A crude look at the crude wealth of Iraq

 

Henry Thompson

 

Wealth in the world is shifting toward the owners of energy sources. Over the coming decades total world energy consumption will double. As a result, energy prices and the energy share of income is increasing. Monopoly profits will go to the owners of energy sources including crude oil.

The Arab Gulf has 65% of proven oil reserves in the world, and Iraq 12%. Oil in the ground is better than money in the bank. Iraq can sell 2 billion barrels per year that for $200 billion at $100 per barrel. That amounts to $8000 per capita income. Selling one quarter of its potential reserves at $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, $15,000 annual income per capita. Productive capital assets are $60,000 per capita in the US. Iraq would match current US productive assets per capita by investing a quarter of its oil revenue for the next 20 years.

The total value of Iraq 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. These calculations do not include natural gas revenue, lately about equal to oil revenue.  Moreover, most of Iraq has not been explored for gas and oil. Every Iraqi is a present value millionaire.