Oil Wars and Greenie Schemes

February 27th, 2007

Looks like Bush has a grip on the puppet government [and the oil fields] in Iraq but that’s still not a “known known” … NObody knows what they’ll do next [Dub OR the "government."] The instability in both camps is palpable, so it remains up in the air … like everything else. All we know for sure is … that’s why we’re there – no amount of smoke or mirrors has changed my opinion since 2003.

Juan Cole, an AP piece out of al Jazeerah and then a break-down of the oil “plan.”

Then … from our alternate Universe … big Greenie news and links; hope to counterpoint darkness.

Jude

Al Gore, Global Warming, the Oscars and the Iraq War
Juan Cole, Informed Comment
Monday, February 26, 2007

That the Al Gore film “An Inconvenient Truth” was legitimized by an Oscar Sunday night for “Best Documentary” has wider implications for the future of the United States than it might seem, though admittedly it is a small step.

We know that Exxon Mobil is a significant funder of the American Enterprise Institute and has used it to attempt to bribe “scientists” to cast doubt on global warming. Lee Raymond, who was CEO of Exxon Mobil until 2005, is the vice-chair of AEI’s board of directors.

We also know that the American Enterprise Institute is the most hawkish of the Washington “think tanks,” and that its staffers were key to thinking up and promoting the Iraq War with lies and propaganda.

A=B, B=C, therefore A=C. Exxon Mobil is a big behind the scenes player in the Iraq War by virtue of its support for AEI. In fact, I think a boycott of its gas stations is in order until the company cuts off AEI and stops promoting the Iraq War and muddying the waters on global warming. (It pledged to do the latter in the past, but obviously was lying).

So the point is that the American Enterprise Institute symbolizes the intersection of Oil and War, which are the two most menacing threats to the future of America.

Only by a Manhattan Project-scale government effort to develop green energy can we hope to avert the worst consequences of global warming, which is likely to raise sea levels at least a foot, and possibly 7 feet over the next century or century and a half. (That would put a lot of cities on both coasts under water). The arctic and antarctic ice shelfs are already falling into the ocean at rates that have astonished climate scientists. The arctic alone lost perennial ice cover the size of Texas in 2004-2005! Liquid water takes up more space than ice, and the loss of white ice cover is bad because it radiates a lot of sunlight back out to space. So it is a double whammy.

But the other problem with petroleum and gas as sources of energy is that they are getting scarcer. No big new fields have been found for some time. And in one recent year China generated 40% of new demand for petroleum. If a billion Chinese and a billion Indians adopt the American lifestyle and all want 1.5 automobiles and superhighways to crawl along on, the existing stocks of oil will become objects of fierce competition. This process has already begun, and there is a sea change from the mid-1990s, when oil was still cheap and competition for it limited.

Iraq is an Oil War in the mind of politicians like Dick Cheney. It was necessary to deny it to China and other rivals thirty to fifty years in the future. It was necessary to open its vast petroleum fields up for exploration and cast aside anti-American Baath socialism.

Likewise, the religious rigidity of the Pushtun peoples of Helmand province is not the real reason for the US insistence on occupying Afghanistan. It is the vast Turkmenistan and Uzbekistan gas fields that Cheney has his eye on. It was the US hope to use a pipeline from Turkmenistan to supply Pakistan and India, and so forestall a deal by those two countries with Iran. The inability of the Bush administration to calm things down in Afghanistan sufficiently for anyone to dream of putting in such a pipeline and having it avoid routine sabotage has made it likely that Iran will break out of the Bush boycott toward the East.

Hunger for future rights to petroleum and positioning the US to remain a superpower in a world of hydrocarbon scarcity is also driving the campaign to get up a war against Iran. Why can Pakistan have a nuclear weapon, and that is all right, but Iran cannot? Pakistan has very little petroleum. Iran has a lot, and maybe 750 trillion cubic feet of gas in the southwest. If it gets a bomb, regime change becomes impossible, and if Iran wants to tie its supplies up in proprietary contracts with China and India, locking out the United States, it will be able to do so.

Continued heavy dependence on gas and oil therefore not only turns the world into a hothouse, with rising seas, ever more destructive hurricanes, and possibly disastrous shifts in the ocean currents, but it also drives the United States to more and more wars.

And, note that the wars are not even successful in allowing a practical oil grab of the sort Cheney and Lee Raymond dreamed of.

Indeed, you could now, in retrospect, turn their whole argument around on them. US militarism cannot secure petroleum and gas supplies from places such as Iraq, because the pipelines are so easily sabotaged and local nationalisms and religious activism make it impossible for people to accept that kind of US hegemony.

