The Quest, Chapter 7 Overview

The Quest, Chapter 7 Overview

The section from the Quest reviews the reasons behind the war the United States engaged with Iraq post 9-11. This allows us to compare the road to war in Japan and Germany, and in the United States, years apart. Some similarities and some differences, but an undeniable fact is that the oil industry was impacted by both. Some could argue that oil caused both wars, some others could argue that both wars highlighted the value of oil. The actual answer is somewhere in the middle, and that any time war occurred since World War I - oil was included in the consideration.

World War II was a delayed reaction to the end of World War I. Similar to how the Iraq War of 2003 could be considered a delayed reaction to the Gulf War of 1991, Japan of WWII underestimated the United States' reaction. Similarly Iraq and Saddam Hussein were only focused on the regional blustering and did not have the United States in focus. The threat of an armed opponent was a guiding fear factor. The attack on 9-11 has been compared to the attack on Pearl Harbor. However, after 9-11, there was not a clear adversary for the United States. Iraq and Afghanistan were ways to prevent war, but was not as clear as when Japan attacked Pearl Harbor.

So, what do these have to do with oil? - WWII, Japan was seeking more oil sources. The United States has a fear of losing oil supplies. But did the individual attacks, Japan on Pearl Harbor and the United States on Iraq, actually increase access to oil? Japan still had to seek out new oil supplies in the East Indies, and the United States had to stabilize and rebuild the oil industry in Iraq. Neither direction increased access to oil quickly, and neither was a stable and secure option.

Instability does not encourage foreign investment. The oil companies wanted to know how the political system would work and impact their investment. They wanted to know about the economic system and contracts. What would guarantee security to their investment? Then and only then would the oil companies invest. But the United States Government could not guarantee any security of the investment or the knowledgeability to build a stable investment environment. Thus, was the war really all focused on the oil industry? The goal of the US Government would be to keep the oil available on the world market in general. The loss of any percentage of oil production is not just a shortage for one country, but a decreased amount of oil available for everyone.

Then, enter the other view that the oil companies were pushing for oil access. Oil companies do have an increased demand for oil resources to fuel the engaged militaries. Would this be a case of application of the “Rule of Capture” - sell as much oil as possible while the war happens? Or would the oil companies have learned from how this principle impacted the industry? Steady gains more profit than quick.

Iraq had been operating under a nationalized oil industry. We know the challenges and corruption that comes with the Petro State. Yet, we can also see the citizens from a nationalized industry receiving the profits and being able to ideally receive benefits from the natural resources they live on. Iraq had long term goals in the 1970s for 6 million barrels a day. This long-term goal was stopped by the Iran/Iraq war of the 1980s, then the Gulf War of the 1990s. Their continual participation in wars have hurt the Iraqis' ability to develop and advance their oil industry.

Upon review of the Iraqi oil industry and infrastructure - the country had stopped developing in the industry approximately 50 years earlier. Any technological advances were not from government coordinated production development, but the individual skill and innovation of the Iraqi oil engineers. We remember when the USSR fell, and the state of the Baku oil fields; well, this is much of the same. These countries did not develop or advance their oil industry but instead relied on the consistent Petro income to finance the rest of the government, leaving the state of the industry a shadow of what once was.

With Saddam removed from power, the focus of the United States military was finally security. This is what the oil companies were focused on from the start, but the military was focused on changing the regime. Look at this way- thinking that the oil companies could speculate the vast income from the Iraq War is like Rockefeller allowing Standard Oil to be split up so he could multiply his wealth, or Japan attacking Pearl Harbor to increase their Gross Domestic Product (GDP).