Oil War III: The Engineering of Oil Profits
Through War and Arbitrary Monetary Standards
Copyright © 2003 by H. Michael Sweeney and NOILWAR! See Permissions Statement http://www.proparanoid.com/noilwar.htm
This article reveals:
The historically demonstrable equation: Low oil prices = low oil profits
= war = high oil prices = oil/war industry profits
Who profits by application of this formula
Identifies and illustrates Oil War I, II, and III
Why Sadam Hussein was left in power after Desert Storm
Why Bush MUST have war immediately
Why Tony Blair's Government MUST go along with Bush when 90% of Brits
say NOILWAR!
Why France and Germany are against the war when some think their doing
so illogical
Why there is an Oil Crises in Argentina, and what George Bush has to do
with it
Illustrates the value and importance of terrorism to that war
The Players: Who makes a buck when there is a war
The War Formula Revealed: A review of wars vs. crude oil prices over half a
century
Vietnam (1964-76)
Afghanistan-Russia (1979-1991)
The Falklands War (1982)
The Oil Wars: The first wars which revolve almost purely around oil interests
Oil
War I, Iraq-Iran war (1980-1988)
Oil War II, Iraq-Kuwait/US
war (1990-1991)
The Fall of the Soviet Union
(1991-1997)
Oil War III, the
War on Terrorism (2001 - current)
The Euro Gold Standard, OPEC Black Gold Standard, and worthless
I.O.U.s from Uncle Sam
I have stated in prior issues of the Professional Paranoid Newsletter that there is a formula for war in the Middle East, restated for simplicity, here: Low oil prices = low oil profits = war = high oil prices = oil/war industry profits. The question is, can a case be made that oil/war industry interests engineer wars in order to increase oil prices and profits. To answer that, let us first take a look at who we are talking about when we say oil/war industry interests. For the most part, they are often the same people/groups. For another way of viewing the impact of the information presented, here, and for specific references useful in verifying some of the statements, I suggest a look at the Time Line for Treason.
The Players: Who makes a buck when there is a war
OPEC - the cartel of oil producing states have an extreme interest in high oil prices, given that their actual costs to pump the oil out of the ground do not vary except according to their own nation's rate of inflation, which can impact on labor costs and replacement parts for machinery. Chief among these are the Saudi Royal Family, the Fiasals -- many of which are close buddies and business partners with the Bush Family, partners with American oil industry firms, and co-investors in CIA proprietaries and military contractors with Bush and his Administration friends through their investment and leadership roles in the Carlyle Group, which is a holding company for dozens of military contractors (and oil industry firms)
Oil Companies (anywhere in the world) get to raise their prices IMMEDIATELY when any expected shortage of supply exists -- the old supply and demand formula. So even though they have yet to pay higher costs to the producers, the price of oil products (heating oil, gasoline, etc.) rises quickly well in advance of any change in actual expenditures for oil at higher prices. Once the shortage manifests in actual higher costs, prices would at some point level out and represent normalized profits (in terms of percentile, but still higher in terms of net profit volume).
As a rule, war has NOT genuinely suffered a stifled supply in any dramatic way, because various oil producers (those not directly involved in blockades or other war induced production roadblocks) simply increase production rates --further increasing their profits by virtue of a temporarily larger market share. Of course, once the war goes away, the prices come back down -- but never seem to come anywhere near their starting point. The overall profit level of the oil companies is much higher after the war, and the consumer never gains back what it had lost. We consumers are too dumb to notice that, apparently, and no one in government seems interested in monitoring on our behalf.
Military Contractors/Suppliers. That one is not very hard to figure out. All those destroyed weapon systems and platforms, and expended munitions will need to be replaced. So much the better if selling to both sides, even if your own troops end up fighting an enemy armed with weapons your country manufactured. It is an age old story, and no one is better at it than the US Military Industrial Complex -- which I call MIIM (Military-Industrial-Intelligence-Media Complex). A great example is the Carlyle company, which is Of course, that brings us to...
The Military and the CIA. The military always wins in a war, its appropriations going through the roof, and Generals tending to get more stars with victories. The CIA is itself deeply enmeshed in the oil industry and in bed with military contractors, having proprietaries in both industries. In fact, two of three Bush appointees to the US occupied Afghanistan (see next) are actually former CIA operatives, both recruited and thrust directly into the White House, the Department of Defense, and oil industry, and back into Afghanistanís new puppet government at the same times (two for one special, we might presume.)
Individuals important for the purpose: The George Bush family has extensive holdings in the oil industry at all levels, including the service industry, which are firms providing services needed by the oil industry, such as Carlyle Groups Halliburton. The Bush family further has significant interests in the war industries through Carlyle Group. James Baker of Baker and Botts who has a long list of clients in both the oil and war industries. Dick Cheney hails from Halliburton, and has profited from Caspian region pipeline projects. Condoleeza Rice hails from Chevron. All three George Bush appointees to US occupied Afghanistan, John Maresca, Zalmay Khalilzad as Special Envoy and Hamid Karzai as Interim Prime Minister -- all worked on Unocalís Afghanistan pipeline project, Maresca as a Unocal Vice President.
