President Bush has just finished his latest address on Iraq, and Dick Durban has just delivered the Democrats' response. I know you're all dying for my take, and here it is:
President Bush's Speech
It should be no surprise that I approve of the bulk of what President Bush outlined. Pretty much as I suggested months ago, the U.S. is adopting a Baghdad-first strategy designed to take, clear, and most importantly hold Baghdad's neighborhoods, implementing the ink-spot approach that is one of the only proven counter-insurgency strategies.
My only quibble is the move to bring 20,000 more U.S. troops to Iraq to implement the plan; I think it will work but it's not necessary (internal redeployment of 20,000 troops already in Iraq would do the job as well, in my opinion), and is going to cause a real bare-knuckles political battle aimed more at the 2008 elections than fixing Iraq (Senate Democrats are already talking about bringing a non-binding resolution opposing the plan in order to get Republicans on record as supporting or opposing it). That naked political move drops my estimation of the Democrats a few notches; as low as my opinion of politicians already is, that's saying something.
Dick Durban's Response
Interestingly enough, the Democratic response did make a legitimate point: that Iraqis might take on more responsibility and fight harder to protect their own interests if they knew they could no longer count on an American bail-out. No less an authority on warfare than Sun-tzu wrote that a commander could drive his own army into hopeless situations or "fatal terrain" to make them fight harder, as they would be convinced that they could either fight or die.
But what I think the Democrats are overlooking is that the Iraqis already have more than enough incentive to fight for themselves. Iraq Body Count (a fairly credible source) puts the number of Iraqis killed in 2006 alone at roughly 24,000, close to double the 14,000 that died in 2005. With that type of death toll, it's unlikely Iraqis are relaxing while counting on American help to save them.
In fact, Iraqi Prime Minister Nouri al-Maliki has informed key political ally Moqtada al-Sadr that his militia will no longer receive political cover, and they can either disarm by choice or be disarmed by force.
Of course, all of this is just words. But for the first time in a while, people are saying the right ones.
Showing posts with label Foreign Policy. Show all posts
Showing posts with label Foreign Policy. Show all posts
Wednesday, January 10, 2007
Monday, October 09, 2006
Black Gold, Colorado Tea, Part Deux
Back to the oil shale. Possibly the biggest obstacle to the full development of oil shale as an oil source is production cost. Oil shale is essentially rock that contains kerogen - a geological precursor of oil. Extracting usable oil from oil shale requires an extensive - and expensive - conversion process. Until very recently, the only way to extract oil from oil shale was to strip mine the rock and bring it to a processing plant, at a production cost of roughly $40/barrel. Shell recently announced that it had developed technology that could extract oil from oil shale in situ, causing far less environmental damage and at a production cost low enough to allow it to be competitive in the $30/barrel range.
In contrast, the worldwide average production cost for conventional oil is roughly $12/barrel.
The problem is obvious - even at the lower cost-per-barrel Shell has reached, oil shale technology is only profitable in a world where oil prices are above $30 per barrel. Conventional oil will remain profitable even if the price tumbles below $30/barrel. That may be hard to contemplate in today's world of $70 a barrel oil, but as these graphs from WTRG Economics demonstrate, even counting the recent spike in oil prices the worldwide average for oil has stayed within the $20-25/barrel range for a century and a half.
So while it may make economic sense to exploit oil shale right now, when oil prices are high, in the ten years it will take to truly ramp up to meaningful production levels the price of oil may drop. Worse, whatever the price of oil does in the next ten years, the very act of producing large amounts of oil from oil shale will drive the worldwide oil price down; flooding the market with oil produced from oil shale - and the proven oil shale reserves of the United States alone are three times the size of Saudi Arabia's conventional oil reserves, so production would flood the market - would drastically alter the supply and demand equation that has oil priced as high as it is right now.
In other words, there are significant economic reasons why oil shale is not and likely will not be a significant feature of the oil economy in the near future. As increased supply drove worldwide oil prices down, oil shale oil producers would tighten production (and, if necessary, cease production entirely) as it became less profitable. The result would be the U.S. getting far less strategic benefit from oil shale oil production than it might otherwise be able to.
