What's happening at the
Sunday 20 Aug 2017 | 08:16 | SYDNEY
Sunday 20 Aug 2017 | 08:16 | SYDNEY

Thursday links: Iraq, Myanmar, China, Syria, India's cruise missile and more

By

COMMENTS

21 March 2013 11:03

From a narrowly selfish point of view, it didn't make sense to fight war for oil. Here's where economics kicks in. There is a world market for oil. There is no danger that a country that wants to keep the United States from getting oil can do so simply by restricting sales to the United States. The reason is that it will then want to sell its oil elsewhere. That means that someone who buys that newly freed-up oil will then want to buy less from his suppliers. Those suppliers then have oil to sell and Americans can buy that oil. It's a game of musical chairs in which the number of chairs equals the number of players. The game would be awfully boring, but in international trade, boring is good.

The only way a country's government can hurt the United States using the "oil weapon" is to reduce its own production. But then, that country, unless it produces a huge amount of the world's supply, will hurt itself as well. And that country will hurt its oil-consuming allies and help its oil-producing enemies. I've laid this all out in "Do We Need to Go to War for Oil?"

Now, it's possible that Cheney, Bush, Abizaid, et al were a bunch of economic illiterates. So, again, in that sense, the war could have been about oil even if it didn't make sense to be about oil.

You may also be interested in...