Wednesday, September 20, 2006

Long Live the Pentagon

The title of this article (Long Live the Pentagon) is most probably one of the cliché sentences of Pentagon contractor’s prayers.

Traprock Peace Center published an article on 16 June 2006 entitled “ExxonMobil, Shell neck-in-neck in war oil sales”.

The article argues that “The heavy proportion of foreign petroleum sales to the U.S. military raises a question of how dependent that military is on foreign oil.” It is already well known that much of the oil sold by U.S. firms comes from crude oil extracted in other countries."

All fuel the US military needs could theoretically be obtained from the US and shipped over where it is consumed. But of course that would come with a significant cost. Because, transportation and storage would dramatically increase the cost.

Fuel purchases (130.75 million barrels of oil) of Defense Energy Support Center had costed $10.1 billion in FY05. Net sales were $8.3 billion for 132.8 million barrels of oil.
Total transportation expense for fuels was estimated at $377 million by the DESC.

I will leave for the moment how reliable those figures are. Because I do not believe that the US military consumed only 133 million barrel of oil (365 thousand barrels per day) in FY05. I will elaborate this issue in more detail when the figures for FY05 are made available by DESC in its forthcoming fact book.

The important issue I want to discuss is who profits most from oil sales to the US military.
It is not very surprising that ‘war on terror” or say invasion and occupation of Iraq and Afghanistan has been very profitable for big oil corporations in terms of direct sales to the U.S. military.

Here is the TOP 10 SELLERS OF PETROLEUM PRODUCTS AND SERVICES TO THE U.S. MILITARY (in millions of US dollars) for the Fiscal years 1999 to 2005 as provided in the above given article. Original Source is the Defense Energy Supply Center. I verified the data for FY05 and FY04 from the DESC Factbooks.

Fiscal year 2005 (total of TOP 10 is $5.84 billion)
1. BP $1,604.1
2. ExxonMobil $1,024.4
3. Royal Dutch Shell $1,003.7
4. Valero $564.4
5. Bahrain Petroleum Co. $380.3
6. Kuwait Petroleum Corp. $330.3
7. Ssangyong (Korea) $264.8
8. Motor Oil (Hellas) (Greece) $229.0
9. Merlin Petroleum Co. Inc. $226.1
10. International Oil Trading Co. $214.0

Fiscal year 2004
1. Shell $1,067.6¶
2. BP $601.9
3. Valero $333.7
4. Abu Dhabi National Oil Co. $276.5
5. ExxonMobil $274.8
6. Ssangyong $233.3
7. Kuwait Petroleum Corporation $211.5
8. Motor Oil (Hellas) $197.4
9. Bahrain Petroleum Company $196.5
10. Refinery Associates of Texas $121.3

Fiscal year 2003
1. ExxonMobil $729.3
2. Shell $538.0
3. BP $441.7
4. Valero $314.3
5. National Oil Dist. Co. (Qatar) $220.6
6. Tesoro $204.7
7. Motor Oil (Hellas) $197.7
8. Saudi Arabian Oil Co. $190.1
9. Ssangyong $187.6
10. Paramount Petroleum Corp. $130.7

Fiscal year 2002
1. ExxonMobil $567.2
2. Shell $538.3
3. BP $329.9
4. Valero $246.4
5. Caltex $199.4
6. Kuwait Petroleum Corp. $183.4
7. National Oil Dist. Co. (Qatar) $177.4
8. Bahrain Petroleum Co. $158.2
9. LG-Caltex $155.8
10. Refinery Associates of Texas $142.2

Fiscal year 2001
1. ExxonMobil $711.6
2. BP (BP/ Arco/ Amoco) $561.9
3. Equilon Enterprises (Shell) $466.3
4. Valero $303.6
5. Motor Oil (Hellas) $206.5
6. Coastal Aruba Refining $146.6
7. LG Caltex $145.1
8. Navajo $121.8
9. Paramount $94.4
10. Tesoro $88.6

Fiscal year 2000
1. Equilon Enterprises $264.9
2. Arco Products $236.0
3. Exxon Corp. $160.9
4. Motor Oil (Hellas) $148.4
5. Mobil Oil Corp. $135.5
6. Conoco Inc. $128.6
7. Navajo $121.0
8. Valero $108.4
9. Coastal Aruba Refining Co. $102.2
10. Tesoro Hawaii Corp. $86.6

Fiscal year 1999
1. Mobil Corp. $207.0
2. Equilon Enterprises $202.9
3. Arco Products Co. $123.4
4. Coastal Refining $115.7
5. Motor Oil (Hellas) $104.5
6. Exxon Corp. $92.0
7. Caltex $87.1
8. Refinery Associates of Texas $71.4
9. Conoco $63.0
10. AGIP Petroli SPA $57.6

BUT, things have changed in FY06. Below I give only the top 5, based on Top 100 Defense Logistic Agency contractors for FY06 (from Oct 2005 to June 2006). Note that the totals are missing July, August and September figures.

1. ExxonMobil $924.6 + Mobil Oil Corp. $184.6
2. Kuwait Petroleum Corporation $899.8
3. Refinery Associates of Texas (an oil products trading company) $554.0
4. Abu Dhabi National Oil Co. $494.3
5. Bahrain Petroleum Company $477.5

Yes, very big numbers. Other important ones are (Caltex $356, Valero $335, Air BP Ltd $275 million).

Yes, America is “addicted to oil”. So is the US military. The problem is that the overseas US military bases are much more dependent on foreign sources to secure the oil they need than the domestic consumers.

In my previous post I discussed F-22A. There I mentioned that Lockheed Martin website has the following sentence under its logo: “We never forget who we’re working for”.

How could they forget? Just look at the numbers in the table below.

The largest total dollar volume of Department of Defense prime contract awards in FY05 and FY04

See: Source, see also TOP50 of Defense Logistic Agency for FY05

Now, is it clear why big corporations are eager to recruit high ranking retired military officials? No, I am not jumping into a conclusion. Just a speculation.


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