True or false?

Iran the world's fourth largest oil exporter has repeatedly said that the market is well supplied with crude and blames rising prices on speculation, a weak US currency and geo-political factors. The decrease in the dollar's value and the increase in energy prices are two sides of the same coin which are being introduced as factors behind the recent instability."

Behind the drive to war and military adventures in the Middle East lie some powerful special interests (vested in war militarism and the geo-political concerns of Israel ) that use oil as an issue of national interest as a facade or pretext to justify military adventures and derive both economic and geo-political dividends from war.

The claim that world oil reserves have reached their maximum capacity and are now dwindling with grave consequences of oil shortage and high energy prices not only supplies fodder for war -profiteering militarists who are constantly on the look out to invent new enemies and find new pretext for continued war and escalation of military spending but serves as a clever manipulation that lets the real forces of war and militarism (the military-industrial complex and the pro-Israel lobby) off the hook.

The fact however is that there is no evidence that oil has peaked or that global oil reserves are shrinking or that the current sky-rocketing price of oil is due to supply shortage. It discounts or disregards the fact that energy -saving technologies have drastically improved. It also pays no attention to what is sometimes called non-conventional oil, such as Canada's gigantic reserve of extra-heavy bitumen that can be processed to produce conventional oil.

It omits to mention sources other than oil. Gas is now 25% of energy demand worldwide and it is estimated that by 2050 it will be the main source of energy.

Statistics show that there is no supply/demand imbalance in global oil markets . The current oil price shocks are a direct consequence of the destabilising wars and political insecurity in the Middle East, not oil shortages. These include also the wars in Iraq and Afghanistan and the threat of looming war against Iran. The war contributes to the escalation of fuel prices in indirect ways, by plunging the US ever deeper into debt and depreciating the dollar and by creating favourable grounds for speculation.

As oil is priced largely in US dollars oil exporting countries ask for more dollars per barrel of oil as the dollar loses value. As much of 60% of today's crude oil price is speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myth of peak oil. It has to do with the control of oil and its price.

Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and moved to Wall Street: The same Wall Street financial giants that created the Third World debt crisis in the late 1970s and early 1980s, the tech bubble in the 1990s and the housing bubble in 2000 are now hard at work building the oil bubble.

By purchasing a large number of future contracts and thereby pushing future prices to even higher levels than current prices, speculators have provided a financial incentive for oil companies to buy more oil and place it in storage. The large influx of speculative investments into oil futures has led to a situation where there are both high supplies of crude oil and high crude oil prices. In fact during this period global supplies have exceeded demand according to the US Department of Energy.

Saudi officials reminded President Bush " that there is plenty of oil on the market. Iran has some 30 million barrels of oil that it cannot sell into floating storage, if we produce more oil it would not find buyers . It would not affect the price at all."

The soaring oil prices are therefore the product of speculation. Control of or influence over oil-producing companies of the Middle East is a requirement for access to cheap oil, the United States already enjoys significant influence over some of the major producers in the region - Saudi Arabia, Kuwait and a number of other small producers.

Why then does the US want to bring about war and political turmoil in a region that might undermine that long and firmly established influence? To establish democratic rule and representative government in the Middle East? Would the thus emerging democratic governments representing the wishes of the majority of their citizens be as accommodating to the US economic and geo-political objective including its oil needs as are the friendly rulers in the region. Probably not.

Beginning with the 1950s the pattern of local non-competitive price determination began to gradually change in favour of regional and/or international markets. Today oil prices are determined largely by the forces of supply and demand in competitive global energy markets. and any country or company can have as much oil as it wishes if it pays the going market price. Subversion of competitive market forces is brought about not so much by OPEC or other oil producing countries as by manipulative speculation by financial giants in New York and London. As a result the global oil market is the prime determinant of oil price and OPEC follows its trajectory accordingly. When market price, both spot and futures, is falling OPEC decreases its output and when market price is rising OPEC attempts to increase its output, with market prices steady OPEC keeps its output unchanged.

