The Roots Of War In Iraq

We have met the enemy and he is us. If this is (fair & balanced) petroleum avarice, so be it.

1.
[x Slate]
Oil Terror: Don't blame Osama for high gas prices.
By Daniel Gross

As the price of crude oil spiked in recent months, economists and energy pundits were stumped. The data on global economic growth, supply, and demand didn't seem to warrant the action in the markets. There had to be an alternative explanation.

Thus was born the "terror premium." In May, when crude topped $40 per barrel, economists and oil analysts began to argue that prices were being pushed up by fear of terrorism and political instability in major oil production centers—Nigeria, Venezuela, Russia, and particularly Iraq and Saudi Arabia. What's more, several big events slated for the summer—the Euro 2004 soccer tournament, the Athens Olympics, the U.S. political conventions—would provide targets for attacks. George Worthington, Asia Pacific chief economist for Thomson IFR, quantified the terror premium as $8 a barrel. The same month, the Economist likewise settled on $8, and the Kerry campaign noted that "Economists estimate that Americans are now paying a 'terror premium' of $10 to $15 per barrel for oil." In August, HSBC economist John Butler suggested the premium was somewhere between $10 and $15.

As evidence for the terror premium, analysts tended to cite the difference between the price of a barrel of crude oil to be delivered in the next month and the price of a barrel to be delivered much later. In March 2003, for example, just before the Iraq war started, light sweet crude traded at about $35 per barrel in the spot market while the price for a June 2004 contract was only about $25. In May, when oil hit $40, the price for a barrel of oil to be delivered in July 2005 was about $35. In other words, the market assumed that oil prices would return to historical means in the future once the temporary instability responsible for today's elevated prices dissipated.

But what if the theory of the temporary terrorism premium is wrong? After all, terror and instability are likely to be with us for the foreseeable future. And the absence of terrorist incidents at major events this summer didn't calm the oil market down. Quite the contrary: Oil prices are climbing and topped $50 a barrel this week. Could it be that the rise of oil prices is caused by global economic forces that are more powerful than terrorism?

As Barry Ritholtz points out, there may never have been much of a terror/instability premium in oil prices to begin with. After 9/11, when the world suddenly became aware of the ravages of terrorism, oil prices plummeted briefly. Why? Investors feared the global economy would contract, thus tamping down demand. Further, between April 2002 and January 2004, oil prices were relatively stable. (The price spiked sharply before the outbreak of hostilities in Iraq in early 2003 but quickly settled back down to prewar levels.) It's only in the past year that prices have taken off.

What's changed, then? Global economic growth, continued increases in demand from all corners of the globe, and concerns about capacity. Three years ago, Japan, the United States, and Europe were in a rare period of synchronous recession. Today, all three are growing, and China's appetite for industrial commodities is suddenly omnivorous. Perhaps the price of oil is rising because the long-term equation of supply, demand, and capacity has changed in the past few years.

The first reaction to such an assertion—by investors and by analysts—is denial. Analysts tend to forecast by analogy: Under generally similar macroeconomic circumstances in the past, oil prices behaved a certain way, so that's how they should behave next year. But perhaps we are at the beginning of a new era in which the old rules have been thrown out the window. The International Energy Agency noted that second-quarter oil demand grew by a whopping 5 percent, despite the higher oil prices. Meanwhile, the United States, the world's largest consumer of oil, produces less and less of its own oil and imports more and more each year; car sales are growing in China; and the huge economies of Latin America—Argentina and Brazil—seem to be recovering. If demand continues to grow rapidly, concerns over production capacity will likely increase, not lessen.


Daniel Gross is a journalist, editor, and New York Times best-selling author based in New York and Connecticut who specializes in three broad areas: business history, the links between business and politics, and the culture of Wall Street. A graduate of Cornell University, he holds an A.M. in American history from Harvard University, and has been a fellow at the New America Foundation. He has worked as a reporter at The New Republic and Bloomberg News, and has written articles, book reviews, essays, and commentary for more than 60 publications, including New York Times, Washington Post, Boston Globe, New York, New York Observer, Slate, American Prospect, and Washington Monthly. He currently contributes columns to Slate, Attache, and CEO.

He appears frequently in the media to discuss issues affecting Wall Street and Washington, and in 2000 coined the term “the politics of personal finance.” Gross has appeared on CNBC, CNN, Fox News Channel, The News Hour with Jim Lehrer, C-SPAN, Bloomberg Television, Reuters Television, and on more than 35 radio programs,, including Fresh Air with Terry Gross, and NPR’s “Marketplace.”

Gross is the author of three books: Forbes Greatest Business Stories of All Time (Wiley, 1996), a New York Times and Business Week best-seller that has been translated into seven languages; Bull Run: Wall Street, the Democrats, and the New Politics of Personal Finance (PublicAffairs, 2000), and Generations of Corning: 150 Years in the Life of a Global Corporation, 1851-2001 (Oxford University Press, 2001), co-authored with Davis Dyer.
Since 1999, Gross has edited STERNbusiness, the semi-annual management journal published by New York University’s Stern School of Business.