Which is why I would propose government intervention in the market - or, more accurately, government activity in the market. The U.S. government should (and if I were President, would) guarantee all oil shale producers a profit margin of 6% on all oil shale produced in the U.S. at a cost of $30/barrel or less, up to a total of 7.5 billion barrels per year (the total U.S. oil consumption for 2004 according to the department of energy). The 6% figure is a slight drop from the average oil industry profit margin for the third quarter of 2005, which was 8.2% according to Gravmag. The drop in profit margin makes sense because of the absence of risk that the government guarantee would entail. To encourage continued reduction in production costs, I would propose a 50/50 split of any production cost decreases - that is, if production costs decline from $30/barrel to $29/barrel, the profit margin would be calculated as though the production costs had only dropped from $30/barrel to $29.50/barrel - and therefore the nominal 6% profit margin would actually be incrementally greater.
Lets talk dollars and cents for a second. At a production cost of $30/barrel, a 6% profit would be $2.10, or a total sale price of $32.10/barrel. If the market price for oil remained above $32.10/barrel, the guarantee would be irrelevant and the U.S. government would pay nothing. If the market price for oil dipped below $32.10/barrel, the U.S. would purchase the oil directly and then either use it, resell it on the market at market price, or add it to the Strategic Oil Reserve, as it chose. At most - that is if the oil shale producers produced the full 7.5 billion barrels and the market price of oil dipped to $0 - the program would cost $240B, or 1/10 of the 2005 U.S. budget. Assuming oil stabilizes at $10/barrel, that cost would drop to $165B, and at $20/barrel, the cost would be $95B. And, that money would: (1) be taxable by the government, allowing it to recover several billion dollars directly; (2) support a massive increase in the domestic economy, as oil shale production would provide jobs and other influxes of cash to the Wyoming, Colorado and Utah economies (which would, of course, be taxable); and - if worldwide oil prices stayed high until oil shale production came on line - (3) lower the cost of goods by driving down the cost of oil either as a resource in production (such as plastics) or an addition to the costs of transportation (in the form of high gas prices).
More importantly, those are primarily economic assessments. As I mentioned in the first post, the real impact of oil shale production would be geopolitical - stemming the flow of petrodollars to regimes such as Iran, Venezuela and Saudi Arabia, forever eliminating the threat of the "oil weapon" and dramatically reducing the influence of OPEC and its members on global policy issues. Looked at in that light, the funding for this initiative would be as much in America's national security interests as would any weapons development initiative put forward by the Pentagon.
In contrast, the worldwide average production cost for conventional oil is roughly $12/barrel.
The problem is obvious - even at the lower cost-per-barrel Shell has reached, oil shale technology is only profitable in a world where oil prices are above $30 per barrel. Conventional oil will remain profitable even if the price tumbles below $30/barrel. That may be hard to contemplate in today's world of $70 a barrel oil, but as these graphs from WTRG Economics demonstrate, even counting the recent spike in oil prices the worldwide average for oil has stayed within the $20-25/barrel range for a century and a half.So while it may make economic sense to exploit oil shale right now, when oil prices are high, in the ten years it will take to truly ramp up to meaningful production levels the price of oil may drop. Worse, whatever the price of oil does in the next ten years, the very act of producing large amounts of oil from oil shale will drive the worldwide oil price down; flooding the market with oil produced from oil shale - and the proven oil shale reserves of the United States alone are three times the size of Saudi Arabia's conventional oil reserves, so production would flood the market - would drastically alter the supply and demand equation that has oil priced as high as it is right now.
In other words, there are significant economic reasons why oil shale is not and likely will not be a significant feature of the oil economy in the near future. As increased supply drove worldwide oil prices down, oil shale oil producers would tighten production (and, if necessary, cease production entirely) as it became less profitable. The result would be the U.S. getting far less strategic benefit from oil shale oil production than it might otherwise be able to.
Which is why I would propose government intervention in the market - or, more accurately, government activity in the market. The U.S. government should (and if I were President, would) guarantee all oil shale producers a profit margin of 6% on all oil shale produced in the U.S. at a cost of $30/barrel or less, up to a total of 7.5 billion barrels per year (the total U.S. oil consumption for 2004 according to the department of energy). The 6% figure is a slight drop from the average oil industry profit margin for the third quarter of 2005, which was 8.2% according to Gravmag. The drop in profit margin makes sense because of the absence of risk that the government guarantee would entail. To encourage continued reduction in production costs, I would propose a 50/50 split of any production cost decreases - that is, if production costs decline from $30/barrel to $29/barrel, the profit margin would be calculated as though the production costs had only dropped from $30/barrel to $29.50/barrel - and therefore the nominal 6% profit margin would actually be incrementally greater.
