One Final Solid For Big Oil

If Washington conservatives are worried about the upcoming federal elections, then you can bet Big Oil is worried too.

Sure, at the moment, Senate conservatives can filibuster legislation that would repeal oil subsidies, implement tax policy that prods oil companies to invest in renewable energy and refinery expansion, and crack down on oil speculators.

But with a big shift in Congress, that filibuster firewall may crumble after November.

So the Bush administration appears to be trying lock in whatever goodies it can for Big Oil before it exits, stage far right.

First, a last ditch attempt to exploit high gas prices to make a bogus case [1] for lifting the federal moratorium on coastal drilling. [2]

And today we learn from the New York Times that American and European oil companies are about to get no-bid contracts in Iraq, [3] squeezing out Russian, Chinese and Indian companies that don't have US-based executives bankrolling conservative politicians [4]. And as the Chicago Tribune reports, this initial move towards privatizing Iraqi oil is happening over the opposition of the Iraqi people: [5]

These are service contracts, with Iraqi leaders insisting that they are not privatizing their oil. Yet the agreements, expected to be reached by month's end, certainly place these firms in a position for more influence down the road.

"It's been a long road, but the oil companies seem set to get much of what they have been seeking,'' writes James Paul, executive director of the Global Policy Forum. "The Iraqi public is overwhelmingly opposed to this privatization of Iraqi oil, just like they are overwhelmingly opposed to the so-called security pact with the U.S. What's interesting is that the New York Times noted the historic sweep of Western oil companies in Iraq -- these are the very same companies that controlled all of Iraq's oil 80 years ago."

Secretary of State Condi Rice is insisting [6] that the Bush administration has nothing to do with the deal. Please. Iraq is occupied territory, with a pseudo-democratic government propped up by American troops.

The International Herald Tribune's Daniel Altman [7] (via The Carpetbagger Report [8]) finds the deal "peculiar:"

Imagine. At the precise moment when demand for oil was the highest in history, a recently democratized country with enormous reserves had the chance to sell extraction contracts to the highest bidder. This was a country that desperately needed the revenue to help rebuild its schools, power grid and water supply after a long internal conflict. So why did it hand out the contracts with no auction at all?

As Andrew Kramer writes, Iraq has handed out no-bid contracts to the same companies that used to profit from its oil before Saddam Hussein came to power. They have short-term contracts not only to extract oil but to raise production by half a million barrels a day, or about 20 percent of Iraq’s current output. If the Iraqis do auction off extraction rights once those contracts expire, this may turn out to have been a good idea. But you have to wonder if these were the only oil companies that could have done the job.

But those are the companies that will do the job. Because the contracts will be signed, and the goodies will be delivered, before change can come to Washington.