Jun 29 2008

NYTimes admits oil shortage! Sing hallelujah!

Category: Iraq,oil pricesharmonicminer @ 10:37 pm

The New York Times has admitted that there is an international oil shortage! Really. Twice in one article!

Based on their previous coverage, a person might be led to think that the oil prices are high due solely to unscrupulous profiteers and speculators bidding up the price, and evil oil company executives gouging the hapless public, secretly hiding oil that will mysteriously appear on the market when prices are high enough.

The NYTimes let this admission slip in the context of an article snarkily suggesting there is something terribly wrong with the Iraqi oil ministry giving some oil contracts to American and British based publicly traded oil companies. They pull out the dreaded phrase “no bid contract” whenever they want to tar anyone with the sticky whiff of collusion and price fixing.

The major oil companies did have advisers in Iraq, helping the oil ministry with details of all kinds (no one in Iraq has ANY experience in a market based oil company… Saddam had a completely closed shop, with sweetheart deals in the “oil for food” kickback scheme with France, Germany, Russia, etc.), but no one forced the Iraqi government, which has shown no qualms about asserting its independence, to accept any contract from any company. Presumably Iraqi authorities thought it was in their best interest to do what they did.

In any case, Iraq has no tradition of “bidding out” oil contracts. In fact, it’s a bit jingoistic, don’t you know, for western journalists to insist that Iraq do business in the same way as a “free market” western nation might. What kind of cultural bigots are these journalists? I thought they were more accepting of different customs in different places… maybe they just got off the bus or something.

The advisers — who, along with the diplomatic official, spoke on condition of anonymity — say that their involvement was only to help an understaffed Iraqi ministry with technical and legal details of the contracts and that they in no way helped choose which companies got the deals.

Repeated calls to the Oil Ministry’s press office for comment were not returned.

At a time of spiraling oil prices, the no-bid contracts, in a country with some of the world’s largest untapped fields and potential for vast profits, are a rare prize to the industry. The contracts are expected to be awarded Monday to Exxon Mobil, Shell, BP, Total and Chevron, as well as to several smaller oil companies.

The deals have been criticized by opponents of the Iraq war, who accuse the Bush administration of working behind the scenes to ensure Western access to Iraqi oil fields even as most other oil-exporting countries have been sharply limiting the roles of international oil companies in development.

Is somebody’s preference for nationalized oil companies showing here? Does “most oil exporting countries” mean countries that have simply taken over the oil industry, a la Venezuela?

For its part, the administration has repeatedly denied steering the Iraqis toward decisions. “Iraq is a sovereign country, and it can make decisions based on how it feels that it wants to move forward in its development of its oil resources,” said Dana Perino, the White House spokeswoman.

Though enriched by high prices, the companies are starved for new oil fields. [emphasis mine] The United States government, too, has eagerly encouraged investment anywhere in the world that could provide new oil to alleviate the exceptionally tight global supply, which is a cause of high prices. [emphasis mine]

Iraq is particularly attractive in that light, because in addition to its vast reserves, it has the potential to bring new sources of oil onto the market relatively cheaply.

I can think of no reason why American and British companies should not get contracts to expand oil supply available to the world. That can only help American consumers, in the long run.

The big story here has nothing to do with Iraq, or “no bid oil contracts”.

The New York Times, mouthpiece of the Left, has admitted there is a structural world-wide oil shortage causing high prices. It’s only a short hop from there to favoring exploration and drilling.

I can dream, can’t I?

Tags: ,

Leave a Reply