The War Formula Revealed: A review of wars vs. crude oil prices over half a century
Now lets take a brief look at the wars. Oil prices are adjusted for inflation/recession to reflect constant 1995 $, and come from the US Dept. of Energy. Their figures are averaged for the year, and thus, the actual highest prices for the year are not reflected. Despite this, the numbers are still rather revealing...
WWII (1941-1945) : Oil prices had held between $11.00 and $13.42 for a ten year period. But in the war years, oil dropped to as low as $9.32. By 1949, after the shooting war had stopped and the cold war had begun, oil prices had peaked to above $16, and remained in that strata for some time, and then slowly started downhill. Clearly, WWII in Europe was not about oil, but the Pacific war was -- the US was essentially blocking Japanís access to it. Regardless, it impacted on oil prices and profits.
Vietnam (1964-76): Oil had started to approach to the old $11 strata. The war in Vietnam started when oil was in the mid $12 range, but by the time the war had ended, it was an all time high of $20.39. Again, we probably agree this war was not about oil, but it clearly impacted on oil prices.
Afghanistan-Russia (1979-1991): This war was argued by various experts as being ideological, religious, political, and oil related. It is largely coincidental to a larger (in death tolls) war between Iran/Iraq (see below). For this reason, the data is essentially identical for the two wars, which could be argued as one in net effect. While Afghanistan was itself not an oil industry player, the bordering Russian states were extremely oil rich -- the Caspian basin. Further, Afghanistan had long been identified as a central key to political power in the region and was often referred to white papers on Grand Game constructs by the New World Order groups. The Grand Game is control of the oil in the region, as promoted by such groups as the Council on Foreign Relations. The CFR and its think tanks, though its primary goals are very much against US sovereignty in favor of a one world government, is probably the most influential power group in Washington DC. It virtually dictates US foreign and domestic policy as well as policy regarding national security (CIA, NSA, FBI, Department of Defense.)
The Falklands War (1982): This short war between Great Britain (British Petroleum) and major oil producer, Argentina, should also be combined into thinking about the Iraq-Iran war, below. Though it was a very short lived war, it kept prices high (above $44) for the year -- though otherwise representing a mere hiccup in oil exports from South America. Yet lessons learned from the 'double whammy' effect of wars effecting oil producers on two continents would prove useful, later.
The Oil Wars: The first wars which revolve almost purely around oil interests
Oil War I, Iraq-Iran war (1980-1988): This was clearly and ideological war, but between two major oil producing states, it illustrates to the oil and war industries where the money comes from. When combined with the Falkland war and the more localized impact of the Soviet-Afghanistan conflict, which bordered both Iraq and Iran, the impact on oil supply and demand is significant. Oil prices had slipped from the $20 level to near $19 when war talk started to send oil prices back upward. By the second year of the war, prices had peaked at $52.42, a new all time high. It remained above $30 until the war started to die down and other oil producers had taken up the slack. As the war ended, however, there was a glut on the market from the increased production and the renewed access to Iraqi and Iranian oil, and oil immediately plunged to a low of $16.81. The first gas lines were in this period.
Oil War II, Iraq-Kuwait/US war (1990-1991): Iraq is feeling a financial bind, and oil prices are not what they used to be. Further, other OPEC nations seem bent on pumping a lot of oil which means both a low profit to Sadam Hussein and a low market share. That may be, in part, why he invaded Kuwait. Regardless, all experts agree that he was after their oil fields, if not their oil customers -- and better seaport access for oil exports, Iraq being largely land locked. From a low of $15.76 entering the period, oil shoots up as Desert Storm looms to a high of $23.01. This war is definitely about oil, and I call it Oil War I.
The Fall of the Soviet Union (1991-1997): This was not exactly a war, but the Soviets had fallen victim to the Cold War. The date of the actual collapse (Dec 1991) is not as important as are the dates shown in parenthesis, which are the dates representing a flood of US oil company investments in Soviet oil resources. These involved a series of bribes in order to gain control at ridiculously low investment costs. This resulted in roughly a 75% ownership or control of all Caspian region oil and gas reserves (a trillion dollar value.) It is mentioned here because it helps explain why George Bush the Fist did not take control of Iraq when the chance existed. To do so would have adversely effected the oil companies attempts to get good prices for ownership of Soviet oil. Oil prices needed to drop as quickly as possible and it would not do to have the Soviets see America as owning the region at that time.
Oil War III, the War on Terrorism (2001 - current): By 1994, oil prices had dropped to $13.49, facilitating reasonable prices for Soviet oil fields to American oil companies. But now, they needed a way to export the oil -- and to get prices back up. The only viable way was the pipeline project through Afghanistan. But the Taliban and their civil war were in the way. So, per other NOILWAR! articles, Osama bin Laden became terrorist, and was moved to Afghanistan to befriend the Taliban. While there, 911 happens and the US immediately associates bin Laden and the Taliban as one. Retaliation commences and, soon enough, attention swings to Iraq and 'Weapons of Mass Destruction.'
