Pigs at the Trough

Last month crude oil prices reached a record level of  $147 per barrel . While some of this price increase could be attributed to increase in demand for oil in Asia and reduction in oil production, most of it was due to speculation.

If the price increase is due to a supply demand mismatch, the price remains fairly stable. However, speculation can result in significant fluctuations in prices. The end user suffers, while the speculators pocket the profits.

The Iraq war is one of the reasons for the high oil prices.Many believed that invading Iraq would increase the opportunities for American businesses,  but this has not happened. Though American companies are still priority while contracts are being awarded, the unsafe environment makes it difficult for the corporations to make much money, as they have to spend large amounts on the safety of their personnel.

Billions of dollars have been spent to quell the insurgency, which continues. Millions of dollars were paid to people providing information on the most wanted Iraqis. Most of them have been captured, yet American soldiers continue to die. As soon as the US withdraws from Iraq, the insurgents will take over and all the taxpayers money spent on the ” war on terror” will be wasted.

The main reason why the US economy is in such a bad state today is the war in Iraq.  If the government  had not wasted  billions of dollars starting a war over the non existent weapons of mass destruction, the economy would be in a much better condition.

Oil prices would also be lower as the Iraq’s oil infrastructure would not be damaged during the war.  Iraq was a major oil producer before the war. Though officially , Iraq has its own government, it is likely to collapse the moment the US troops are withdrawn.