Lets talk dollars and cents for a second. At a production cost of $30/barrel, a 6% profit would be $2.10, or a total sale price of $32.10/barrel. If the market price for oil remained above $32.10/barrel, the guarantee would be irrelevant and the U.S. government would pay nothing. If the market price for oil dipped below $32.10/barrel, the U.S. would purchase the oil directly and then either use it, resell it on the market at market price, or add it to the Strategic Oil Reserve, as it chose. At most - that is if the oil shale producers produced the full 7.5 billion barrels and the market price of oil dipped to $0 - the program would cost $240B, or 1/10 of the 2005 U.S. budget. Assuming oil stabilizes at $10/barrel, that cost would drop to $165B, and at $20/barrel, the cost would be $95B. And, that money would: (1) be taxable by the government, allowing it to recover several billion dollars directly; (2) support a massive increase in the domestic economy, as oil shale production would provide jobs and other influxes of cash to the Wyoming, Colorado and Utah economies (which would, of course, be taxable); and - if worldwide oil prices stayed high until oil shale production came on line - (3) lower the cost of goods by driving down the cost of oil either as a resource in production (such as plastics) or an addition to the costs of transportation (in the form of high gas prices).
More importantly, those are primarily economic assessments. As I mentioned in the first post, the real impact of oil shale production would be geopolitical - stemming the flow of petrodollars to regimes such as Iran, Venezuela and Saudi Arabia, forever eliminating the threat of the "oil weapon" and dramatically reducing the influence of OPEC and its members on global policy issues. Looked at in that light, the funding for this initiative would be as much in America's national security interests as would any weapons development initiative put forward by the Pentagon.
Saturday, September 16, 2006
Black Gold, Colorado Tea
To say that America has an oil problem is to state the blindingly obvious; it would have to be for President Bush and Chuck Schumer to both agree on something. There is an extremely detailed and apparently reliable source here that has statistics that I'll be using as the basis for my positions on oil and energy policy in general.
For now, since I'm swamped with work, I'll keep it simple. Part of America's oil problem is the fact that people fail to recognize that it isn't a unitary problem. There are two interrelated but distinct aspects to America's oil problem.
The first aspect is environmental, or inherent. It has nothing to do with where the oil comes from; the problem is oil itself. The only real solution to the environmental problems posed by oil is finding or developing viable alternative energy sources. To someone primarily concerned with this aspect of America's oil problem, the discovery of a vast new American oil field would be a tragedy, since it would enable the oil economy to continue on its current path for longer.
The second aspect of America's oil problem is geopolitical. It has nothing to do with oil in and of itself and everything to do with where we get it from and the political clout oil resources provide countries such as Iran, Saudi Arabia and Venezuela, the strategic threat of the "oil weapon" and the problems of relying on possibly hostile countries for a vital natural resource. There are two possible solutions to this problem - a move to alternative energy sources or a significant American source of oil. To someone primarily concerned with this aspect of the problem, the discovery of a vast new American oil field would be a cause for celebration, since it would significantly alter the geopolitical playing field.
Me? Count me in the latter category. That doesn't mean I completely disregard the environmental necessity of moving away from oil. What it does mean is that I would consider the geopolitical implications of a significant American oil find more important than the environmental ones. Even if we found a hidden American oil reserve roughly the size of Saudi Arabia's, I would still be committed to alternative energy sources, because I believe that minimizing the environmental impact of our energy consumption is supremely important. But you'd better believe I'd do everything I could to tap that reserve - or ensure that the reserve got tapped by private enterprise, really - regardless of the environmental impact, because the geopolitical implications would be so important.
Of course, the key is that the oil resource be significant. I'm against opening up ANWR to drilling, because it is a relatively insignificant field, by all estimates, and the geopolitical benefits of the minor increase in worldwide oil production would be far outweighed by the environmental damage to ANWR.
But the Colorado oil shale? That's another story entirely.
