Armstrong Williams
The United States economy is taking a beating. Gas is selling over $3 a gallon. Oil is trading for more than $40. The country remains dependent on oil. But as we are now learning, oil is becoming increasingly scarce. Does this mean the great American engine is about to ground to a halt?

The administration no doubt hoped that the Iraq invasion would transform the United States into an instant member of OPEC. It did not. Iraq is producing significantly less oil now than before the war. Oil production has been stymied by insurgent attacks on oil pipelines and tankers, as well as the general political upheaval in Iraq. Unsurprisingly, the Saudis aren’t jumping at the chance to help America’s long term strategic interests.

As reserves continue to be depleted, we will become more dependent on OPEC than ever. OPEC is unlikely to respond sympathetically. Especially considering that the Iraq invasion pretty much makes it impossible for the Middle East oil prices to publicly adopt an outright pro-American stance. At the same time, the war in Iraq has alienated Russia, which the administration had been positioning to compete with OPEC as an alternative source of oil.

Rather than changing the political landscape in the Middle East, the Iraq invasion has arguably fortified the Middle East oil regimes. Iran and the Saudi ruling family continue to realize huge profits from skyrocketing oil prices. As capital markets continue to respond to the attacks on Iraq’s oil supply by effectively raising the price of crude, those regimes once slated for takeover actually grow stronger.

So, are skyrocketing oil prices, the Iraq morass, and the domestic energy crises harbingers of a slow economic decline? More to the point, is the American engine slowly grounding to a halt? Not necessarily. It is undisputed that, due to their capacity for oil production, the Middle East is the center of the global economy. If the region destabilized, it could very well drag the global economy down with it. From this perspective, our presence in Iraq presents a valuable conduit to the internal affairs of the region.


Armstrong Williams

Armstrong Williams is a widely-syndicated columnist, CEO of the Graham Williams Group, and hosts the Armstrong Williams Show. He is the author of Reawakening Virtues.
 
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