Iraq’s Oil Bust

Oil exports were supposed to pay for the reconstruction. Instead they’ve been stifled.

Guarding the Fatah oil refinery used to be a pretty straightforward job. Insurgents hit the complex only sporadically, at night, and usually missed important targets. But by early last year, attackers were using rocket-propelled grenades, mortars and heavy machine guns in brazen daylight assaults. They seemed to know about everything and everybody in the refinery. Ambushes were common. “We were afraid to even take vacation and go home,” says 26-year-old Saif Mohammed, an Iraqi security guard assigned to help protect the vast network of blackened pipes and smokestacks. “The people who worked with us used to tip off the fighters. They wanted to play both sides
When insurgents killed the man Mohammed shared duty with last April, then threatened Mohammed with the same, he quit. In the past year, there have been close to 20 large-scale assaults on or around Fatah, part of Iraq’s largest oil-production complex in Bayji, deep in the Sunni Triangle northwest of Baghdad. Last month the Bayji site shut down completely for two weeks. It reopened with the New Year, but three days later insurgents pinned down a 60-truck fuel convoy there in an hourlong gun battle. Across the country, insurgents mount a major attack on oil facilities about once every three days, and the situation is getting worse. December was the third month in a row that Iraqi oil production went down, marking the lowest level of exports since the invasion. At a time when global supplies are stretched thin, the Iraqi oil bust helps keep world prices near record highs. Instead of looking forward to the prospect of their country standing on its own, after final results in polls to elect a new, permanent government were announced last week, Iraqis are now facing a massive oil and gas price hike designed to ease part of a crippling $120 billion debt.

Only three years ago, before the United States led the invasion of Iraq, the Bush ad