Lugar on Energy and Iraq

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I heard Sen. Dick Lugar deliver some insightful remarks this morning on energy, Iraq, and U.S. foreign policy at the 20/20 Vision National Summit on Energy Security. The talk was an acceptance speech for the first ever Energy Security Leadership Award.
A lot of what Lugar has to say on energy is intuitive, but he offered a couple of exceptionally nuanced observations today. Here’s one:

“Although securing oil supplies was not the proximate motivation for the U.S. intervention in Iraq, Persian Gulf oil is highly relevant to the difficulties associated with extricating ourselves from that country. Having set in motion conditions in Iraq that could threaten regional stability, American and, indeed, global analysts rightly are concerned that if instability spreads it could threaten oil flows. Moreover, the supposed American greed for oil is used as an excuse by a myriad of Middle Eastern propagandists. The oil dependence of the United States and the West is a pillar of Iranian foreign policy.”

As I’ve said before, it’s both easy and simplistic to suggest that the invasion of Iraq was motivated by thirst for oil. The actual reality is more complicated than that, and while Lugar is just skimming the surface here, he’s doing it in a very smart, careful, but still bold way.
The other observation Sen. Lugar made is less quotable, but equally important. I’ve noted before both the impossibility and the irrelevance of the goal of “energy independence” or “ending dependence on foreign oil,” or worse, “ending dependence on Middle Eastern oil.” At some point I’ll outline all the details of why these buzz terms are so misleading, but for the time being, it should suffice to say simply that the U.S. can never insulate itself from energy prices on the global energy market and that nothing the U.S. does unilaterally will solve the global climate, development, or security problems caused by the current energy situation.
As far as I can tell, Lugar generally recognizes this principle. The main reason that he suggests we should reduce oil imports is that doing so would lessen the global demand for oil (I’m not totally sold) and pave the way for others to follow (a smart rationale). After all, it’s the global demand for oil that has the greatest effect on U.S. national security interests and needs to be reduced, not U.S. imports specifically. The Energy Diplomacy and Security Act, a bill authored by Lugar and Joe Biden that passed in the Senate last month, rightly takes that approach.
Some commentators, of which Tom Friedman is the most vocal, have basically said we should reduce imports because oil money is going to the “bad guys” in the Middle East. It’s a political winner to demonize Middle Eastern governments, but Friedman and his followers ignore a couple of key facts. First, in the global energy economy, if one oil producer profits, all oil producers profit. And second, any oil we don’t buy will be scooped up by rapidly developing economies at the same or similar prices.
Lugar doesn’t fall into that trap, but he does give two smart reasons to be concerned about Middle Eastern oil imports. One, which I quoted above, is that propogandists will use consumption of Middle Eastern oil to support their claims that the U.S. is after imperial dominance in that region. The second is that transporting Middle Eastern oil puts a huge strain on the U.S. military, upon which energy companies rely to protect their shipments.
Even if the goal of ending our energy relationships with Middle Eastern countries is both unrealistic and distracting from the main energy issues, as I believe it is, Lugar’s concerns are valid.
Senator Lugar is doing something rare in the soundbyte era of politics: he’s speaking to hot-button regional realities, keeping his eye on the main issue, the global oil problem, and elevating the debate above shallow rhetorical devices all at the same time. Presidential candidates need to stop talking down to Americans with energy independence mumbo jumbo and instead follow Lugar’s lead.
— Scott Paul

Comments

23 comments on “Lugar on Energy and Iraq

  1. Mr.Murder says:

    We’ve imposed import quotas for decades saying it makes us “less dependent on foreign oil” and it’s a mantra that even Hillary quakes to control fervor for.
    The reality is these caps artificially inflate the price. the refinery capacity of our country is less than when Eisenhower was President in comparative terms.
    The Military Industrial Petrochemical Complex is alive and thriving.
    Expanding the strategic reserve helped somewhat, another reason the industry strove to deregulate and dismantle enough to bottle neck the pricing levels.
    Mission Accomplished.
    As for Sen. Lugar,
    W.ith A.ll R.egard,
    Kiss off, you licksplittle Robber Baron.

