Thursday, August 01, 2002

Tom Friedman in the New York Times put an interesting case about what will happen to world oil prices after kick off in the war against Iraq.
That would mean Iraq would be able to modernize all its oilfields, attract foreign investment and in short order ramp up its oil production to its long-sought capacity of five million barrels a day. That is at least three million barrels of oil a day more on the world market, and Iraq, which will be desperate for cash to rebuild, is not likely to restrain itself. (Now you understand why Saudi Arabia, Iran and Kuwait all have an economic interest in Saddam's staying in power and Iraq's remaining a pariah state, so it can't produce more oil.)

Most interesting analysis. I've been getting desperate for actual analysis of the situation that didn't start from the Bush-is-Satan-incarnate bus depot.

Friedman concludes with this wide-ranging prediction

Bottom line: A quick victory that brings Iraq fully back into the oil market could lead to a sharp fall in oil incomes throughout OPEC that could seriously weaken the oil cartel and rob its many autocratic regimes of the income they need to maintain their closed political systems. In fact, give me sustained $10-a-barrel oil and I'll give you revolutions from Iran to Saudi Arabia, and throw in Venezuela.
If that scenario prevails, you could look at an invasion of Iraq as a possible two-for-one sale: destroy Saddam and destabilize OPEC at the same time. Buy one, get one free. But you better prepare for the consequences of both.

I like it!

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