$20 to $25 per barrel

This space is nearly always devoted to topics exclusively focused on Color Country. But occasionally, I see a general news item that seems to me to be missed, so I comment about it. I was reading a financial article in the Sunday New York Times and I saw something like that. A column on investment quoted a financial analyst as saying, “Over the last two years, there has been a fairly constant premium of $20 to $25 a barrel built into oil prices because of geopolitical concerns.”

It seemed to me that this might be a starting point for some home-grown analysis to discover the overall impact of this extra cost.

Back when we were closing in on the crimes of “I am not a crook” Nixon, there was a phrase that the informant “Deep Throat” used to explain what Nixon and his people were really doing: “Follow the money.” It makes a lot of sense for most things. If what people are saying or doing doesn’t add up, “Follow the money.”

And there is a LOT of money to follow! I used the low side of the estimate of an extra $20 to $25 per barrel to calculate just how much money that added up to. The world consumes about 85 million barrels of oil every day. So the extra that the whole world pays for oil due to “geopolitical concerns” is around $1.7 billion every day. That’s just the extra cost, not the total cost. Saudi Arabia alone nets an extra $220 million per day. Over two years that would be an extra $160 BILLION in Saudi pockets. If you wanted to extrapolate that to the time span of the Iraq war, you get an extra half a TRILLION dollars or more.

Let’s look at it from the point of view of the United States. The US consumes 20 million barrels of oil per day. That means we pay $400 million extra per day just because world events are so tense. Over the term of the Iraq war, a low guess of the extra we pay would be well over $500 trillion.

500 Trillion Dollars! Extra! The entire United States federal budget was only 12 trillion over the same time period, even including the Iraq war. That’s only about two and a half percent of just the extra money we pay for oil due to the wars being fought around the world.

As Will Rogers said, all I know is what I read in the papers, but maybe this helps explain why 15 of the 19 9/11 hijackers (and Osama) were Saudi. Why the pot is kept boiling by Saudi money sources and religious schools. Why Sunni Saudi supports the cause of the Shia Iranians. And all this when the Saudi royal family is said to be such good friends with the Bush family. After all, both Bush and Cheney were in the oil business before getting elected and starting this war.

Add another 500 trillion dollars to the cost of the Iraq war and …

Follow the money!