Summary: Why are oil prices so high, after inflation above 1980 record highes? Peak oil enthusiasts have explanations (usually wrong, like their forecasts). There are many factors at work, including one simple but hidden reason: American foreign policy. The USA has played a large role in the suppression of oil production in three major oil producers, including two nations with some of the world’s largest petroleum reserves — and having the greatest potential for increased production. Perhaps it’s a coincidence that we’ve intervened in three oil producing nations, and high oil prices are an accidental by-product of our good intentions.
Contents
- Iran
- Iraq
- Libya
- Another perspective
- For More Information
(1) Iran
After a long history of interference in Iran’s government, we initiated an ever-tightening and broadening array of sanctions on Iran after the 1979 revolution — continuing until today. See a list here; Wikipedia has details on US sanctions and the UN sanctions the US promoted. For analysis see the Council on Foreign Relations and the US Institute of Peace (USIP).
For analysis of sanctions impact on Iran’s oil industry see this USIP report: part one and part two. They’re working. Iran produced 6 million barrels/day of oil in 1974. In July their exports hit a five-month high of 600 thousand b/day.
Iran has vast untapped reserves. See the EIA’s report on Iran. From the EIA:
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EIA, 10 December 2013
(2) Iraq
Following Iraq’s invasion of Kuwait, in August 1990 the UN imposed a broad array of financial and trade sanctions on Iraq, which lasted until the US invasion and subsequent destabilization of Iraq.
The below graph is by James Hamilton. The dotted line shows their potential, which US actions have helped remain in the indefinite future. For details see the EIA report on Iraq.
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Iraq oil production by James Hamilton, 15 June 2014
(3) Libya
On 17 March 2011 the UN Security Council passed Resolution 1973 which authorized US and others’ involvement in the Libyan civil war. As with Iraq, our well-intentioned intervention has crashed their oil production. For details see the EIA report on Libya.
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Libyan oil production, 10 October 2013
(4) Another perspective on oil and US geopolitics
The key to a great story is not who, or what, or when, but why.”
— Elliot Carver, in Tomorrow Never Dies (1997)
Why has the US done these things? To find the reason, see the result. Widespread suffering? Hopefully not. Setting the Middle East ablaze? Unlikely. Higher oil prices? That would imply that oil companies (and perhaps others, such as the Saudi Princes) have a powerful influence on US policy makers — sufficient to trump the interests of the US people.
That would imply that we don’t clearly see the world. Like President Kennedy the athletic family man in fact being a womanizing near-cripple. Or the US and UK government keeping the war-winning ULTRA code-breaking secret for 29 years after WW2. Or any of the other things we didn’t know in 1963, so that our picture of the world was radically wrong.
Is it possible our vision of the world is as blind today as it was then?