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  2. deRougemont says:

    Some facts, a question, and a prediction:
    1. The original name for the Iraq war was Operation Iraq Liberation – but the acronymn was determined to be too transparent.
    2. Follow the money on all the Bush key players: they’re ALL Oil people, and they’ve all benefited hugely from the Afghanistan and Iraq wars. (I met an oil worker in Paris 2 years ago back from Afghanistan where he’d been working on “Pappy Bush’s” pipeline.)
    3. The present oil agreement before the Iraq parliment gives 70% to the (mostly) American and European companies for 20 years to re-build infrastructure and find new oil. With more contractors in Iraq than US forces, they are well positioned to provide protection for the oil companies right after Iraq agreement. This is necessary because after the oil companies get ahold of the oil revenues, there won’t be (politically) acceptable reasons for using US troops to protect the oil in light of the terrific profits the companies have been getting. Right now the oil is under Iraq national control (obstensively).
    Prediction: The day after the US companies get control of Iraq oil, and have in place their own ‘potection’, Bush will lower the troop deployment immediately.
    Question: Why is NO ONE fact-checking Lieberman’s listing of Iranian infractions in the bill passed today- especially in light of the actions of Iraqie police (Not just QUD forces) in the Jan kidnappings and attacks against US forces!
    It’s the run-up to the Iraq war all over again.
    Bushies want the Iraq oil agreement in place, so they can re-deploy to Iran.

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  3. Sandy says:

    Thanks for that quote, Ben. Quite remarkable.

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  4. MP says:

    jon writes: “If the US reduced its fuel consumption to a rate similar to Europe’s, we could ease much of the current constriction in the oil market, without reducing our standard of living.”
    I’ve wondered about this. Given the much longer distances Americans have to drive just in their daily lives…the size of the country…the size of the economy…the standard of living most people are accustomed to…how does this happen without a complete reorganization of the fabric–much of it built fabric– of our lives?

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  5. Ben says:

    I spent thirty-three years and four months in active service in the country’s most agile military force, the Marines. I served in all ranks from second Lieutenant to Major General. And during that period I spent most of my time being a high-class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism.
    I suspected I was just part of a racket at the time. Now I am sure of it. Like all members of the military profession I never had an original thought until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of the higher-ups. This is typical with everyone in the military service.
    Thus I helped make Mexico, and especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenue in. I helped in the raping of half-a-dozen Central American republics for the benefit of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers and Co. in 1909-1912. I brought light to the Dominican Republic for the sugar interests in 1916. I helped make Honduras “right” for American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went its way unmolested.
    During those years, I had, as the boys in the back room would say, a swell racket. I was rewarded with honors, medals, and promotion. Looking back on it, I feel that I might have given Al Capone a few hints. The best he could do was to operate a racket in three city districts. The Marines operated on three continents.

    Major General Smedley Darlington Butler (July 30, 1881 – June 21, 1940) was at the time of his death the most decorated U.S. Marine in history. He was twice the recipient of the Medal of Honor, one of only nineteen to be so honored.

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  6. JonU says:

    Is oil *the* reason we invaded Iraq? No.
    Is it one of the top three reasons? Yes.
    Is it one of the top three reasons/rationales for every move we make in the ME? Yes.
    Anyone thinks oil isn’t always a primary concern in every move we make in the Middle East is at best, painfully ignorant about what our entire economy is based upon.
    Oil/natural gas allow our current civilization to function. Period.
    p.s. Coddled, well-fed, neocon think-tank philosophers are indeed another primary reason for all our missteps in the ME. The automatic reaction to any neocon ideas should be instantaneous pointing and laughing at such radical fringe delusions being taken seriously by anyone.

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  7. rapier says:

    Right Hank. The days of insightful comments are over. The day of Senators is over, in no small part because of the likes of Lugar who sat by as Rome burned. I can only imagine the contempt he is held in by the guys in the White House running our empire and creating the next reality. (Chertoff let the cat out of the bag a bit the other day)
    Let me guess where Dick has voted on the recent cloture votes.
    It’s oh so very comfortable being a gray eminence. The limos and the clinking crystal at the nice quiet parties in Alexandria. ” Yes Senator, So good to see you. How is the Grandson doing at Harvard?”

