A Look at the Crude Wealth of Iraq
Wealth in the world is shifting toward the owners of crude oil making every Iraqi a present value millionaire. Over the coming decades, total world energy consumption will double. Energy prices and the energy share of national income will increase. Monopoly profits will go to the owners of oil.
The Arab Gulf has 65% of the world’s proven oil reserves and Iraq 12%. Oil in the ground is money in the bank making Iraq wealthy. Iraq can produce 2 billion barrels per year that would produce $200 billion at $100 per barrel or $8000 per capita for the population of 24 million. Selling one quarter of its potential reserves at an average price of $100 for the next 20 years will generate 90 billion x $100 = $9 trillion. If the population of Iraq grows to 30 million that would be $300,000 per capita for 20 years or $15,000 annual income per capita. Productive capital assets are $60,000 per capita in the US, and $5,000 in the entire world. If Iraq invests only a quarter of its oil revenue for the next 20 years, it would match current US productive assets per capita.
The total value of Iraq potential oil reserves at an average profit of $75 per barrel over next 100 years is 360 billion x $75 = $27 trillion or $900,000 per capita, making every Iraqi a millionaire. These calculations do not include natural gas revenue, lately about equal to oil revenue. Most of Iraq has not been explored for gas or oil. Similar calculations for the Arab Gulf region amount to $7,500 trillion or a quarter of the present total capital assets in world.