by 2050 it will be the main source of energy in the world. A number of American, European, and Japanese firms have and are investing heavily in developing fuel cells for cars and other vehicles that would significantly reduce gasoline consumption [15].

Peak Oil also pays short shrift to what is sometimes called “unconventional” oil. These include Tar Sands, Heavy Oils, and Oil Shale.

Tar Sands can be recovered via surface mining or in-situ collection techniques. Canada's Athabasca Tar Sands is the best known example of this kind of unconventional reserve—estimated at 1.8 trillion barrels. Although this was originally considered cost inefficient, experts working in this area now claim that they have brought down the cost from over $20 a barrel to $8 per barrel.

Heavy Oils can be pumped and refined just like conventional petroleum except that they are thicker and have more sulfur and heavy metal contamination, necessitating more extensive refining. Venezuela's Orinoco heavy oil belt is the best known example of this kind of unconventional reserve—estimated at 1.2 trillion barrels.

Oil Shale requires extensive processing and consumes large amounts of water. Still, reserves far exceed supplies of conventional oil, and costs are bound to decline as newer and more efficient processing techniques become available [16].

A rarely mentioned but potentially very important substitute for conventional oil “is an even bigger hydrocarbon resource that can be developed to provide nearly endless amounts of energy: methane hydrates (methane frozen in ice crystals). The deposits of methane hydrates are so vast that when we develop the technology to bring them to market, we will have clean-burning energy for 2,000 years. It's just one of the exciting scenarios we may see in the far-off future” [17].

Except for natural gas and nuclear energy, most of these alternative sources of energy are still highly costly, and are therefore used in only insignificant quantities. But, considering the ever evolving newer and more efficient technologies, they are bound to rise in significance. This means that the prospects of reaching a day in our search for energy sources when conventional oil is no longer the world’s dominant source of energy are quite realistic. Humans did not invent motor vehicles because they ran out of horses or horse-driven carriages; nor did they invent electricity because they ran out of candles.

Concluding Remarks

Predictions of global oil production peaking, and then running out, have been around almost as long as oil was discovered in the second half of the 19th century. Time and again, such dire predictions turned out to be false, largely because of the Peak Oil’s apparently sound but actually deceitful logic: while it is true that, as Peak Oil maintains, oil is a finite natural resource that is bound to run out some day, it does not follow, again as Peak Oil argues, that therefore oil is or must be running out soon.

A major flaw of Peak Oil is that it is based on a static, or technology-neutral, assumption: it implicitly assumes that limits to oil are set as natural, innate, and immutable. Yet, limits to oil, like those to most other resources, are determined as much (if not more) socially as they are naturally. Research, development, and technological advances have made (and will continue to make) both the amounts of oil reserves and of oil production much more fluid or elastic than perceived by the champions of Peak Oil.

Viewed in conjunction with the vast pool of substitutes, both actual and potential, oil limits loom less vitally than when they are considered in isolation from such energy alternatives. The constantly evolving newer and more efficient technologies are bound to further expand those limits far beyond the narrow, “natural” limits set by the Peak Oil theory.


[1] Robert L. Hirsch, Roger Bezdek, and Robert Wendling, “Peaking of World Oil Production: Impacts, Mitigation, and Risk Management,” Testimony on Peak Oil before the House Subcommittee on Energy and Industry (7 December 2005), http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf

[2] Matthew Mosk, “Industry Gushed Money After Reversal on Drilling,” Washington Post (27 July 2008), http://www.washingtonpost.com/wp-dyn/content/article/2008/07/26/AR2008072601891.html

[3] F. William Engdahl, “Perhaps 60% of Today’s Oil Price Is Pure Speculation,” financialsense.com (2 May 2008), http://www.financialsense.com/editorials/engdahl/2008/0502.html

[4] Michael T. Klare, Resource Wars: The New Landscape of Global Conflict (Holt Paperbacks, 2002).

[5] Red Cavaney, “Global Oil Production about to Peak? A Recurring Myth,” World Watch (01 January 2006), http://goliath.ecnext.com/coms2/gi_0199-5142950/Global-oil-production-about-to.html

[6] Eliyahu Kanovsky, “Oil: Who's Really Over a Barrel?” Middle East Quarterly (Spring 2003), http://www.meforum.org/article/527

[7] Jason Schwarz, The Peak Oil Myth: New Oil is Plentiful,” Seeking Alpha (22 June 2008), http://seekingalpha.com/article/82236-the-peak-oil-myth-new-oil-is-plentiful

[8] M.A. Adelman, The Genie out of the Bottle: World Oil since 1970, (Cambridge: MIT Press, 1995); cited in Bill Kovarik, “The Oil Reserve Fallacy: Proven reserves are not a measure of future supply,” http://www.radford.edu/~wkovarik/oil/

[9] Joe Vialls, “Russia Proves ‘Peak Oil’ Is A Misleading Zionist Scam,” rense.com (25 August 2004), http://www.rense.com/general75/zoil.htm

[10] Eliyahu Kanovsky, “Oil: Who's Really Over a Barrel?” Middle East Quarterly (Spring 2003), http://www.meforum.org/article/527

[11] Ibid.

[12] Red Cavaney, “Global Oil Production about to Peak? A Recurring Myth,” World Watch (01 January 2006), http://goliath.ecnext.com/coms2/gi_0199-5142950/Global-oil-production-about-to.html

[13] Ibid.

[14] Joe Vialls, “Russia Proves ‘Peak Oil’ Is A Misleading Zionist Scam,” rense.com (25 August 2004), http://www.rense.com/general75/zoil.htm

[15] The Wall Street Journal (10 March 1998); cited in Eliyahu Kantovsky, “Oil: Who's Really Over a Barrel?” Middle East Quarterly (Spring 2003), http://www.meforum.org/article/527

[16] For an informative discussion of unconventional oil reserves, and a scathing critique of Peak Oil see Bill Kovarik, “The Oil Reserve Fallacy: Proven reserves are not a measure of future supply,” http://www.radford.edu/~wkovarik/oil/

[17] Red Cavaney, “Global Oil Production about to Peak? A Recurring Myth,” World Watch (01 January 2006), http://goliath.ecnext.com/coms2/gi_0199-5142950/Global-oil-production-about-to.html

Ismael Hossein-zadeh, author of the recently published The Political Economy of U.S. Militarism (Palgrave-Macmillan 2007), teaches economics at Drake University, Des Moines, Iowa.