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PAX, LUX ET VERITAS SINCE 1965
Post T. Boone Pickens, Iraqi Oil, and China
Created by John Eipper on 06/12/13 3:26 AM

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T. Boone Pickens, Iraqi Oil, and China (Tor Guimaraes, USA, 06/12/13 3:26 am)

T. Boone Pickens is a person who usually talks straight and is quite knowledgeable about the oil business, nationally and globally. Therefore, it is quite upsetting to me when I hear him say that "the United States spent $2.2 trillion and tragically lost more than 3,000 men and women fighting in Iraq, and now the Chinese are getting over half the Iraqi oil." How can our government and oil companies be so stupid? Can someone please explain this absurdity to me?

Pickens also stated that "every day, 17 million barrels of oil come out of the Straits of Hormuz. We get about 10% of that, but the Chinese get significantly more. And in the process, the United States is spending billions of dollars per year to protect the OPEC cartel's oil. Why? If we had an energy plan, we wouldn't need to do this."

Someone must be making a lot of money on the back of the US taxpayers. Who is behind this rip-off game?

JE comments:  Iraq's oil is sold on the open market, and the part of it we "get" is the part we buy.  China does the same.thing, and presumably Iraqi oil is cheaper for them to ship in than oil from Canada, Mexico, or Venezuela.  Is Tor Guimaraes suggesting that the US should have the conqueror's exclusive right to Iraq's resources?

In any case, what's the deal with the latest spike in gasoline prices?  Regular unleaded in my neighborhood is now about $4.10 per gallon, up 10% from two weeks ago.



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  • T. Boone Pickens, Iraqi Oil, China, and George W. Bush (Robert Whealey, USA 06/13/13 3:28 AM)
    Regarding the question of Tor Guimaraes (12 June), "How can our government and oil companies be so stupid? Can someone please explain this absurdity to me?" The answer is that the two million plus people who work for the President are not all stupid. George W Bush was the leader of a stupid clique. He was too incompetent to ever have been nominated and elected President. He did have three assets:



    1. A pedigree name

    2. A personal inherited fortune

    3. He lived in Texas, the heart of the oil industry



    He also had seven or eight liabilities:



    1. He had no experience in finance in banks and Wall Street



    2.  Had no experience in military affairs



    3.  He had no knowledge of Middle Eastern countries: Iraq, Afghanistan, Saudi Arabia or Israel



    4. When he attended Yale, he was a playboy and missed out on studying history, philosophy, or political history. I wonder if his classes in business ever mentioned Karl Marx or John Maynard Keynes?



    5. He was a poor judge of character



    6. He became a covert to Methodism late in life



    7. I wonder if he ever read the New Testament by the time he was 21?



    8. Whoever told him to choose Richard Cheney as his VP?



    The majority of the Republican Party learned nothing from the errors of Richard Nixon and his misunderstanding of China, Korea, and the Vietnamese-Indochinese wars with foreign invaders. Few ever read the Constitution. Few understand the nature of imperialism.

    JE comments: I'm not sure how this answers Tor Guimaraes's questions, except to suggest that we're still paying the price of Pres. Bush's cozy relationship with Big Oil. Tor's question was more direct: how is it that the Chinese are now getting the lion's share of Iraqi oil, given the enormous US sacrifice in lives and treasure? In blunter terms: is China the principal (only?) beneficiary of Pres. Bush's 2003 invasion?  Iran, by most definitions, also benefited from the removal of Saddam Hussein.



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    • Iraqi Oil and China (Tor Guimaraes, USA 06/14/13 3:33 AM)
      Robert Whealey's explanation of 13 June may have hit the nail on the head with an oblique strike. It seems as if T. Boone Pickens's words, "the United States spent $2.2 trillion and tragically lost more than 3,000 men and women fighting in Iraq, and now the Chinese are getting over half the Iraqi oil," and "the United States is spending billions of dollars per year to protect the OPEC cartel's oil," indicates the final result from our special interest-motivated foreign "policy" and behavior.

      It does not seem to matter who is in charge, the goal is to intervene around the world to allow special interests to flourish by installing corrupt foreign governments, selling weapons, technology, military contracts, etc. Some days ago John Eipper asked a good question, "is Tor Guimaraes suggesting that the US should have the conqueror's exclusive right to Iraq's resources?" That might be too obvious and probably too much to ask, but it seems only fair to somehow provide a little ROI to the American taxpayers by charging all oil companies something for what Mr. Pickens is complaining about. Instead the US government is more likely to give billion-dollar no-bid contracts to the "right" companies. In summary the basic problem is that US, Chinese, and other interests figure out how to benefit from US foreign interventions, while only the US taxpayers pay for everything and have no one protecting their interests.


