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Saturday, October 11, 2003
Five Finger Exercises
The "blood for oil" nonsense has always given me a rash. Now that we have some facts and figures, let's have another look at it and see how it holds up.

First, we get most of our oil from Canada, Saudi Arabia, Venezuela (remember how the strike there pushed our prices up?), Mexico, and Nigeria in that order. Two-thirds is from outside OPEC. This is not a new situationSource: DOE. It looks to me like there are adequate supplies without Iraq.

Second, even if we were to steal the Iraqi oil at the price of extracting and shipping it, the difference between the cost of stealing and the market price for oil would in no way compensate for the cost of invading, occupying, and rebuilding Iraq. We're talking about $87 billion, give or take, as an initial estimate. If we stay longer, the price goes up. Bear in mind that Iraq had a pre-war production level of 2.5 million barrels per day. At about $30/barrel, that's about $27 billion gross per year, less cost of production of roughly $7 billion. Shipping is extra. The Congressional Budget Office estimates the cost of occupation (just the military part) as somewhere between $8 billion (at greatly reduced force levels -- unlikely) and $29 billion. The most commonly mentioned figure is about $20 million. Let's see, an initial outlay of $87 billion, with a payback of the initial investment at the rate of approximately $0 per year? That's a tough way of making a profit -- no doubt it would have been much cheaper to stay home.
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