Thursday, October 21, 2004

The world has lost Iraq's oil: "Iraq used to produce close to 3.5 million barrels of oil per day under the rule of Saddam Hussein.... The reason oil prices have been hovering around $50 a barrel now is that most of these Iraqi exports disappeared just as oil consumption began to skyrocket around the world.... The International Energy Agency reported that the global use of oil — about 81 million barrels every 24 hours — rose at least 1.3% and perhaps as much as 3% in the past year. Consumption is being driven by new, voracious appetites in the huge industrial machineries of China and India as well as in various other economies on a fast-growth track.

"Meanwhile, two huge Western oil lakes — the North Sea shared by the United Kingdom and Norway, and Alaska's oil fields — are beginning to run dry. Pipelines and oil terminals from the northern fields near Kirkuk to the southern export terminals near Basra are being blown up daily by various groups of insurgents."

"Iraq, a country that sits on the world's second-largest oil reserves after Saudi Arabia, finds itself in the humiliating position of importing oil products such as gasoline, diesel and fuel oil. It is only able to export an average of about 1 million to 1.3 million barrels of crude oil per day. And that is on good days, when something is not ablaze. What's worse is that a large chunk of the oil revenues is not accounted for because of graft, theft, mayhem and the near-total absence of transparency within the transitional government of Prime Minister Ayad Allawi, according to aid agencies, which say they cannot see where the money is going. Oil traders go further. They say large amounts of oil are being stolen and smuggled onto ships, with Iraqi officials and traders splitting the returns. The Iraqi people and economy see no "trickle down" effect.

"As for the country's oil industry, once a proud mighty machinery of some 55,000 well-trained and highly disciplined technocrats, the situation is catastrophic. Oil fields are deteriorating for lack of maintenance, fires, accidents and lack of funds. Oil refineries that were looted in the first week of the war have yet to be repaired."

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