      JE comments: ROI--return on investment?  Let's focus on Tor Guimaraes's final point, that US and Chinese special interests benefit from this country's foreign interventions, while the US taxpayer is stuck with the bill. An infuriating thought, but is it really that simple?



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      • BBC Series on Iraq War (John Heelan, UK 06/15/13 12:03 PM)
        JE commented on 14 June: "Let's focus on Tor Guimaraes's final point, that US and Chinese special interests benefit from this country's foreign interventions, while the US taxpayer is stuck with the bill. An infuriating thought, but is it really that simple?"

        No--it is probably worse than that.


        A recent excellent three-part series on BBC TV examined the Iraq war and its consequences 10 years later. It included substantial live quotations from the decision-makers at the time, such as Cheney, Blair, Bush 43's advisers, senior military figures like Casey and Petraeus, diplomats like Zalmay Khalilzad, Bremer and Jack Straw, and so on. It was noticeable that there was nothing directly from Bush or Aznar (the other members of the "Azores Three"). Top Iraqi politicians in power like Alawi, Chalabi, and al-Maliki were interviewed at length and the reasons were explored for the post-"Mission Accomplished" civil unrest and mayhem.


        At the end of the series, I was left with the impression that today's Iraq is as much a Shia dictatorship as it was a Baathist/Sunni dictatorship 10 years ago. If so, is the return on investment on the 170,000+ civilian and military deaths and the billions of dollars invested to change the regime negative?


        JE comments: See this blurb for the BBC series from a fortnight ago. I wonder if it has reached the US?


        http://www.bbc.co.uk/mediacentre/proginfo/2013/22/iraq-war-1.html



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      • Iraqi Oil, Special Interests, and Iran (Tor Guimaraes, USA 06/17/13 5:15 AM)
        John Eipper commented on my 14 June post: "Let's focus on Tor Guimaraes's final point, that US and Chinese special interests benefit from this country's foreign interventions, while the US taxpayer is stuck with the bill. An infuriating thought, but is it really that simple?"

        My statement was based on T. Boone Pickens's words, "the United States spent $2.2 trillion and tragically lost more than 3,000 men and women fighting in Iraq, and now the Chinese are getting over half the Iraqi oil," and "the United States is spending billions of dollars per year to protect the OPEC cartel's oil."


        While humanitarians may legitimately claim that the heaviest cost of the Iraq and Afghanistan wars has been paid by the innocent civilian populations massacred by both sides, Mr. Pickens's estimates of US taxpayers paying $2.2 trillion for the Iraq war alone seem quite reasonable, not counting the Americans dead and maimed for the rest of their lives, and all the other future sequences from causing so much misery to a foreign people. Regardless, there should be no doubt that the American people paid for the bulk of the treasury costs.


        In Afghanistan I believe we had to go after Al-Qaeda for revenge on 9/11. But the second Iraq war was for special interests, so let's follow the money and power. Who are the greatest beneficiaries from the Iraq war? One major objective was to eliminate the criminal tyrant and US ex-puppet Saddam Hussein as a threat to Israel. He had lost his importance as a countervailing force against Iran which also earlier was a US ex-puppet under the Shah and became an enemy under Islamic control. The Saddam threat was destroyed along with the whole country. Iran became a great political and military beneficiary despite our best efforts to keep it in check anyway we can, but Iran received no economic or financial benefit from the last Iraq war.


        Who are the biggest financial beneficiaries? Obviously the US military-industrial complex has benefited enormously, as everyone already knows. As claimed by Mr. Pickens, China is a great beneficiary; and it lost no skin in the game (they make business, not war image). The global oil companies are extremely profitable today, so we must assume they have benefited greatly also. Therefore, I do not understand John Eipper's question regarding my statement that "special interests benefit from this country's foreign interventions, while the US taxpayer is stuck with the bill." Is John questioning the statement in the context of other US interventions?


        JE comments: I was paraphrasing Tor Guimaraes's post, as I understood it.


        Let's turn to Iran: I'm surprised that nobody in WAISworld has commented on Saturday's presidential election victory of reformist candidate Hassan Rohani (or Rouhani). After the tense years of Ahmadinejad, does a Rohani presidency promise better relations between Iran and the West?

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    • Assets and Liabilities: Bush and Obama (Randy Black, USA 06/14/13 4:04 AM)
      I'm intrigued by Robert Whealey's 13 June post mortem on the faults
      and flaws of George W. Bush. It's always interesting and far too easy to
      chastise the sins of a prior president. One only has to change a few
      names and locations, and you are looking at Barack H. Obama.


      For instance, using Robert's argument about Bush but refocused on President Obama:



      He (Obama) also has seven or eight liabilities:


      1. He had no experience in finance in banks and Wall Street (true)


      2. Had no experience in military affairs (true)


      3. He had no knowledge of Middle Eastern countries: Iraq, Afghanistan, Saudi Arabia or Israel (mostly true)


      4. When he attended Occidental, Columbia and Harvard, he likely missed
      out on studying history, philosophy, or political history.  Robert wondered if Bush's classes in business ever mentioned Karl Marx
      or John Maynard Keynes.



