What Bush didn't tell you: U.S. firms and Iraq agree on oil deal

| 1/30/2003

As President Bush outlined his domestic agenda Jan. 28 while making the case for removing Saddam Hussein from power, the United States had already turned to an unlikely helpmate to alleviate its severe oil shortages – Iraq.

In a bit of "business as usual" irony, the oil-rich state doubled its oil exports to America just weeks before a possible invasion, thereby helping U.S. refineries cope with other pressing international issues, including the oil strike in Venezuela, the London Observer reports.

After the loss of 1.5 million barrels per day of Venezuelan production in December, the oil price rocketed, and the scarcity of reserves threatened to do permanent damage to the U.S. oil refinery and transport infrastructure.

To keep the pipelines flowing, President Bush stopped adding to the 700-million-barrel strategic reserve.

But ultimately, Chevron, Exxon, BP and Shell came to the rescue, doubling imports from Iraq from 500,000 barrels in November to more than 1 million barrels per day to solve the problem. Essentially, U.S. importers diverted 500,000 barrels of Iraqi oil each day that were headed for Europe and Asia.

The trade, though bizarre given the possibility of an invasion of Iraq, is legal under terms of the United Nations’ oil for food program.

But for war opponents, it shows oil is the unspoken reason for military action in Iraq, which has the world's second largest proven reserves – some 112 billion barrels, and at least another 100 billion of unproven reserves – according to the U.S. Department of Energy.

While the State Department is mindful of cynical world opinion about U.S. war aims and the oil connection, officials do not always stick to the script, the Observer reports.

Grant Aldonas, undersecretary at the U.S. Department of Commerce, is quoted as saying war "would open up this spigot on Iraqi oil, which certainly would have a profound effect in terms of the performance of the world economy for those countries that are manufacturers and oil consumers."