In collaboration with design and editorial professionals, Gross has worked with individuals and companies in areas such as executive recruiting, management consulting, media, insurance and utilities, and provided editorial services including speechwriting, ghostwriting, business plans and annual reports, op-ed articles, and book packaging.

Copyright © 2004 Slate Magazine

2.
[x The Boston Globe]
What I hope they'll say: We're a selfish nation
by Derrick Z. Jackson

During a football commercial break, my TV turned into a kaleidoscope for a crazily spinning Hummer. During another timeout, a Cadillac spun around a dance floor, bullying several foreign luxury cars off to the side.

No other metaphors are necessary to understand the United States on the eve of the presidential debates.

About 1,050 U.S. soldiers are dead in Iraq. Up to 15,000 Iraqi civilians are dead. None of that has persuaded us Americans to put down the kaleidoscope and stop spinning in our own orbits. No amount of mass sacrifice abroad has resulted in mass sacrifice at home. No amount of failure in the original mission of finding weapons of mass destruction in Iraq has made us question the fantasy of bullying the world. Our toys really are us. We're big, we're bad, and you Euro girlie-cars, we're cutting in.

It would be sad to conclude someday that our leaders sent our soldiers halfway around the world to die for our cars. In the absence of weapons of mass destruction and in the absence of Saddam Hussein being tied to Sept. 11, there is not much left to conclude. On its current Web site, the Economist Intelligence Unit says "the biggest potential prize" and an "ideal prospect" for international oil companies is Iraq, home to the world's second- or third-largest oil reserves. In 1993, the deaths of a mere 18 Army Rangers in resource-starved Somalia made us flee that country.

Today we accept 58 times more American fatalities to secure Iraq. We accept the death of human beings who just finished being boys and girls, yet we have not accepted the notion that to avoid losing more of them, the rest of us must grow up. In 1991, during the first Gulf War to defend Kuwait from Saddam, Americans were consuming 25.2 percent of the world's oil. Today the figure is 26.1 percent, according to statistics kept by British Petroleum.

A huge part of that consumption is our insistence on huge cars, symbolized by Hummers and Caddys. But almost everything about our lifestyles, from our obesity epidemic to our homes, reeks of not giving one whit about being only 4 percent of the planet's population yet creating a quarter of the greenhouse gases that contribute to global warming. Even though the size of the American family has shrunk over the last half-century, the size of the average American home has more than doubled, with a single home in the suburbs loaded with more technology than whole villages in the developing world.

If any of this comes up during the debates, it will be a miracle. The last thing voters want to hear from a presidential candidate is that a more secure America means a less selfish America. You certainly will not hear that from President Bush, who says he can drill us into energy independence, even if that takes out a few snow geese and polar bears up in the Arctic. Nor will you probably hear much about sacrifice from his challenger, John Kerry. The Massachusetts senator has a voting record that earned him the endorsement of many environmental groups. But in the heat of pandering to voters, Kerry also said: "You want to drive a great big SUV? Terrific. That's America."

It should be a national shame that more than 1,000 soldiers have died in Iraq, and to this day the only sacrifice President Bush has asked of Americans was so trivial as to be utterly American. "One of the great goals of this nation's war is to restore public confidence in the airline industry," Bush said 16 days after 9/11. "It's to tell the traveling public: Get on board. Do your business around the country. Fly and enjoy America's great destination spots. Get down to Disney World in Florida."

Hummers, Caddys and Disney World. That's America. A Martian landing in front of an American TV set on a Sunday afternoon would conclude that that is what our modern wars are for.

The presidential debates start tonight. Bush and Kerry will say they can best finish the job in Iraq and make America more secure. Neither has dared to tell Americans that the job begins at home. The debate will matter when one of them asks us to put down the kaleidoscope and end the fantasy of a chicken in every pot and a gas guzzler in every garage.

Derrick Z. Jackson was a 2001 finalist for the Pulitzer Prize in commentary and a winner of commentary awards from the National Education Writers Association and the Unity Awards in Media from Lincoln University in Missouri.

A Globe columnist since 1988, Jackson is a five-time winner and 10-time finalist for political and sports commentary from the National Association of Black Journalists. He is a three-time winner of the Sword of Hope commentary award from the New England Division of the American Cancer Society.

Prior to joining the Globe, Jackson won several awards at Newsday, including the 1985 Columbia University Meyer Berger Award for coverage of New York City.

Jackson, 45, is a native of Milwaukee, WI, and a 1976 graduate of the University of Wisconsin at Milwaukee. Jackson was a Nieman Fellow in Journalism at Harvard University in 1984. He holds honorary degrees from the Episcopal Divinity School in Cambridge, MA, Salem State College, and a human rights award from Curry College in Milton, MA

Copyright © 2004 The Boston Globe