We’ve all heard the mantra. The U.S. economic recession is made significantly worse by the extremely high cost of Operation Iraqi Freedom, with a price tag of nearly $700 billion going into 2010.
The cost of the war in Iraq has been unnecessarily and tragically high, both in lives and treasure, but if the Iraqi government has its way, the country will massively increase its oil output, bringing down the price of oil and decisively impacting global geopolitics in the West’s favor.
The Russian Lukoil company has won a massive contract to develop the West Qurna Phase 2 oil field in southern Iraq, putting to rest allegations that the Bush administration launched the war to seize the fields for its buddies in the oil business, a laughable accusation of Satan-level evil that has had a disappointingly long shelf life.
When news of the deal was published, my good friend and fellow Pajamas Media writer Nick Guariglia lamented, saying on his Facebook page, “our blood; Russia’s oil.”
Most readers upon reading this will agree, but there is much reason to be excited about how America and the free world will benefit from this deal. Yes, you read that right. This deal may end up being just what America needs in this time of economic and geopolitical crisis.
Iraq wants to increase its oil production, which currently stands at 2.5 million barrels per day, to a whopping 12 million barrels per day in ten years.
The minister of oil thinks this can even be accomplished by 2016. That would make Iraq the second largest oil producer in the world, behind only Saudi Arabia. Lukoil is excited about the future of Iraq, saying it will cause a “revolution” in the market by increasing the world’s oil supply by 20 percent.
“A top manager at a leading Western firm said the modern history of the oil business will be split into the pre-Iraq and post-Iraq periods. I agree,” said Leonid Fedun, a Lukoil shareholder who was ranked #122 on Forbes’ list of the world’s billionaires this year.
Some are saying this goal is too ambitious and is “crazy.” That may or may not be true, but Iraq’s oil output is about to dramatically increase and impact the world’s dynamics.
This will probably result in a decrease in oil prices unless Iraq agrees to OPEC’s demands to keep the price high, something the Iraqis will be reluctant to do if they feel they can get a bigger share of the pie through competitive pricing.
And the Iraqis aren’t so hot on the Saudis and their other neighbors right now anyway.
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