Iraqi Oil Production

Michael Makovsky at the Weekly Standard points out another benefit to the troop surge in Iraq: to note, a 500,000 barrel a day increase in Iraqi oil production - the same amount requested by the US government when pleading with the Saudis to increase their own production. The Iraqis are now back to their pre-war production levels of 2.5 million per day, with 80% of that destined for export. Even better, with just a little investment, the nation could produce quite a bit more - even more than the 3.5 million barrels a day it produced prior to the first Gulf War.

"Iraq has great potential as an oil producer and exporter. It is perhaps the least developed oil exporting country in the world with already the third largest proven oil reserves, and produced as much as 3.5 million barrels per day in 1990 before the Kuwait invasion, the Gulf war, and sanctions. Iraqis have long had plans to reach more than 6 million barrels per day of production, which could be achieved within a decade with security and foreign investment. But despite the obvious potential and recent progress, political factors in both the United States and Iraq continue to constrain Iraq's oil sector."

One obstacle has been the Iraqi govenment itself, given that the legislature has still not formulated an agreement over revenue sharing between the country's various factions, and a lack of expertise in the oil ministry. Another issue is meddling by the American government in the form of Senators John Kerry (D- Mass) and Charles Schumer (D-New York). They disingenously argue that without a revenue sharing arrangement, increased production will lead to more factional conflict in Iraq - even as production has increased with an ebb in factional conflict. They also object to Americna firms getting technical service deals in Iraq, (in their minds, this gives the appearance that we really did go to war in Iraq over oil) even though American pil firms are probably the best qualified to help increase production.

If Iraq were to increase their production another 500,000 barrels a day, it would represent a 20% increase in spare global oil prodcution capacity. I have to wonder what the impact of that would be at the pump.