For now, since I'm swamped with work, I'll keep it simple. Part of America's oil problem is the fact that people fail to recognize that it isn't a unitary problem. There are two interrelated but distinct aspects to America's oil problem.
The first aspect is environmental, or inherent. It has nothing to do with where the oil comes from; the problem is oil itself. The only real solution to the environmental problems posed by oil is finding or developing viable alternative energy sources. To someone primarily concerned with this aspect of America's oil problem, the discovery of a vast new American oil field would be a tragedy, since it would enable the oil economy to continue on its current path for longer.
The second aspect of America's oil problem is geopolitical. It has nothing to do with oil in and of itself and everything to do with where we get it from and the political clout oil resources provide countries such as Iran, Saudi Arabia and Venezuela, the strategic threat of the "oil weapon" and the problems of relying on possibly hostile countries for a vital natural resource. There are two possible solutions to this problem - a move to alternative energy sources or a significant American source of oil. To someone primarily concerned with this aspect of the problem, the discovery of a vast new American oil field would be a cause for celebration, since it would significantly alter the geopolitical playing field.
Me? Count me in the latter category. That doesn't mean I completely disregard the environmental necessity of moving away from oil. What it does mean is that I would consider the geopolitical implications of a significant American oil find more important than the environmental ones. Even if we found a hidden American oil reserve roughly the size of Saudi Arabia's, I would still be committed to alternative energy sources, because I believe that minimizing the environmental impact of our energy consumption is supremely important. But you'd better believe I'd do everything I could to tap that reserve - or ensure that the reserve got tapped by private enterprise, really - regardless of the environmental impact, because the geopolitical implications would be so important.
Of course, the key is that the oil resource be significant. I'm against opening up ANWR to drilling, because it is a relatively insignificant field, by all estimates, and the geopolitical benefits of the minor increase in worldwide oil production would be far outweighed by the environmental damage to ANWR.
But the Colorado oil shale? That's another story entirely.
Sunday, September 03, 2006
Iraq: A Battle Plan
"Let me sum up once more the last two principles. Their combination gives us a maxim which should take first place among all causes of victory in the modern art of war: 'Pursue one great decisive aim with force and determination.'"- Carl von Clausewitz, in Principles of War.
von Clausewitz was a Prussian General and perhaps the greatest military thinker in history, and analyzing our action and progress in Iraq, I've come to the conclusion that the major flaw in the current US approach to stabilizing Iraq is that we've ignored this basic principle. Instead of pursuing "one great decisive aim" (more on that further down), we have our forces spread across Iraq, pursuing 101 different ojectives. As of May 2005, the 100,000+ U.S. soldiers in Iraq were spread across over 100 bases.
Another famous maxim of war comes from another Prussian (they were good at war), Frederick the Great: "He who defends everything, defends nothing." Attempting to defend all possible targets equally leads to nothing being defended adequately. That aptly defines what is happening to the U.S. forces in Iraq; in attempting to stabilize the entirety of the country they have become ineffective at stabilizing any of it. John McCain called it "whack-a-mole": troops are moved from one pocket of resistance to another, temporarily quelling the insurgency in one area before being called to stamp it out in another - and allowing the insurgency to flare back up in the region they vacated.
All of which leads me to two conclusions. First, that the U.S. forces can't stabilize the entire country. And second, because of that, that they shouldn't be trying to.
One of the most successful anti-insurgency tactics in the history of warfare is the "ink spot" (or "oil spot") strategy - create a zone of security and opportunity within which the insurgents cannot operate and the benefits of peace are open and obvious, and the native support for the insurgents will begin to melt away, as areas outside the "ink spot" see the benefits and look to join in. I'm not the first person to argue that this is the method that should be applied to Iraq - Alex Krepinevich wrote a comprehensive article in Foreign Affairs nearly a year ago arguing just that. Where I break from the strategies I've seen is in the scope of the original ink spots. There really should be only two. The way forward in Iraq, I think lies in securing Baghdad and Kirkuk.
