Published on Saturday, May 17, 2008 by CommonDreams.org
Want Cheaper Gas and Oil? End the Damned Wars!
by Dave Lindorff
Americans are in a panic over rising gas and heating oil prices, and
with reason. For months, the price of a barrel of crude oil has been
rising steadily, hitting a record $127 yesterday.
Analysts keep getting trotted out on TV and in print, attributing the
dramatic price rise to everything from “peak oil” — the idea that
producing countries have reached their peak of productive capacity, and
that the only direction for oil supplies looking forward is down, while
demand continues to rise — to increasing demand in China and India, to
supply bottlenecks, to specific news events, like a pipeline break in
Nigeria, or a closed refinery in California.
Politicians, like Republican presidential candidate John McCain and
Democratic presidential candidate Hillary Clinton, have called for a
two-month moratorium on federal gas taxes, but with taxes running at
something on the order of 18 cents a gallon, this is not going to do
much to bring prices down-in fact it might do nothing, since retailers
would be free to just raise prices to match the tax break, and pocket
the profits.
One analyst, economist Ismael Hussein-Zadeh, a professor of economics at
Drake University in Des Moines, Iowa, has a different explanation for
the price rise, and American motorists and homeowners should pay close
attention.
“Oil prices have gone from the mid $20 range in the fall of 2002 to $127
yesterday — a rise of $100/barrel in just over five years,” he says.
“And the bulk of that increase can be attributed to the US wars in Iraq
and Afghanistan, and to the threats of war against Iran.”
Hussein-Zadeh’s analysis looks at a number of ways that the Bush/Cheney
wars have contributed to rising oil prices. Chief among these are two
factors: the threat to supplies, particularly from the Persian Gulf
region from which 20 percent of the world’s oil supplies come, and a
falling dollar, because oil is priced in dollars, and as it loses value,
oil producing countries raise their prices to compensate.
In an article titled “Worried About the Price of Gas? End US Wars,”
Hussein-Zadeh writes, “Soon after the invasions of Afghanistan and Iraq
the price of oil began to escalate in tandem with the escalation of war
and political turbulence in the Middle East.” Furthermore, he says,
“Anytime there is a renewed US military threat against Iran, fuel prices
move up several notches.” If the US were to actually make good on Bush’s
and Cheney’s threats to attack Iran, in Hussein-Zadeh’s view “the sky
would be the limit” to oil prices, with $200/barrel being a starting
point.
The dollar’s fall, too, is significantly a result of the
wars-particularly the Iraq War, he says. That war has been costing the
US $200 billion a year, all in borrowed funds. That in itself is a huge
hole that has to be funded by borrowing from China, Japan, Saudi Arabia
and other nations. But as Nobel economist Joseph Stiglitz has pointed
out, the true cost of the Iraq War, when interest on debt, health costs
of injured veterans and other long-term costs are factored in, is more
like $3 trillion and rising. And when currency speculators and traders —
the ones who really set the value of the dollar — make their bets,
they’re looking at that bigger number, not the little one.
Moreover, it’s not just oil that has been driven up in price because of
the war. As energy costs have gone up, so has the cost of food, in no
small part because most fertilizer is oil-based, and because
trans****tation costs are also largely a reflection of oil prices. As
well, to the extent that American’s food is im****ted, they are paying in
shrinking dollars, whose value is being driven down because of the war.
Hussein-Zadeh says the Bush/Cheney administration and its
neoconservative war promoters have worked hard to offer other more
benign explanations for the crippling rise in energy prices, and food
prices. As he puts it:
Neoconservative forces in and around the Bush administration and
beneficiaries of war dividends — wi****ng to deflect attention away from
war as the main culprit for the skyrocketing energy prices — tend to
blame secondary or marginally relevant factors: OPEC, China and India
for their increased demand for energy, or supply-demand imbalances in
global markets. Whatever the contributory role of these factors, the
fact remains that the current oil price hikes started with the beginning
of the Bush administration’s wars against Iraq and Afghanistan.
Furthermore, a closer examination of these factors reveals that their
roles in the current price inflation of oil have been negligible.
Common sense bears him out here. China’s and India’s economies have
indeed been growing rapidly, and with them, demand for oil, but over the
past five years, oil prices have risen 400%, and the same cannot be said
for demand. Even if Chinese and Indian growth figures of 7-9 percent per
year were accurate (and there is reason to believe they are grossly
inflated), that at best would amount to perhaps a 50% increase in
economic activity over five years. In fact, during this time more
efficient energy use in the developed countries has largely offset much
of the increasing demand for oil in China and India, and even in China
and India, much of the energy growth has involved replacing inefficient
vehicles and power plants with more efficient ones, so oil consumption
isn’t rising in lock step with economic growth.
The answer then, to rising oil prices, is obvious then. It is not some
silly two-month moratorium on federal taxes-what Sen. McCain referred
to, in a candid moment, as a “little gift” to American vacationers. Nor
is it opening up the Artic refuge to drilling — a move that would take
years to lead to any significant new supply, and which in any case would
have minimal impact on overall supply, or on prices. Nor is it opening
up the Strategic Oil Reserve — another drop in the barrel. Nor is it
hammering OPEC to boost production — something they have already done.
No, it is much simpler. As Hussein-Zadeh puts it:
The political implications of this discussion are clear: to bring down
the prices of fuel and food requires bringing home the troops. By
lowering the energy costs of production and trans****tation this will
help save our own and many other economies from the plagues of inflation
and stagnation. It will bring relief to hundreds of millions worldwide
who are burdened by crippling energy bills and the cru****ng costs of
feeding their families.
Got that people? If you want to see gasoline drop back below $3.89/gal,
get Congress to end the war!
It’s that simple.
Dave Lindorff is a Philadelphia-based journalist. His latest book is
“The Case for Impeachment” (St. Martin’s Press, 2006 and now available
in paperback edition). His work is available at
www.thiscantbehappening.net
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