      (We know that Obama certainly was taught Marx at Harvard by his
      professors and mentors, Charles Ogletree and Derrick Bell. From
      thefamouspeople.com: "Some of the notable Keynesian economics adopters
      are Presidents George W. Bush and Barack Obama...")


      5. He was a poor judge of character (See Eric Holder-contempt of
      congress, Hillary Clinton-Benghazi debacle, Jeremiah Wright, Jr.-G-damn
      America, Douglas Shulman, the director of the IRS, et al)


      6. He became a covert to Methodism late in life (see item 7)


      7. I wonder if he ever read the New Testament by the time he was 21?



      Based on his admissions in his autobiography, Obama occupied some of his
      time with smoking pot and snorting cocaine as a student. Per news
      reports, Obama was baptized in 1988 at age 27 in Chicago. The preacher
      who did the baptizing was the Rev. Jeremiah Wright, Jr., the man who is
      famous for his vulgar God-cursing of America.



      As president, Obama made the decision to join no religious congregation in DC. From The Audacity of Hope
      by B. H. Obama:  "I was not raised in a religious household. For my
      mother, organized religion too often dressed up closed-mindedness in the
      garb of piety, cruelty and oppression in the cloak of righteousness."


      8. Whoever told him to choose Richard Cheney [Joe Biden] as his VP? 



      http://www.thefamouspeople.com/profiles/john-maynard-keynes-191.php



      JE comments: Tit for presidential tat, but Robert Whealey also listed three
      assets for President Bush. Randy, can you find three for
      President Obama?  How about one?  


      Regarding Pres. Obama's religion, he has no specific Christian affiliation, yet primarily attends Methodist services in DC.  Other Methodist presidents?  Besides George W. Bush, we have McKinley, Polk, and possibly U. S. Grant.  Not an illustrious roster, although many historians consider Polk one of the most effective one-term presidents ever.

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      • Bush and Obama (Robert Whealey, USA 06/16/13 4:11 AM)
        Regarding Randy Black's diversion (14 June) from Bush 43 to Obama, it is a good lawyer's plea. Historically, Bush went to war in 2001 and again against a second Muslim country in 2003. He got 100% of the Republican votes in Congress to finance those wars. About 20% of the Senate Democrats voted for the State Department's / NSA's draft resolutions advocating military action. The many Democrats in Congress are also financed by the banks, the oil companies and military-industrial complex.



        I'm no great fan of Obama, but I gave him 51% confidence vote (no money) because he was more intelligent than John McCain and Mitt Romney. Obama like Reagan gives a good TV speech, but he has no executive talent, once he got in the White House. He gets no votes from the House of Representatives, only 4 votes from the Supreme Court, and the Federal Reserve banks control the value of the paper dollar. The Republican politicians are right that "Obama never made a dollar in private business and on the free market." He knows nothing about banking operations. He has had no military experience, even worse he has had no time to read how the American army fought in Korea, Vietnam, Iraq, and Afghanistan. In this sense Randy is right. Obama has inherited the propensity to solve moral and economic questions with force.

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    • Iraqi Oil and China (Robert Whealey, USA 06/18/13 5:24 AM)
      In response to my post of 13 June, JE asked: "How is it that the Chinese are now getting the lion's share of Iraqi oil, given the enormous US sacrifice in lives and treasure?"

      Sacrifices of lives to do not create war profits. The US gold dollar filled a vacuum in 1919 when the Germans and Brits spent their gold pounds and marks on a futile war, 1914-1919. A second round of war, 1939 to 1945, weakened London's, Berlin's, and Frankfurt's real capital still further.



      Step 2. Chinese oil engineers bought up Iraqi fields after 2006-2009 as the paper dollar inflated in relation to gold. The paper Renminby inflates at the same rate as the paper dollar, but Chinese engineers came to a destroyed Iraq and bought up oil fields. US engineers are spread around the globe. The hundreds of US bases that Chalmers Johnson writes about are a drain on real US capital and taxpayers. The oil projects that China are now building in Iraq is with real capital, not paper stocks and bonds. How will the Federal Reserve issue its next bonds? Nobody knows beyond three months.



      The Republican Party as a whole does not see the connection between debts, war and a foreign policy that must be based on sound geography and history.


      JE comments: To me the interesting point is the new Chinese model of imperialism--not with guns and bases, but with resource development and infrastructure. The latest is Nicaragua's $40 billion deal with a Hong Kong firm to build a canal to rival Panama's. This could be pie-in-the-sky, but if the project goes ahead, China will gain major influence in trade between the Atlantic and Pacific.