Producers' policy to sometimes curtail or limit the supply of oil is designed to raise the actual trading price above the market determined price in order to keep high-costs US producers in business while leaving low-cost Middle East producers with an above average profit.

It is also necessary to keep in mind that OPEC's desire to sometimes limit the supply of oil in order to shore up its price is limited. The share and hence the influence of Middle Eastern oil producers as a percentage of world oil production has steadily declined over time from about 40% when OPEC was established to about 30% today.

Furthermore the widely held view that the Bush administration's drive to war and the influence of big oil is due to both President Bush and Dick Cheney having been "oil men" is false. Bush was never more than an unsuccessful petty oil prospector and Dick Cheney headed the notorious Halliburton company that sold and still sells services to oil companies and the Pentagon.

There is very strong evidence that the oil companies did not welcome the wars because they prefer stabilitity and predictability to periodic oil spikes that follow war and political convulsions. As Thierry Desmarest chairman and CEO of France's giant oil company TotalSinaElf said " a few months of cash generation is not a big deal, stable not volatile prices of a $25 price per barrel would be convenient for everyone."

The big oil companies were not enthusiastic about the Gulf War. Corporations like Excon-Mobil, Chevron-Texaco want stability and this is not what Bush is providing in Iraq and the Gulf region. Exclusion of US oil companies from vast oil resources in countries such as Russia, Iran and Venezuela and a number of Central Asian countries due to militaristic foreign policy is a clear testament to this. When Vladimir Putin first became president of Russia he was willing to allow American energy companies to continue with the one-sided contracts they had drawn up during Boris Yeltsin's presidency: Soon after the generous cooperation by Russia after the 9/11 attacks. Bush repudiated the anti-ballistic missile treaty in the belief that it could develop the technology for winning a nuclear war.

Bush's withdrawal from the treaty not only posed a threat to Russia but was a betrayal of trust . Eventually Putin seems to have decided that every time America transgressed against Russia he would retaliate by stopping another American company from exploiting Russian resources.

Major oil companies have consistently opposed US policies and military policies against countries like Iran, Iraq and Libya . President Clinton started the trend in 1995 when he issued Order No. 1259 which expanded sanctions to become a total trade and investment embargo against Iran. It is no secret that the major force in the Iran/Libya sanction act was the America/Israel Public Affairs Committee (AIPAC), the main Zionist lobby in Washington.

The success of AIPAC in passing ILSA which extended the sanctions on Iran to Libya, over the opposition of the major US oil companies is testimony to the fact that in the context of US policy in the Middle East even the influence of the oil industry pales against the influence of the Zionist lobby

The major reason for the persistence of the pervasive myth of Bush and Cheney as "oil men" seems to stem from certain deliberate efforts that are designed to perpetuate the legend in order to camouflage some real economic and geo-politic special interests that drive US military adventures in the Middle East.

There is evidence that both the military and industrial complex and hard line Zionist proponents of "greater Israel" disengenuously use oil as issue of national interest in order to disguise their own nefarious special interests and objectives. Justification of continued expansion of military spending , extension of sales markets for military hardware and recasting the geo-political map of the Middle East in favour of Israel.

Through AIPAC and other war-mongering institutes such as the American Enterprise Institute (AEI), Project for the New American Century (PNAC), and the Jewish Institute for National Security Affairs (JINSA) who in collaboration with a whole host of similar militaristic lobbying entities like the Centre for Security Affairs (SA) and National Institute for Public Policy (NIPP) working largely as institutional facades to serve the de facto alliance of the military industrial complex and pro-Israel lobby have repeatedly thwarted efforts at peace and reconciliation in the Middle East.

It is a well established fact that Wolfowitz has been a devoted champion of these jingoistic institutions and their aggresive unilateral policies which is designed to divert attention from the main forces behind the war - the armaments lobby and the Pro-Israel lobby. These powerful interests are careful not to draw attention to the fact that they are the prime instigators of war and militarism in the Middle East.