Back to von Clausewitz, for a second. He said something else (and something that may surprise the sizable group in the U.S. that derides the talk of "winning hearts and minds" as harming the U.S.' interests):
- von Clausewitz, Principles of War. von Clausewitz explains how public opinion can be won:I. Warfare has three main objects:
(a) To conquer and destroy the armed power of the enemy;
(b) To take possession of his material and other sources of strength, and
(c) To gain public opinion.
von Clausewitz' emphasis on the capital is no accident. It is the emotional center of the country, the city that captures the imagination and loyalty of its citizens. The insurgents' ability to create instability in Baghdad - and the sectarian violence and retribution that has magnified that instability - is a tremendous morale boost for the insurgents, and a terrible blow to the U.S. and the fledgling Iraqi government. By contrast, the complete pacification of Baghdad would be a hammerblow to the insurgency. And von Clausewitz' first and second rules, which the U.S. has been ignoring, provide the map to accomplishing that goal.4. Public opinion is won through great victories and the occupation of the enemy's capital.
5. The first and most important rule to observe in order to accomplish these purposes, is to use our entire forces with the utmost energy. Any moderation shown would leave us short of our aim. Even with everything in our favor, we should be unwise not to make the greatest effort in order to make the result perfectly certain. For such effort can never produce negative results. Suppose the country suffers greatly from this, no lasting dis- advantage will arise; for the greater the effort, the sooner the suffering will cease.
The moral impression created by these actions is of infinite importance. They make everyone confident of success, which is the best means for suddenly raising the nation's morale.
6. The second rule is to concentrate our power as much as possible against that section where the chief blows are to be delivered and to incur disadvantages elsewhere, so that our chances of success may increase at the decisive point. This will compensate for all other disadvantages.
7. The third rule is never to waste time. Unless important advantages are to be gained from hesitation, it is necessary to set to work at once. By this speed a hundred enemy measures are nipped in the bud, and public opinion is won most rapidly.
First, the U.S. forces in Iraq have to focus on the goal of wiping out the insurgency in Baghdad. That means both clearing the city of arms and explosives and preventing the import of arms and explosives into the city, as well as finding and containing the insurgents themselves. And to do that, the U.S. forces will need to use their "utmost energy" - putting aside missions external to securing Baghdad, even to the point of taking several steps back in the rest of Iraq. We need to be willing "to incur disadvantages elsewhere, so that our chances of success may increase at the decisive point." Intelligence assets in the rest of Iraq will need to be maintained, but if the insurgents want Fallujah, let them have it; if they want Ramadi and Tikrit, let them have it. They won't be able to keep it, but taking it back will need to be secondary to securing Baghdad.
And that brings us to the second of von Clausewitz' rules - we must "concentrate our power as much as possible against that section where the chief blows are to be delivered." Having 100,000+ troops spread out across Iraq is not working. We need to concentrate that force on Baghdad and its environs. A force that size would have the manpower to safely patrol the city, to pacify large areas, to guard marketplaces and mosques, to root out the weaponry in Baghdad and prevent more weapons from being brought in. Security in Baghdad would be accompanied by increased reconstruction and prosperity, which would make securing Baghdad a double blow to the insurgents: first, by imposing on the insurgency the humilliation of being unable to effectively strike in Iraq's most important city, and second by winning the support of the general Baghdad populace and demonstrating that Iraq without the insurgents would be a peaceful, stable and prosperous Iraq.
Importantly, a large and effective force in Baghdad could protect the Iraqi army and police recruits as they trained. And, eventually, those Iraqi troops could replace U.S. troops in holding Baghdad on a rolling basis, and those U.S. troops could move on to the next ink spot - Basra, Mosul or Najaf, most likely.
The one exception I would suggest to the "Baghdad First" strategy is Kirkuk. Kirkuk is defended by the Kurdish Peshmerga - an effective native force - has been spared much of the violence that has convulsed the rest of the country, and is a major source of oil (important if the Iraqi nation is to survive). Given its relatively secure status today, a small but potent U.S. force should remain in Kirkuk to ensure that it maintains its current level of security.
Let's be clear about something. I have no military background at all. None. I've never been in the armed forces, never so much as ran or even participated in a boyscout unit or a paintball game. So I don't think I'm qualified to plan military tactics; I can't even begin to suggest the hows by which the plan I've outlined would be put into motion. But what I do have some basic grasp of is military strategy. And three years into an Iraq war that I believed from the beginning would likely take close to a decade to truly win, it seems obvious to me that there needs to be a dramatic change in the overall strategy by which this war is being fought.
Subscribe to:
Posts (Atom)