This week's Political Spaghetti: Not about Iraq

I think, in his link to my last post, Andrew Sullivan may have given some readers the impression that I had written to talk about why we went into Iraq, or whether it was a good idea (I happen to think it wasn't a good idea, but that's beside the point).

The Iraq invasion figured into my discussion as the single most important medium-term factor leading to the last three years' precipitous drop in excess petroleum production capacity. With lowered excess capacity and OPEC no longer capable of providing additional supply, regional crises, caused by decades of neglect by local governments and by the oil industry, now contribute about a $20 political risk premium to the price of each barrel. My argument is that we can reasonably blame the oil companies for the $20 premium, since they have had no incentive act responsibly in many of the countries in which they operate.

Until now.

My post was intended to point out that in the absence of a powerful OPEC, local human rights and social and environmental justice acquire much tighter control of the price of crude, because even small drops in production in places like Nigeria will lead to bottlenecks in global oil supply.

Supply is now so tight, that local governments might now be incented to push oil companies for local remuneration and reconciliation. The name of the game is stability, at any cost, and at $70 a barrel, no cost is too high.