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Iraq war and oil price spike.

"The U.S.-led invasion [of Iraq] has resulted in the loss of an average of 2 million barrels a day of Iraqi oil from world markets," wrote New York Times Middle East correspondent Youssef M. Ibrahim in the October 5 USA Today. "That is a significant number with huge consequences for the globe."

Prior to the March 2003 invasion, the Bush administration predicted that Iraq's oil exports would pay the costs of the war and occupation. But contrary to the cheerful forecast that Iraq would become "America's private gasoline-pumping station," continues Ibrahim, "the world has lost Iraq's oil. The impact is slowly taking its toll as the price of everything related to petroleum rises (from the food on the supermarket shelves to the gasoline in your car to the plastic chairs on your lawn)."

"The consequences have been evident in the past few months," Ibrahim elaborates. "Oil prices stand at 20-year-high records with no relief in sight. Indeed, should the ongoing disruption of Iraqi oil exports be compounded with an interruption of production elsewhere--Russia, Africa, Saudi Arabia, Venezuela, or any member of the Organization of Petroleum Exporting Countries--we could be looking at prices far above $50 a barrel, perhaps $60 or more. Indeed, the sky is the limit." (On October 12, U.S. crude surpassed $54 a barrel, a new high.)

The relentless increase in petroleum prices is not merely a reflection of production shortfalls created by the Iraq invasion and disruptions resulting from this year's turbid hurricane season. The most important contributing factor is the equally relentless decline in the dollar's purchasing power, a result of Washington's huge and ever-expanding budget deficit.
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Title Annotation:Insider Report
Publication:The New American
Article Type:Brief Article
Geographic Code:1USA
Date:Nov 1, 2004
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