Simultaneous to all this, we have the Argentina oil shortage going on, which forces South America and countries relying upon Argentine oil to get it from the Middle East -- putting more demand on oil from that quarter and sending prices even higher. Guess what? It turns out that the labor dispute and political disruption in Argentina seems to be getting its cue from the George Bush White House and the CIA. The effort to overthrow the Democratic government through labor revolt is being secretly stimulated by George Bush for no apparent reason. There is no fit to US foreign policy -- but it is a fit to oil industry profit motives. For more on this, take a look at an article by W. Clark at the Independent Media Center.
This all sends oil prices skyward, steadily. As of this writing, they have eclipsed $30 a barrel - that being in 2003 dollars, not 1995 dollars. Using the gold standard as a guide, 1995 to 2003 conversion is ten to one (it takes ten times as many dollars to buy an ounce of gold - $35 vs. $350); making it $300 a barrel equivalent. Ergo, gasoline is predicted to be $2 a gallon by spring, perhaps $3 by summer. Now that's a lube job! But it gets worse. What we are looking at is another 40% potential boost due to arbitrary manipulation of monetary standards...
The Euro Gold Standard, OPEC Black Gold Standard, and worthless I.O.U.s from Uncle Sam
We could name this section ëWhy War Canít Wait.í If we do go in and take control of Iraq ëtemporarily on behalf of freedom loving Iraqisí, what impact will that have on oil profits? Well, as it happens, it will significantly impact on them. It will, in fact, represent a whole new formula. This new formula has to do with a kind of ëwild cardí situation which has never before existed -- the creation and emergence of a dominant new monetary standard in the world, the Euro Dollar. As it happens, the US dollar is dwindling rapidly against the Euro. Currently, they are almost at parity (1 Euro = $1), though when the Euro first came out, it was worth much less than a dollar. This has a significant role in American oil company profits -- and indeed, all major US corporations doing business abroad (megacorps.) It even effects certain ëalliesí of George Bush in his war efforts in the same ways and for exactly the same reasons:
As it happens, Iraq had been forced by the US embargo and other pressures to switch Iraq from US dollar (pretend money -- Federal Reserve I.O.U. notes) trade to Euros (based on a real Gold standard). This involved not only his oil sales but his $10 billion in cash reserves held in European banks from oil sales -- a fund established as part of the embargo in order to provide food and medical supplies for Iraqi civilians. Seems that instead of buying those goodies, he is borrowing Euros against it, and spending that wherever he pleases. But the real story is that this has strengthened Iraqís financial picture significantly, by up to 30% over what it would have been with US dollars. The rest of OPEC has eyed this and is considering switching, too -- or perhaps establishing their own money standard based on oil (black gold.)
And this brings us to why Tony Blair is such a stuanch Oil War III supporter, and the Germans and French are not. Blair, like Bush, is not really worried about weapons of mass destruction... he and those in British Petroleum's Boardroom are worried about the same thing the American oil companies are worried about. If the exchange standard for oil changes, economic experts predict a virtual recession for the US, and American oil companies may stand to loose another 30-40% in attempting to convert US dollars for Euros in order to buy oil. Great Britain is in the same fix, because they refused the Euro in favor of the English Pound which is also failing against the Euro almost as badly as the American I.O.U.s.
France and Germany, on the other hand, use the Euro, and thus, hope the war is a bust. That means a strong Euro and better buying power -- especially for oil. But if the US invades Iraq and takes control, one of the first things expected of George Bushís puppet government officials installed there is to revert Iraq back to US Dollars for petro -- especially in sales to Europeans. In such a move, OPEC would be hard pressed to move ahead to any conversion strategy, because it might result in a production war which sends prices low (for both standards.) In addition, George Bush is in a key position to blackmail select OPEC leaders (especially the Saudi Royals) for their funding of Osama bin Laden... ëPlay ball, Faisal, or you might be next in line for Americaís New War!í Itís that same old carpet of gold or carpet of bombs argument, all over again.
Thus it is no coincidence that virtually every country in favor of war with Iraq is not using the Euro standard (i.e., all those Slavic/former Soviet states)... or is partnered with America in oil ventures in the Caspian (i.e., Turkey...) and every country which has come out publicly against the war is a Euro nation. The only noted exception is the Soviet Union, which while both partnered with the US and not on the Euro, has non the less opposed the war. This may be because they view with alarm and suspicion the series of Oil Wars for profiteering in the region, and the ultimate price they may have to pay if the US controls the bulk of the entire world's supply of oil short of the Argentines. And perhaps they know about Bush and friends adventures there and fear more trickery is afoot akin to that used against the Soviets, resulting in loss of control of their own oil reserves.
So the new formula is War = Euro x 0 = (US$ and £) x 1.7 x Oil Profits x Caspian Reserves. Perhaps a million people will die before it is over, but the equation does not factor that in. Boardroom math is like that; better to spill red blood and have black ink on the bottom line than to save lives and have red ink at the bottom line. So every one but Bush and friends gets it in the end. So, I guess there is only one last thing to say: Please pass the Vaseline. On second thought, I probably canít afford it, since it is petroleum based. I'll use butter.