To the victor goes the spoils

What struck me about Trump’s insane notion that we will take Iraq’s oil–to the victors belong the spoils, he said–is that the US doesn’t need that oil. We import only 35% of our oil now, and less than 20% of our imports come from the middle east, and number that keeps falling. The other 80% comes from the western hemisphere–Canada, mostly, but also Mexico and Venezuela and I think Colombia. So this Iraqi oil would be exported to other countries–Europe, Asia–and would need massive infrastructure investment after a decade and a half of war. It would also require the permanent presence of US troops to protect it from angry Iraqis. This is sort of a throwback to the way Europe, America and Japan divided up chunks of pre-WW2 China into economic zones, administered by each country and protected by their own troops, while not actually taking possession. Any way you look at it, the idea is a net loss for the United States (not to mention Iraq) but a gain for elements of the oil industry. Exxon for instance. Meanwhile, the price of oil is dropping steadily, and Trump plans on opening up more U.S. lands for oil production, loosening regulations on fracking, and reviving the coal industry, all of which will push the price per barrel downward. Expanding alternative energies–despite Trump, who apparently doesn’t like them–are also putting increasing downward pressure on the demand for oil. And then there are higher gas mileage automobiles and the increasing popularity of electric and hybrid cars. Gas stations are closing down for a reason–people don’t need as much gas as they used to. All of which make oil from costly investments like seized Iraqi oil fields far too expensive amid the global glut of oil. Economies like Russia’s and Venezuela’s are tanking for a reason–global supply exceeds global demand. The art of the deal, I guess.

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