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Shell Denies War Profits; Refuses to Aid War Victims

By Nick Mottern, Director ConsumersforPeace.org

In spite of findings by Nobel Prize winning economist Joseph Stiglitz and other noted experts, Royal Dutch Shell plc rejects the idea that any part of the current spike in oil prices and its record profits, are directly traceable to the Iraq War.

Shell, the world’s second largest privately held oil company, made its position on war profits known in a letter to ConsumersforPeace.org, responding to a request that it contribute its war profits for the last five years, estimated at $28 billion, to a total $80 billion fund to benefit Iraqi, U.S. and other coalition war victims.

“The proposals in your letter are based on the contention that there is a direct casual relationship between profits achieved by some oil companies in the last few years and increases in the oil price linked to some degree to the war in Iraq,” Shell says in the letter dated March 7 and authored by Roxanne Decyk, Corporate Affairs Director.

“We reject this contention:” the letter continues, “the oil price fluctuates in response to many and various factors, and it is not possible to identify any one cause, or attribute any specific portion of profits to such a cause, in this way. We do not, therefore, accept your suggestion of payment of a specific sum into the kind of fund you have described.”

ExxonMobil, the largest privately held oil firm and BP, the third largest, were also asked by Consumers for Peace to contribute estimated five-year war profits of $38 billion and $19 billion respectively to the aid fund. Neither firm has responded at this writing.

Shell also rejected a request that it lobby for an end to occupation of Iraq and the observation by Consumers for Peace that it had been involved in pre-invasion discussions with U.S. officials. “Shell does no get involved in political activity of the kind you suggest, the letter said. “ Your insinuation that Shell was involved in consultations with the U.S. government prior to the invasion is also entirely without foundation.”

With respect to a proposed Iraq oil law that could lead to extraordinary profits for oil firms, the letter said: “Shell is not, nor has it engaged in any lobbying about the specific form that the legislation should take, but it is no secret that we, alongside other oil companies, hope to see a legislative framework in place as soon as possible.”

Shell’s position on war profits is contradicted in “The Three Trillion Dollar War”, just published, authored by Professor Stiglitz, who teaches at Columbia University, and Professor Linda Bilmes, of Harvard’s Kennedy School of Government.

“…if America went to war in the hope of securing cheap oil, we failed miserably,” they write. “We did however, succeed in making the oil companies richer. ExxonMobil and other oil companies have been among the few real beneficiaries of the war, as their profits and share prices have soared. Meanwhile, the economy as a whole pays a big price.”

Their study finds: “If even half of the difference between the current price ($95-$100 a barrel) and the price before the war ($25 a barrel) is attributed to the war, then the oil costs of the war today are $35 a barrel…”

This analysis is consistent with that of Dr. Dean Baker, Co-founder of the Washington, D.C. based Center for Economic and Policy Research, who has estimated for Consumers for Peace that “the price of oil is probably about $10 to $20 a barrel higher because of the war.” This, he says, is because of the war-caused drop in Iraq oil production and fear in the market that the war will spread and further disrupt oil supplies.

“If (oil) prices were 10-20 percent lower,” Dr. Baker says, Exxon’s profits might be 20 – 30 percent lower.” This analysis was applied to the profits of Shell and BP to arrive at the estimates of their war profits.

Dr. Baker also estimated that about 40 cents out of $3/gallon gasoline represents war profit.

With respect to Shell’s involvement in pre-invasion discussions, the Washington Post reported that White House records showed that on April 17, 2001, staff members of Vice President Dick Cheney’s energy task force met with “Royal Dutch/Shell Group’s chairman, Sir Mark Moody-Stuart, Shell Oil chairman Steven Miller and two others.” The content of the discussions are not known because Mr. Cheney went to court to block disclosure of task force records. However, it appears the task force had access to information on Iraq oil fields and competitors for access to Iraq’s oil that was prepared by the Defense Intelligence Agency.

The Post also reported that Darci Sinclair, a Shell spokesperson, asked about the task force meeting “said she did not know whether Shell officials met with the task force, but they often meet with members of the administration.”

Phillip Carroll, a former Shell official, is reported to have been one of a group of oil people who entered Iraq in 2003 with invasion forces as an advisor to the Coalition Provisional Authority, that was set up to manage the occupation.


Read Royal Shell Letter                                  Read War Profits Shell