Since the Pentagon cannot practically speaking hope to safeguard US petroleum supplies from the Gulf, national security requires a massive and rapid research and development program of green energy. A lot of green technology, especially solar, would come down in price rapidly if enough government money were thrown at it. We need to press Congress on this, and maybe Californians can craft some of their famous referendum items. That would be one way to promote a new generation of electric cars.

Green energy– wind, thermal, solar, maybe ultimately fusion, etc.– is what would allow the US to retain its autonomy and independence into the next century, and what would allow it to avoid losing more cities the way Bush and Cheney lost New Orleans. Oil and War will, in contrast, ruin us all. ++

Maliki Cabinet Approves Draft Oil Law, Allowing US Oil Companies Substantial Share of Iraqi Oil Revenues and Big Tax Breaks
AP Headline: Iraqi Cabinet Approves Draft Oil Law
ROBERT H. REID, AP/al Jazeerah
Feb 26, 2007

BAGHDAD, Iraq (AP) — The Iraqi Cabinet approved draft legislation Monday to manage the country’s vast oil industry and divide its wealth among the population, a key U.S. benchmark for progress in this country. The legislation now goes to parliament for approval.

Prime Minister Nouri al-Maliki announced the decision after the Kurds accepted the draft oil bill over the weekend - nearly two months after the government’s own deadline for enacting a new oil law.

Al-Maliki said the measures would be “another foundation stone” in building a new Iraq, which relies on oil revenues for about 90 percent of its national budget.

It was unclear when 275-member parliament will vote on the measure. The legislature reconvenes early next month.

All major parties have agreed to work for approval of the measure by May, but there are no guarantees in Iraq’s fractious, sectarian political system.

“The draft law represents a major breakthrough for Iraq’s economic and political transition,” said Deputy Prime Minister Burham Saleh, a Kurd. “I very much hope the main political groups will rise to the occasion” and approve the bill in parliament.

Iraq has some of the world’s largest petroleum reserves, and supporters hope the legislation will encourage major oil companies to invest billions - if the security situation improves.

Under the measure, revenues will be distributed to all 18 provinces based on population size - a concession to the Sunnis whose central and western homeland has relatively few proven reserves. Most of Iraq’s oil is in the Kurdish north and Shiite south, and many Sunnis fear they would be cut out of a fair share.

However, the bill had been bogged down for months in infighting between al-Maliki’s Shi’i-led government and the self-ruled Kurdish administration of northern Iraq over who had the final say in negotiating contracts and managing the revenues.

In Washington, White House spokesman Tony Snow called a new oil law the “key linchpin” in Iraq’s recovery because it gives “everybody a shared economic interest in working together.”

The haggling went to the heart of the Iraqi crisis - the failure of religious and ethnic parties to compromise in the interest of saving the nation. Without such compromises, U.S. commanders doubt that military crackdowns and the current U.S. and Iraqi security operation can produce long-term stability.

The Bush administration, facing growing pressure to end the Iraq conflict, has been urging the Iraqis to finish the new oil law - one of the benchmarks that al-Maliki’s government had pledged to meet by the end of last year.

“That being done, then the Iraqis can turn to other things, such as constitutional reform, election reform” and allowing many Sunnis to return to public life, Snow said.

The Iraqis also missed a year-end deadline to establish provincial elections, reverse regulations that exclude many Sunnis from government posts, and grant limited political amnesty to some insurgents.

Under the oil legislation, regional administrations will be empowered to negotiate contracts with international oil companies. The contracts will be reviewed by a central government committee in Baghdad headed by the prime minister.

(Before the 2003 US-Led NATO invasion of Iraq, oil was produced and marketed by the Iraq oil company, which disappeared after the invasion and now replaced by foreign oil companies).

A new law is needed, most outside experts believe, to encourage international companies to pour billions into Iraq to repair pipelines, upgrade wells, develop new fields and begin to exploit the country’s vast petroleum reserves, estimated at about 115 billion barrels.

According to Iraqis familiar with the deliberations, the draft law would offer international oil companies several methods to invest, including production-sharing agreements. Those would give U.S. and other international companies a substantial share of the oil revenues to recover their initial investments and then allow them big tax breaks.

That angers some Iraqis, who believe foreigners will get too much control of the nation’s wealth.

Some critics of the law believe the draft gives the regions too much control. The Kurds currently have the only self-governing region in Iraq, although the 2005 constitution allows other areas to form them too, such as the Shi’is in the oil-rich south.