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  8. Hank Essay says:

    Please wake me up when Dick Lugar does anything besides “make insightful comments”, ok? He seems to excel at talking and not much more when it really counts.

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  9. Hank Essay says:

    Please wake me up when Dick Lugar does anything besides “make insightful comments”, ok? He seems to excel at talking and not much more when it really counts.

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  10. jon says:

    Great comments and insight being expressed in the comments here.
    The lack of consistent focus on reducing energy use in the US has led us to this predicament. The Economist just published a chart showing that the US’ gasoline consumption is greater than the next 20 largest countries. The world economy continues to be reliant on oil production, hence the geopolitical importance of the Middle East.
    If the US reduced its fuel consumption to a rate similar to Europe’s, we could ease much of the current constriction in the oil market, without reducing our standard of living. Prosecution of the war in Iraq is currently consuming an amount of oil almost exactly equal to Iraq’ current oil pumping ability, essentially removing 1.6 mb/d that might otherwise be on the world market, further driving up prices. If the US had been diplomatically adept, there would be no need for aircraft carrier battle groups to patrol the Persian Gulf continuously.
    The US must seek to regain its previous lead in alternative energy production. We are having to import wind turbines from Europe, rather than producing sufficient numbers locally. We have handed over our prior eminence in solar power innovation and production to the Japanese and Germans. Prior to WW11 the US was the world leader in solar power for hot water production and wind generated electricity.
    Elimination of our use of foreign or Middle Eastern oil is a straw man argument. If it could happen, it would not occur for a generation. But reducing our reliance on foreign oil and creating substantial replacement sources of energy sustainably is well within our abilities. New power sources, coupled with improved efficiency and conservation could make a tremendous contribution to a problem that will not go away.
    Securing Iraq’s oil for US consumption may not have been the primary motivator for the Iraq war, but it was not far behind. The Army secured the Oil Ministry and not other ministries, and the oil fields were fully secured. Improving the refinery and oil pipelines was a primary reconstruction project. And Halliburton is relocating to Dubai. It is simply foolish to try to say that oil played no part.

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  11. Carroll says:

    Posted by MP at July 12, 2007 02:39 PM
    >>>>>>>>>
    I agree, I have used the ‘perfect storm” description myself from almost the begining. That is exactly what started all this.
    A tragic alignment of all the wrong people in all all the right places at one time.

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  12. Carroll says:

    Posted by AWR at July 12, 2007 03:31 PM
    >>>>>>>>>
    I think most of us who are old enough understand exactly what a fuel shortage does to the GDP….from first hand practical experience.
    I remember the oil embargo in the 70’s when we had to get in line at gas pumps and in my area could only get gas on certain days. It impacted every business ..construction, trucking, delivery of material to industries and delivery to consumers, etc.
    However….”that attempted to put America’s dependence on Gulf oil supplies into context and justify a forceful military posture in the region”…..is faulty thinking and contributes to the problem.
    All you will end up with that way is dog eat dog oil wars that expend more oil resources than it secures in the end. The only solution to the current condition is a global agreement, if oil countries would agree, that proportions the supply ….or either let world market demand take it’s course and you pay the price for you need.
    Going to trillion dollar wars to control prices is rather self defeating to the purpose. By the time we “saved enough” on oil prices to justify what we spent on a decade of war to control it we would still have an energy shortage and less oil.
    Not a good long term business plan to me.

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  13. JohnH says:

    I apologize if my analysis presumes that Bush and Cheney are rational, informed actors, acting with a modicum of desire to promote the national interest…
    Given their unconscionable behavior, it’s more tempting to write them off as totally craven, corrupt, insane, stupid, or driven by outside agents, a desire for revenge, a need to achieve the legacy of a war president, or simply to surpass “Daddy.”

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  14. ... says:

    keeping money out of the hands of the ‘bad guys’. i suppose they are us$ too… what does that tell you? maybe you have the good and bad guys mixed up?

