Sunday, June 15, 2008

One of several causes

The price of oil has gone up because of the confluence of a number of reasons. These include demand, speculation and, as Rosa Brooks explains, US foreign policy. Consider this during your next "pain at the pump" moment.
On the supply side, U.S. foreign policy can have a major impact on global oil prices. Obvious example: Iraq has the world's fourth-largest oil reserves, but the U.S. war in Iraq caused oil production there to plummet, from a prewar level of 2.6 million barrels a day to below 1.5 million a day in 2004. This contributed to rising oil prices over the last few years. In May, Iraqi oil production finally returned to prewar levels, but the Iraqi oil industry remains vulnerable to continuing insecurity.

In other parts of the globe as well, U.S. foreign policy decisions have helped spur increases in the price of oil. In Nigeria, continued tensions about the share of oil profits that should go to local development have fueled ongoing militant attacks on oil production facilities, repeatedly disrupting the flow. On May 4, for instance, attacks on Royal Dutch Shell installations disrupted production; the next day, global oil prices were up by $3.65 a barrel. But the Bush administration has shown little interest in pushing the Nigerian government to adopt the political and economic reforms necessary to defuse the crisis.

In Venezuela (the world's fifth-largest oil supplier), the Bush administration backed a failed 2002 coup against President Hugo Chavez, effectively eliminating our diplomatic leverage with the Venezuelan government. Since then, Chavez has nationalized all oil production sites in Venezuela formerly under the control of foreign companies, a move that has further raised global oil prices. In Russia, too, ham-handed U.S. policies alienated Moscow, which has nationalized oil and gas companies and shown a distinct willingness to manipulate energy supplies for political purposes. Partly because of Russian government policies, Russian oil production has recently declined.

And global anxiety about U.S. bellicosity toward Iran -- which has the world's third-largest oil reserves -- continues to cause intermittent spikes in oil prices, as investors brace for the production disruptions a conflict with Iran would cause. (Last week, for instance, when an Israeli Cabinet minister said that an Israeli military strike against Iran -- backed, he appeared to imply, by Washington -- might be "unavoidable," global oil prices made their biggest-ever one-day jump.)



Comments:
It is refreshing to see recognition that Bush regime policies are largely responsible for the rise in gas prices.
 

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