If implemented, “The balance of power in the management of Iraq’s oil and gas resources would have shifted alarmingly from the center to the regions,” former oil official Tariq Shafiq, who helped draft an early version, told an oil seminar in Amman, Jordan, this month.

The tortuous negotiations are reminiscent of the intense American arm-twisting, public pressure and backroom dealmaking that have pushed nearly every step in Iraq’s political transformation since the U.S.-led invasion nearly four years ago.

The process sometimes has produced agreements that enabled Washington to declare success but ultimately created a new set of problems - such as a divisive 2005 election that invigorated the Sunni resistance to the US occupation, and a new constitution that the U.S. now acknowledges must be amended substantially to bring peace.

Some critics fear the oil law will become the latest example.

“The draft law is very dangerous,” former oil official Faleh al-Khayat told the Amman seminar. “It should not be implemented at this time.” ++

Oil Grab
The Secret Scheme to Split Iraq
February 27, 2007
ANTONIA JUHASZ and RAED JARRAR, Counter Punch

While debate rages in the United States about the military in Iraq, an equally important decision is being made inside of Iraq–the future of Iraq’s oil. A new Iraqi law proposes to open the country’s currently nationalized oil system to foreign corporate control. But emblematic of the flawed promotion of “democracy” by the Bush administration, this new law is news to most Iraqi politicians.

A leaked copy of the proposed hydrocarbon law appeared on the Internet last week at the same time that it was introduced to the Iraqi Council of Ministers. The law is expected to go to the Iraqi Council of Representatives within weeks. Yet the Internet version was the first look that most members of Iraq’s parliament had of the new law.

Many Iraqi oil experts, like Fouad Al-Ameer who was responsible for the leak, think that this law is not an urgent item on the country’s agenda. Other observers and analysis share Al-Ameer’s views and believe the Bush administration, foreign oil companies, and the International Monetary Fund are rushing the Iraqi government to pass the law.

Not every aspect of the law is harmful to Iraq. However, the current language favors the interests of foreign oil corporations over the economic security and development of Iraq. The law’s key negative components harm Iraq’s national sovereignty, financial security, territorial integrity, and democracy.

National Sovereignty and Financial Security

The new oil law gives foreign corporations access to almost every sector of Iraq’s oil and natural gas industry. This includes service contracts on existing fields that are already being developed and that are managed and operated by the Iraqi National Oil Company (INOC). For fields that have already been discovered, but not yet developed, the proposed law stipulates that INOC will have to be a partner on these contracts. But for as-yet-undiscovered fields, neither INOC nor private Iraqi companies receive preference in new exploration and development. Foreign companies have full access to these contracts.

The exploration and production contracts give firms exclusive control of fields for up to 35 years including contracts that guarantee profits for 25-years. A foreign company, if hired, is not required to partner with an Iraqi company or reinvest any of its money in the Iraqi economy. It’s not obligated to hire Iraqi workers train Iraqi workers, or transfer technology.

The current law remains silent on the type of contracts that the Iraqi government can use. The law establishes a new Iraqi Federal Oil and Gas Council with ultimate decision-making authority over the types of contracts that will be employed. This Council will include, among others, “executive managers of from important related petroleum companies.” Thus, it is possible that foreign oil company executives could sit on the Council. It would be unprecedented for a sovereign country to have, for instance, an executive of ExxonMobil on the board of its key oil and gas decision-making body.

The law also does not appear to restrict foreign corporate executives from making decisions on their own contracts. Nor does there appear to be a “quorum” requirement. Thus, if only five members of the Federal Oil and Gas Council met–one from ExxonMobil, Shell, ChevronTexaco, and two Iraqis–the foreign company representatives would apparently be permitted to approve contacts for themselves.

Under the proposed law, the Council has the ultimate power and authority to approve and re-write any contract using whichever model it prefers if a “2/3 majority of the members in attendance” agree. Early drafts of the bill, and the proposed model by the U.S. advocate very unfair, and unconventional for Iraq, models such as Production Sharing Agreements (PSAs) which would set long term contracts with unfair conditions that may lead to the loss of hundreds of billions of dollars of the Iraqi oil money as profits to foreign companies.

The Council will also decide the fate of the existing exploration and production contracts already signed with the French, Chinese, and Russians, among others.