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  15. SmellaRat says:

    Great points above. I especially like MP’s reasoning. It is a multi-pronged “perfect storm”. The hubris prong (i.e. neo-con, hawkish-Pentagon elements) added to the need-resource prong (Oil) added to the need-to-get-reelected prong (i.e. Rove–making of a war president in ’04) add to the catastrophe prong (i.e. 9-11; I don’t by the conspiracy stuff).

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  16. JohnH says:

    There is a major difference between having access to ME oil and controlling ME oil. Sure, ME countries were unlikely to stop supplying the world. But the real question was whether they were going to supply enough? During the run-up to the war, oil shortages were creating a seller’s market, giving OPEC control over quantity produced, which in a monopolistic situation would have meant restricting production to maximize pricing and revenue.
    Control of Iraq theoretically would have given the occupier the ability to dictate how much was produced. Facing imminent shortages (Russia unexpectedly bailed us out in the first half of the decade), the administration had to get Saddam out of the way and US oil companies into Iraq to make oil production rise to expected levels of world demand.
    Once they had control, they could have flooded the market, if they chose, forcing other suppliers to increase investments and production to meet national revneue budgets, thereby increasing overall supply, creating a buyer’s market, and breaking OPEC’s pricing control (essentially repeating the oil market of the 1990s). Or Washington could simply have become another member of OPEC, gouging the market along with everyone else. Greg Palast provides evidence supporting both paths, and an administration facing a fork in the road and unable to take it.
    Having failed in Iraq and stymied in Iran, two countries with huge, cheap, reaily accessible oil reserves, oil markets are headed for trouble. The IAEA says it expects a crunch by 2010. This scenario is similar to the one impending in 2001, except Russia isn’t there to bail us out this time around.
    For sceptics to be right, they have to be implying that an administration consisting of former oil executives facing an impending oil shortage would have sat passively by while oil markets melted down. Yeah, right!
    As I said before, if not oil, then what? It’s well past time for someone to provide a coherent answer.

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  17. AWR says:

    I happened to be present at the creation of the neo-con movement to secure Persian Gulf oil supllies, as a Hill staffer. In 198o, a staff report for the House Foreign Affairs Committee, largely designed to explore President Carter’s proposed creation of a “Rapid Deployment Force” contained a summary (that I wrote at the tender age of 23) of economic analyses that attempted to put America’s dependence on Gulf oil supplies into context and justify a forceful military posture in the region. A most interesting conclusion, drawn from research done by Harry Rowen and John Weyant, then both at Stanford, was that a one-year cutoff of Persian Gulf oil supplies could be expected to create a 3% decline in US GDP. If anything, this has gotten worse, in spite of finding more oil and natural gas – the latter terribly underused as an energy source, but that’s another story. I believe most Americans – beyond paying now $3 at the pump – do not understand the consequences of this remaining dependence. This makes all subsequent analysis of our dependence less relevant to the public. This is an enormously complex issue, as you all know, and there’s no room in a blog response to do this issue justice. But even if everyone in the country bought a Hybrid, used bio-diesel, and started taking the bus to work, the problem would remain. I look forward to lots more discussion on the subject. Sen. Lugar’s probably the most thoughtful guy in the Senate and deserves his award, but the average American still remains woefully undereducated as to what this dependence on foreign energy supplies implies, and the Congress gets itself in a lather over ANWAR and CAFE standards, which don’t address the national security issue nor the terrible effects an oil supply disruption could affect everyone, from the 7-11 clerk to the the biggest corporations.

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  18. bakho says:

    Senator Lugar hosted an energy conference earlier this year. It is a shame that the GOP nominated Bush instead of someone more intelligent like Senator Lugar. In fact, our whole Middle East policy would probably be substantially better if Bush would fire the current help, retire to Crawford and put Lugar in charge.
    Marcia is misreading Lugar. Lugar is saying that oil is central to Middle East policy

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  19. Marcia says:

    For Senator Lugar to pretend that oil is not the motor fueling American foreign policy is either naive, blindness or…a lullaby.
    Control of oil is the means this administration intended to use to impose US hegemony..oil bought and sold in DOLLARS, an all important factor to insure continued exportation of the debt. Pipelines and control of pipelines used as diplomatic weapons to isolate Russia and dominate China.
    That sea of oil under Iraq and Iran is considered by the Big Oils as their personal property and the US army on the more than 100 bases scattered around the world the guardians. Paid for by the taxpayers in the name of “American Interests” for whom no war is too far or too costly.

