2003 August 05 Tuesday
Iraq Oil Production Rising

Pre-war production was 2.5-3.0 million per day.

He now has to rely on the estimate of Philip J. Carroll, America's adviser to the Iraqi oil ministry, who guesses--hopes--that the Iraqis can export enough oil during the balance of this year to cover salaries, pensions, and other everyday costs associated with reconstituting the Iraqi bureaucracy.

But even if Carroll's goal is met, Iraqi production will not generate sufficient funds to cover the cost of reconstructing the country's infrastructure.

Iraqi production is now over 1 million barrels per day and rising.

"Crude oil production is rising very fast now. We are up to well over a million barrels a day," a coalition spokesman told reporters here. "Yesterday's production was significantly above that figure," he added. His remarks echoed comments by a senior Pentagon official who testified Tuesday before a Senate panel, reported Platts.

In my opinion the US government should have made much more preparations in advance of the war to rapidly increase Iraqi oil field production once the war was completed.

The rate at which Iraqi oil production rises matters for several reasons:

  • Many costs now being paid by US taxpayers could be paid by oil production when Iraq produces more oil.
  • A rapid rise in oil production will fund a more rapid reconstruction and reduce the level of dissatisfaction of Iraqis and hence reduce support for Baathists and other fighters who attack US forces.
  • Higher Iraqi oil production will reduce world oil prices. This will save the US money in import costs and also make the US and larger world economy grow faster.
  • The US will have more leverage over Saudi Arabia to get the Saudis to crack down on terrorists and to be less supportive of Wahhabi Islamic ideology.
  • Lower world oil prices will reduce the amount of money the Saudis have to spread Wahhabism.

Therefore the US can gain both security and economic benefits from high levels of Iraqi oil production.

For greater longer term security the US ought to pursue a very ambitious research and development effort to develop forms of energy that can gradually replace fossil fuels as energy sources.

Share |      By Randall Parker at 2003 August 05 02:27 PM  Mideast Iraq Economics


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