The law does not clarify who ultimately controls production levels. The contractee–the INOC, foreign, or domestic firms–appears to have the right to determine levels of production. However, a clause reads, “In the event that, for national policy considerations, there is a need to introduce limitations on the national level of Petroleum Production, such limitations shall be applied in a fair and equitable manner and on a pro-rata basis for each Contract Area on the basis of approved Field Development Plans.” The clause does not indicate who makes this decision, what a “fair and equitable manner” means, or how it is enforced. If foreign companies, rather than the Iraqi government, ultimately have control over production levels, then Iraq’s relationship to OPEC and other similar organizations would be deeply threatened.

Democracy and Territorial Integrity

Many Iraqi oil experts are already referring to the draft law as the “Split Iraq Fund,” arguing that it facilitates plans for splitting Iraq into three ethnic/religious regions. The experts believe the law undermines the central government and shifts important decision-making and responsibilities to the regional entities. This shift could serve as the foundation for establishing three new independent states, which is the goal of a number of separatist leaders.

The law opens the possibility of the regions taking control of Iraq’s oil, but it also maintains the possibility of the central government retaining control. In fact, the law was written in a vague manner to help ensure passage, a ploy reminiscent of the passage of the Iraqi constitution. There is a significant conflict between the Bush administration and others in Iraq who would like ultimate authority for Iraq’s oil to rest with the central government and those who would like to see the nation split in three. Both groups are powerful in Iraq. Both groups have been mollified, for now, to ensure the law’s passage.

But two very different outcomes are possible. If the central government remains the ultimate decision-making authority in Iraq, then the Iraq Federal Oil and Gas Council will exercise power over the regions. And if the regions emerge as the strongest power in Iraq, then the Council could simply become a silent rubber stamp, enforcing the will of the regions. The same lack of clarity exists in Iraq’s constitution.

The daily lives of most people in Iraq are overwhelmed with meeting basic needs. They are unaware of the details and full nature of the oil law shortly to be considered in parliament. Their parliamentarians, in turn, have not been included in the debate over the law and were unable to even read the draft until it was leaked on the Internet. Those Iraqis able to make their voices heard on the oil law want more time. They urge postponing a decision until Iraqis have their own sovereign state without a foreign occupation.

Passing this oil law while the political future of Iraq is unclear can only further the existing schisms in the Iraqi government. Forcing its passage will achieve nothing more than an increase in the levels of violence, anger, and instability in Iraq and a prolongation of the U.S. occupation. ++

Antonia Juhasz is the Ida Tarbell Fellow at Oil Change International, a Visiting Scholar with the Institute for Policy Studies, and author of The Bush Agenda: Invading the World, One Economy at a Time (HarperCollins, April 2006).

Raed Jarrar is Iraq Project Director for Global Exchange. He is an Iraqi blogger and architect. He runs a blog called “Raed in the Middle.”

Wall Street adds climate change to bottom line
The environmentally tinged takeover of TXU Corp. illustrates global warming’s increased financial relevance.
Ron Scherer, The Christian Science Monitor
2/27/07

NEW YORK - Wall Street now views the color green as something other than money.

In the latest sign that global climate change is becoming a major factor for investors, potentially the largest private takeover in the nation’s history has environmentalists’ fingerprints all over it.

A consortium of private investors announced Monday they would pay almost $45 billion to acquire TXU Corp., which generates electricity in the state of Texas. What makes the deal more than just another gigantic financial transaction is that the buyers of the company consulted with environmental groups and agreed to sharply scale back plans to build new coal-fired power plants.

“This is a real breakthrough, an indication investors are paying attention to the real financial risk associated with climate change,” says Dan Bakal, director of electric power programs at Ceres, a Boston-based environmental group that advises investors controlling $3.7 trillion in assets. “It means Wall Street is really beginning to pay attention.”

Wall Street analysts believe the deal could mean that future takeovers will start to factor in the cost of corporate carbon emissions.

This could affect mergers and acquisitions in a broad range of industries, including manufacturing companies, the auto industry, mining companies, and other utilities.

“What it shows is the environment has a much greater presence than in the past and the issue of global warming is under increased scrutiny,” says Sam Stovall, chief investment strategist at Standard & Poor’s in New York. “These are additional factors that must be addressed in future mergers.”

In fact, there are some signs Wall Street is trying to get up to speed as quickly as possible. For the past three years, the World Resources Institute (WRI), an environmental think tank in Washington, D.C., has been working with investment banks and securities firms such as Merrill Lynch, Citigroup, and Goldman Sachs to teach them how to establish their own carbon “footprint” and analyze other companies’ emissions.