      Is President Monroe rolling in his grave?



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      • Iraqi Oil and China (Istvan Simon, USA 06/19/13 6:27 AM)
        I would like to make two points on this interesting thread about Iraq and China's share of Iraqi oil exports.

        Point number one: The United States was accused of invading Iraq in order to "steal" its oil. This accusation has been made as usual rather carelessly, both in the left-wing press and by people in this Forum. I remember in particular an excellent post by Cameron Sawyer at the time, in which he contested such claims by other WAISers.


        The current situation which scandalized Tor Guimaraes proves that those who made such charges for the the motivation of the United States for the war were wrong. It sure would be nice if they admitted so publicly.


        Point number two: The oil market is a global market. So it absolutely does not matter who gets Iraq's oil. China needs oil for its vertiginous economic growth and development. They must buy it somewhere. Wherever they buy it influences the global market--and so it is largely unimportant whether they buy it in Iraq or Venezuela or Iran or Kuwait or Saudi Arabia or Russia. The effect on the United States and other oil importers would be very similar, no matter where they got their oil. The same is true about the sources of oil for our own economy. Some sources are of course preferable to others because of possible disruption of supply, but other than that it just does not matter.


        JE comments:  Oil is fungible, but it would be interesting to know more about what companies and nations have acquired the rights to develop Iraq's oil.  Is the T. Boone Pickens argument (the source of Tor Guimaraes's original post) based on the assumption that members of the Iraq War coalition should have "dibs" on these properties?



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      • Iraqi Oil and China; on PSAs (Production Sharing Agreements) (Robert Gibbs, USA 06/19/13 1:54 PM)
        Not to put too fine a point on the matter, however Robert Whealey (18 June) is wrong to say that the Chinese "bought up" Iraqi oil fields. What the Chinese have is an oil Production Sharing Agreement (PSA) with the Iraqi government. This can take many forms, but the gist is that the Chinese paid an up front price to the Iraqis for the rights to drill, and both governments share in the production (mainly with the Iraqi-owned energy company). They do not own the wells or the oil; they only have the contractual rights to operate certain fields which they "sell" to buyers in China or trade with whomever they wish. Either way the Iraqi government will get theirs.



        As I said before, the Chinese are interested in getting energy and do not care from whom they obtain it. They are quite aggressive in their quest. They are also looking at costs, hence the long delay in talks with Russia on the long-proposed Siberian pipeline.

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  • Gasoline Prices in Italy (Eugenio Battaglia, Italy 06/13/13 1:31 PM)
    On 12 June, John Eipper lamented the $4 gasoline in Michigan. Please do not cry; in Italy today it costs the equivalent of US$ 9.19 per gallon. However, we are very proud to pay such prices inflated by "excise" and taxes, so that the President of the Republic can happily spend four times more than that cheapskate, the Queen of England.

    Usually when something extraordinary happens (wars, so-called missions of peace, earthquakes, floods, etc.), the government in charge uses this as an excuse to slap on another "accisa." It is some kind of tax, but then you also pay taxes on that. The first one to do that this Mussolini, who imposed an accisa of one lira per liter of gasoline to finance the war in Ethiopia.


    I have a Jeep Cherokee to face the rough roads in the woods, and such a vehicle drinks gasoline or diesel like hell.


    JE comments: The Jeep Cherokee, designed just down the road in Toledo (Ohio, not Spain)--I am impressed!  I did some rough math: at 16 miles per gallon and 160 miles of round-trip commuting, my daily driving expenses in a Jeep at Italian fuel prices would be $92 per diem. That alone would be reason enough to move. Or retire.



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  • Iraqi Oil and China (Robert Gibbs, USA 06/14/13 3:17 AM)
    To answer Tor Guimaraes's question of 12 June, the answer is simple: The Chinese really need the oil and are willing to risk their money in oil infrastructure, so that they now dominate about one-third of the production as well as the purchase of Iraqi oil. They are skating on thin ice (somewhat) with their interest and investments with the Kurdish Regional Government (KRG), thereby passing and alienating the National Government, but so far it seems to work for them. Of course, they are not bound by US rules regarding bribes in the form of "personal contracts" and consulting "fees" and outright gifts. They are aggressive and operate in the oil fields openly and aggressively all over the globe. They do this without political consideration or any other constraints beyond obtaining energy at the best price possible.

    As a question: would Tor and others be so seemingly bothered with Iraqi oil distribution had the US and Britain dominated oil production in Iraq?


    To answer John Eipper's question, China is the main beneficiary country regarding Iraqi energy (as is Iraq).  But in both 1990 and 2003 China was not hardly on the map in Iraq.


    As an aside, the real losers in this are Iran and more importantly India.


    JE comments:  Is Iraq now receiving a good deal of the Chinese oil business that previously went to Iran?



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