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  20. MP says:

    To pick up on JohnH’s point a bit: Clearly, the region as a whole is of vital interest to the West because of oil. This goes way back to the time started to become important. So whether we invaded Iraq for oil per se is a bit beside the point–the region is a hot area because of the role it plays in supplying everyone else’s energy needs…which are growing.
    Carroll makes a good about ME countries not selling us oil. However, they can apply tough leverage that dramatically affects Western economies by turning on and off the spigot, or just slowing it down. Controlling a reasonable supply of oil at a reasonable price–and preventing others, say, China, from cornering the market–could have been part of their thinking.
    Truth is, the “reason” we went into Iraq, I’m convinced, was a host of reasons that came together in a “perfect storm” of ideology, defense, and geopolitical/economic considerations. I’m not sure a decision this stupid could have survived the laugh test had there not been a number of different constituencies pushing for the invasion for their own reasons. That’s why no one reason ever seems to stand up to scrrutiny as the sole reason.

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  21. Carroll says:

    Well I never bought an adquate supply of oil for the US or the oil companies themselves as the sole reason or even a good reason for invading the ME. The FT did some good articles years ago before the invasion of Iraq interviewing oil exec’s who said occupying and controlling countries for oil was “more risky and expensive and LESS profitable” for them than the usual mutually agreed upon arrangements between them and the governments of countries involved. The oil factor may have been the brain fart of some individuals like Cheney but I don’t think this was a plan promoted or supported by the oil companies.
    Can anyone think of a reason, leaving out our invasions into the ME, why the ME oil countries would stop selling oil to the US? Why would they do that under normal circumstances? Do we just want to ‘control” “all” the oil supply to “everyone” else as part of our maintaining supremecy plan? That would be the only reason I could see in the oil theory. Invasions, chaos in the ME certainly don’t do anything positive for the price or availability of oil to oil companies,us or anyone else.
    And Friedman is an idiot and propogandist. You have to be really, really simple minded not to see the ideology behind his money to the bad guys “Friedman units” as they are commonly refered to now.
    If oil was in any way a major consideration it is becuase it is “part” of a larger agenda. Not the sole or only agenda. IMHO.

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  22. Czapniks says:

    I think Friedman is more persuasive here. Technologies that would give the US energy independence could and would be shared, reducing global demand and, yes, keeping money out of the hands of the bad guys. It would also give the US more credible military pressures and options (vis a vis Saudi Arabia or Iran, for example) than it currently has. Finally, anything that reduces mideast dependence on oil EXPORTS over the long term will generate pressures for moderation, as the region will have to find better ways of maintaining prosperity than digging holes. I certainly don’t think the status quo is desirable or sustainable.

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  23. JohnH says:

    Nice post, Scott. It’s extremely refreshing to have a senior, respected policymaker finally address the global oil problem and encourage public discourse on this almost insoluble problem. Far too long have our policy elite assumed that the public and their representatives should butt out of “the market,” except to subsidize it and save it when its excesses overcome it. Of course, “the market” could solve today’s oil problems, but at a cost that will be ruinous, so it’s time government get involved before it’s too late.
    However, I am still amazed that Lugar continues to deny that securing oil supplies was not the proximate cause of the war in Iraq (whatever “proximate” means in this context). Would he at least agree that controlling oil was one of the major proximate causes if not the proximate one?
    It absolutely defies common sense that an administration consisting of former oil executives would occupy the world’s potential #2 producer in a time of impending shortage without oil being a major, major consideration. Just amazing!!!
    Now that all the reasons given for going to war have been debunked, would our fearless leaders care to give us the truth? If not for oil, for what? Maybe war profiteering and oil?

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