Analysts eye carbon ‘footprint’

By calculating the footprint – the amount of greenhouse gases a company pumps into the atmosphere – analysts can begin to forecast the potential risks of climate-change lawsuits and future costs of any greenhouse-gas regulations.

“It’s been a slow start, but we have been pleased to see financial institutions begin to grapple with those systems,” says Jennifer Layke, deputy director of climate and energy for WRI. “But this is the first time we have seen a set of investors reach out to the environmental community around the terms of a new investment deal.”

Last year, the New York Stock Exchange began to educate CEOs about the issue. It sponsored a lunch with former Vice President Al Gore, who gave a slide-show version of his Oscar-winning documentary, “An Inconvenient Truth.”

Investors call for carbon accounting

This year there will be a record number of shareholder resolutions asking companies about their carbon footprint.

Normally, shareholder propositions don’t receive much traction in the corporate world.

But, the proposals have been receiving a significant amount of institutional support from such large shareholders as Calpers, the California public-employee pension fund. And there is increasing concern that corporate boards may have a liability if they don’t start to plan for future limits on carbon emissions.

Pressure was already building on TXU to scale back its proposal to build 11 coal-fired power plants. Over the weekend, Ceres issued a report that looked at the potential carbon taxes the utility would face, assuming that Congress or the states begin to enact such charges.

“Our report made some reasonable assumptions, including that none of the costs would be grandfathered in,” says Mr. Bakal. “That means 100 percent of the carbon dioxide must face a carbon tax, which we estimate could be as much as $780 million per year, perhaps for 15 years.”

At the same time, the Ceres report called into question some of the revenue and cost assumptions that TXU had made to justify the new plants.

“We think they had overestimated the amount of growth and underestimated the amount of the coming carbon controls and the cost of complying with the existing Clean Air Act,” says David Gardiner, one of the authors of the report and a sustainability consultant in Arlington, Va.

TXU buyers moved to ease opposition

Some of these issues resonated with the group of TXU buyers, which includes the Texas Pacific Group, Goldman Sachs, and Kohlberg Kravis Roberts & Co. Texas Pacific and KKR are private equity groups that amass money from pension funds and wealthy individuals and buy companies.

Monday, in Dallas, the buyers’ group said they would drop eight of the 11 new coal-fired power plants if their deal succeeds. They also said they would roll back electricity rates by 10 percent. And, they indicated they would work towards meeting any national emissions caps in the future.

“It’s a sign people are paying attention,” says Rodney Taylor, managing director of the environmental-services group at Aon, a large Chicago-based insurance broker. “From a financial standpoint, it also says something about the perception of where energy costs are going. KKR is kind of a medium-term investor, so they must be looking at energy costs going up sharply over the next three to five years.” ++

Is It Good that Big Businesses Are Going Green?
Jason Mark, Kevin Danaher, Grist Magazine
Can Americans retain their bad habits of overconsumption but simply switch to earth-friendly products? In truth, we are not going to spend our way out of a social and ecological crisis 500 years in the making.

Green-Collar Jobs for Urban America
Van Jones, Ben Wyskida, YES! Magazine
The city of Oakland is creating jobs as unlikely allies push a green and local agenda to revitalize a depressed urban economy.

Will a Multi-Million Dollar Contest Be the Answer to Global Warming?
Kelpie Wilson, TruthOut.org
Sir Richard Branson is offering $25 million for anyone who can invent new technologies to get carbon out of the atmosphere. But his contest might do more harm than good.

Careful Consumption Alone Can’t Save the World’s Fish
Jennifer Jaquet, The Tyee
With fish suppliers changing the names of seafood to avoid catch limits, the only way to preserve fish stocks is by electing politicians committed to conservation and tight regulation.

Love Is In the Air for Big Business and Mainstream Enviros
Amanda Griscom Little, Grist Magazine
The on-again-off-again flirtation between big business and the mainstream environmental movement seems to be progressing into a full-on steamy love affair — and perhaps even a committed, long-term relationship.

Ready, Ames, Fire
Bill McKibben, Grist Magazine
People in the Midwest are learning that ethanol will not be enough to fight global warming.

“So keep fightin’ for freedom and justice, beloveds, but don’t you forget to have fun doin’ it. Lord, let your laughter ring forth. Be outrageous, ridicule the fraidy-cats, rejoice in all the oddities that freedom can produce. And when you get through kickin’ ass and celebratin’ the sheer joy of a good fight, be sure to tell those who come after how much fun it was.”
~ Molly Ivins, 1944 - 2007

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Entry Filed under: Political Waves