Blood for Oil

One thing I don’t really understand is the sentiment that America’s military posture in the Middle East is somehow justified or at minimum caused by that region’s large oil reserves. Oil, obviously, is a valuable commodity, but it’s not that valuable. The Iraqi state’s oil revenue is about $20 billion per year, which is a lot of money, but only a small fraction of the annual cost of occupying the country. Looked at another way, Iraq produces about 2.25 million barrels per day of oil and crude sells for around $62 a barrel. 62 times 2.25 million times 365 is a large number — about $51 billion — but still way less than the annual cost of the war.

Or, for yet another perspective, American consumers use about 20 million barrels a day of black gold — good for 7.3 billion barrels in a year. Now suppose you think that withdrawing military forces from the region would lead to widespread chaos and $100 a barrel oil. That means higher energy prices for consumers. But if US consumers could just pocket the cash that’s instead being spent on military operations in the area, they’d still have much more post-oil money on hand even if consumption didn’t drop at all in response to the price hike.