I would agree that pumping oil like crazy out of Iraq would drive down oil prices. But other than the “war premium” prices of oil are quite reasonable. If there were an overwhelming demand for oil, you would see day rates for oil rigs surge, a huge expansion in exploration activities, and oil rig utilization rate approaching 100%. In other words, for the forseeable future supply and demand are pretty much in balance. OPEC is talking about cutting production further to support prices at this level.
As far as the Caspian basin, read on:
Afghanistan: the pipeline war?
Some commentators have asked if it’s all about oil
By BBC Eurasia Analyst Malcolm Haslett
Some attractively original theories have been going the rounds about the real reasons for the Afghan war.
It is obviously much more, some columnists and political theorists suggest, than a simple effort to stamp out terrorism.
Apart from the popular theory (in some parts of Europe as well as the Middle East) that this is a war on Islam, there is also the theory that it is a war motivated mainly - or even purely - by long-term economic and political goals.
The importance of Central Asian oil and gas has suddenly been noticed.
The valuable deposits of fossil fuels in Kazakhstan, Turkmenistan and Azerbaijan, previously discussed only by regional experts and international energy companies, are now being mulled over on the opinion pages of popular dailies.
Economic imperatives
Oil is undeniably important to the Americans
Some writers, indeed, have gone further, suggesting that economic considerations provide the main, or at the very least a major, motivation for US and western involvement in Afghanistan.
If one discounts the more extreme and emotional versions of this theory, the argument boils down to this:
Afghanistan has been proposed by more than one western oil company (the US-based Unocal is often mentioned, but it is not the only one) as the best route by which to export the Central Asian republics’ important output of oil and gas
Given the increasing importance of finding and exploiting new sources of fossil fuel, governments like those of the US and the UK are enormously keen to gain influence in the Central Asian region in order to secure those supplies for the West
In order to achieve that, and get those energy supplies moving out of Central Asia, they need to set up a pro-western government in Afghanistan.
Flawed theory
This line of argument falls down on a number of points.
It is undeniably true that the Central Asian republics do have very significant reserves of gas and oil, and that they have been having difficulty in getting them on to the world market on conditions favourable to them.
Until recently Russia had an almost total monopoly of export pipelines, and was demanding a high price, in economic and political terms, for their use.
But it simply is not true that Afghanistan is the main alternative to Russia.
On the contrary, very few western politicians or oil companies have taken Afghanistan seriously as a major export route - for the simple reason that few believe Afghanistan will ever achieve the stability needed to ensure a regular and uninterrupted flow of oil and gas.
There have been exceptions, of course, like Unocal and the Argentine company Bridas.
The main proponents of the Afghan pipeline idea, however, apart from the Taleban regime itself and its backers in Pakistan, was the government of the eccentric Turkmen President Saparmyrat Niyazov, known as “Turkmenbashi”.
Caucasus route
The West, in contrast, and particularly the US, has put almost all its efforts into developing a major new route from the Caspian through Azerbaijan and Georgia to the Black Sea.
This had the potential advantage (from a western point of view) of bypassing Russia and Iran, and breaking their monopoly of influence in the region - allowing the states of the Caucasus (Georgia, Azerbaijan and possibly Armenia) and Central Asia (Kazakhstan, Turkmenistan, Uzbekistan and Kyrgyzstan) to develop a more balanced, independent foreign policy.