Who's responsible for the high price of gas? Pure and simple, Democrats in Congress. They made most of the U.S. off limits to drilling years ago and as a consequence U.S. reserves have been dwindling and our dependence on hostile and unstable foreign oil producers has increased.
It's in America's interest for world oil production to increase. One of the most promising untapped source -- beside the U.S. itself -- is Iraq. With violence down and attacks on antiquated pipelines and other oil faciliites mostly a matter of the past, it was time, the Iraqi govenment thought, to start rebuilding its oil infrastructure. So it drafted no bid contracts to hire Western oil companies -- Exxon Mobil and Chevron (American), BP (British), Shell (British/Dutch) and Total (French) -- to put their expertise to work to help increase its oil production.
A good deal for everyone, right? Well, not everyone thought so. Three Democratic senators John Kerry of Massachusetts, Chuck Schumer of New York and Claire McCaskill of Missouri objected, created a public uproar in the U.S. and Iraq and as a result Iraq canceled the contracts with the Western oil companies. Now, months later Iraq hired the Chinese to do the job.
The partisan meddling by Kerry, Schumer and McCaskill in foreign affairs in an attempt to dicate foreign policy and to punish American oil companies has delayed any increase in the production of oil from Iraq and cost these oil companies revenues, jobs and the chance to be at the head of the line for future work.
That's disgusting. Jeff Beatty, running to unseat John Kerry this November, released an ad today pointing out that Kerry has done nothing in his years -- decades, actually -- for oil indepedence. In fact, Kerry has repeatedly voted to ban drilling in the U.S. along with his fellow Democrats, which is a major reason why the U.S. now faces this grave national security risk. Now add in this latest blow to world oil production by his meddling in Iraq. Like Obama privately seeking to get Iraq to hold off working out a timetable for American troop withdrawal until after "he's" elected, the Kerry/Schumer/McCaskill meddling, in the words of Fred Kagan, is "harmful to American interests and our prospects in Iraq.
Below is Jeff Beatty's new ad and Fred Kagan's report on how Kerry,Schumer and McCaskill's meddling gave China the first big new oil contract in Iraq.
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By Frederick W. Kagan
The Weekly Standard | 9/17/2008
Yesterday morning, I had the honor of testifying before the House Budget Committee on the situation in Iraq. The discussion was polite and civilized, and was a reminder that even now it is possible for people who disagree about what to do in Iraq to argue without raised voices and disagreeable language (apart from the Code Pink women, yelling for those who think that shouting opponents down is preferable to arguing with them). Congressman Brian Baird once again demonstrated that it is possible even for those who bitterly opposed the war to recognize the importance of doing the right thing now--as well as the possibility of crossing the Republican-Democrat sectarian divide on this issue. One question came up repeatedly in the hearing that deserves more of an answer than it got, however: Why, after all the assistance we've given to Iraq over the past five years, was the first major Iraqi oil deal signed with China and not with an American or even a western company? The answer is, in part, because three Democratic senators intervened in Iraqi domestic politics earlier this year to prevent Iraq from signing short-term agreements with Exxon Mobil, Shell, Total, Chevron, and BP.
The Iraqi government was poised to sign no-bid contracts with those firms this summer to help make immediate and needed improvements in Iraq's oil infrastructure. The result would have been significant foreign investment in Iraq, an expansion of Iraqi government revenues, and an increase in the global supply of oil. One would have thought that leading Democratic senators who claim to be interested in finding other sources of funding to replace American dollars in Iraq, in helping Iraq spend its own money on its own people, and in lowering the price of gasoline for American citizens, would have been all for it. Instead, Senators Chuck Schumer, John Kerry, and Claire McCaskill wrote a letter to Secretary of State Rice asking her "to persuade the GOI [Government of Iraq] to refrain from signing contracts with multinational oil companies until a hydrocarbon law is in effect in Iraq." The Bush administration wisely refused to do so, but the resulting media hooraw in Iraq led to the cancellation of the contracts, and helps to explain why Iraq is doing oil deals instead with China.
Senators Schumer, McCaskill, and Kerry claimed to be acting from the purest of motives: "It is our fear that this action by the Iraqi government could further deepen political tensions in Iraq and put our service members in even great danger." For that reason, presumably, Schumer went so far as to ask the senior vice president of Exxon "if his company would agree to wait until the GOI produced a fair, equitable, and transparent hydrocarbon revenue sharing law before it signed any long-term agreement with the GOI." Exxon naturally refused, but Schumer managed to get the deal killed anyway. But the ostensible premise of the senators' objections was false--Iraq may not have a hydrocarbons law, but the central government has been sharing oil revenues equitably and there is no reason at all to imagine that signing the deals would have generated increased violence (and this was certainly not the view of American civilian and military officials on the ground in Iraq at the time). It is certain that killing the deals has delayed the maturation of Iraq's oil industry without producing the desired hydrocarbons legislation.
Nor is it entirely clear what the senators' motivations were. Their release (available along with their letter to Secretary Rice at the New York Observer quoted Senator McCaskill as follows: "'It's bad enough that we have no-bid contracts being awarded for work in Iraq. It's bad enough that the big oil companies continue to receive government handouts while they post record breaking profits. But now the most profitable companies in the universe--America's biggest oil companies--stand to reap the rewards of this no-bid contract on top of it all,' McCaskill said. 'It doesn't take a rocket scientist to connect these dots--big oil is running Washington and now they're running Baghdad. There is no reason under the sun not to halt these agreements until we get revenue sharing in place,' McCaskill said." So was this about what's best for Iraq and American interests there or about nailing "big oil" in an election year?
Either way, like Barack Obama's asking the Iraqi foreign minister to hold off on a strategic framework agreement until after the American election, it was nothing but harmful to American interests and our prospects in Iraq.
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Frederick W. Kagan is a resident scholar at the American Enterprise Institute and author of Finding the Target: The Transformation of the American Military (Encounter).
