Roger J. Stern at Princeton estimated that the U.S. has spent $8 trillion on armed forces to protect oil flows from Saudi Arabia from 1977 to 2010. See here and here. That’s roughly $200 billion a year. The U.S. imports about 3 billion barrels of oil from all countries, of which 1/3 is from OPEC countries and 1/3 of that OPEC amount comes from Saudi Arabia.
Therefore, we are spending $200 billion a year to protect 3 billion barrels of oil, or $67 a barrel — and that’s for all oil from all sources anywhere in the world, on the assumption that a disturbance in the Gulf price will be felt worldwide. Since oil trades at roughly $50 a barrel, it is easy to see that the amount that the U.S. is paying for this protection of oil flows is exorbitant. If a home was worth $5,000 a year in living space to you, would you pay $6,700 a year to insure that you would not lose its services by an interruption? Home insurance against quite a few perils might run about $600-$700 for such a home, not 10 times as much and certainly not in excess of the annual value of its services.
If we assume that the money spent is strictly to protect OPEC imports, then the cost soars to $200 a barrel. If it’s to protect only Saudi oil, the cost is $600 a barrel. These numbers are completely outrageous, but even $67 a barrel is outrageous.
This cost is the cost of holding military forces like aircraft carriers constantly in the region and of attacking places like Iraq.
The national security state doesn’t care what the cost is. It means to prevent any consolidation of ownership over oil by any country in the region. The proponents of this state do not believe in free markets. They think that an oil monopolist would emerge and blackmail the U.S. with high prices. They do not understand that no such monopolist can emerge without incurring very high costs of conquest. And they do not understand that the U.S. can act as a monopsonist. What good is owning a big pool of oil if you can’t sell it to one of your major markets? And they do not understand that a high price of oil would bring alternative technologies on line and stimulate exploration for new sources. And these proponents of U.S. military force don’t realize (or do not want to realize because of their vested interests) that there are numerous other ways to insure stable oil supplies without stationing fleets of expensive ships and forces year around in foreign waters. But whatever their motives are or their ignorance, the fact cannot be denied that the costs being incurred are outrageous; and as one of the cited articles points out, a number of other nations are free-riding on the costs incurred by Americans. The U.S. gets only 10% of the oil coming through the Persian Gulf.
Americans, you are getting screwed. Your government is screwing you. You are being sold a bill of goods. You are being defrauded. The largest fake stories and lies come from your government. Your government is in the best position to screw you because it has the power. You are being made to support outrageous military expenditures for which you are not getting anything in return that even comes close to having a value worth the cost. If this is true in the case of protecting Gulf oil, is it not also true in the case of Afghanistan? What has this 16 year war done to benefit you? Is this not true in the case of other commitments that your government has made? If, God forbid, some NATO country should get into some sort of scrap or war for any reason, your government has committed your country to become a party to that war.The U.S. has written military insurance policies all over the globe, such that even without a Congressional debate on war or a declaration of war, the President could commit U.S. forces as happened in South Korea in 1950.
The only solution to these improvident and exorbitant extensions of power is to end these commitments, break the stupid treaties and withdraw these dangerous promises.
7:09 pm on March 16, 2017
