Blood Oil

"In America it's bling bling, but out here it's bling bang," says Leonardo DiCaprio's character in the movie "Blood Diamond," explaining how diamonds on American fingers play a role in conflict and death in Africa. Thanks to this film, diamonds are the taboo commodity of the moment -- "All who touch it are left with blood on their hands," intones the voice-over in the preview.

But many Americans don't realize that the oil in our gas tanks, plastics, medicines, lubricants and cosmetics is implicated in an even larger bloody trade. From Nigeria to Iraq, Colombia, Chechnya and the Straits of Malacca, a growing global trade in illicit petroleum -- as much as 750,000 barrels a day, or one percent of the world oil production -- is providing money and weapons for violent conflict. And conflict oil is much trickier to manage than blood diamonds are. Most of us are like Ellen Barkin -- we may have sentimental attachments to our jewels, but we'll give them up the moment they start to seem icky. But no one, rich or poor, can really give up oil.

Almost two years ago, to explore the intersection of illicit oil and war, I traveled to the Niger Delta, where organized gangs steal crude oil from pipelines in a scheme that involves payoffs to local politicians and the military. Traveling on the creeks that weave through the Delta's mangroves, I saw many barges stuffed with large plastic urns -- each one taller than a man -- full of oil, moving slowly downstream towards the sea and waiting tankers. No one knows exactly how much these clunky vessels and some more sophisticated boats carry -- estimates range from 40,000 to 685,000 barrels a day. For years, oil companies have factored the theft into their spreadsheets.

I talked to a serious 26-year-old Nigerian man who had once been a political science student. He explained how he and his buddies had become crude oil thieves. "If your gang has stature and supremacy in a certain area they [dealers] come and sell the initiative to you," he said with the nonchalance of a suburban American describing an Amway franchise. The dealers send barges, and the young men tap the pipelines and ferry the oil. Sometimes the dealers pay in guns and drugs, sometimes in cash.

Isn't it risky?, I asked. "It's riskier not to take a risk," he said, echoing other young men who said the opportunity cost of staying out of the oil-for-guns trade was too high. The young man said that the trade benefits many politicians and other big men, but it also provides employment for young men.

In Nigeria, stolen oil is accelerating decades-old conflicts by bringing together the poor, the thugs and the powerful. For years, struggles over distribution of scarce oil money have turned village against village, and the people generally resent the national government, in part because corrupt and opportunistic politicians hire local thugs to influence elections and suppress challengers. As the trade in stolen oil has grown, the number of weapons entering the Delta has risen dramatically, and local gang members have become skilled fighters. Some gangs now see themselves as challenging the national government and the oil companies for control of the oil resources.

A conflict consultant I spoke with estimated that the amount of oil that can be stolen in the Delta in just half a day is enough to fund the hiring of 1000 trained militia members for a month and arm them with an arsenal of AK-47's. The consultant, who asked not to be named because it would prevent him from continuing to work in Nigeria, said conflict oil has made the Niger Delta as dangerous a war zone as Chechnya is.

In Iraq, a similar calculus of oil for weapons is at work for both Sunni insurgents and Shia militias. In 2005, 60 million barrels of oil were unaccounted for, according to Iraq's oil ministry. That year, fuel smuggling may have cost the government $2.5 to 4 billion. And a percentage of that money went straight to the government's enemies – insurgents, militias and criminal gangs.

Bilal Wahab, an Iraqi Fulbright scholar at American University in Washington, told me that 1200 tanker trucks smuggling oil crossed a single border point in one 24-hour period. Then he did the math: "A single tanker can make $7450 in profit, after paying bribes. A good car bomb costs about $7000, and if you assume that 30 percent of a single day's smuggling is going to the insurgents, then you have the capacity for 400 car bombs a day." By his reckoning, the carnage in Iraq has hardly even begun. (See his paper at The Middle East Forum Web site.)

These distant petro-conflicts creep into our lives through the prices we pay at the gas pump. Over the past few years, news of fighting and pipeline attacks have spooked the oil market and caused world crude oil prices to spike. "Smuggled oil funds conflict, which keeps prices high, and high prices make stealing oil more desirable," Charles Esser of the International Crisis Group told me. "It's a vicious cycle." It would be an overstatement to say that American consumers have blood on their hands, but we are becoming part of the cycle.

Yet the United States has no strategy to address the trade in stolen oil. Our tactics on oil security were developed during the 1973 oil crisis, so they are aimed at diluting OPEC's power and using the American military's ability to control the air and the sea to keep oil flowing through troubled regions. Underlying these policies are outdated ideas about oil -- that organized states control all of its flow and OPEC controls its price. But these days, control may also lie in the hands of a young Nigerian warlord with a cellphone or a boatful of guys in Basra who've attacked a tanker.

Part of the international strategy to stem the blood diamond trade has been to track the jewels made from the raw stones. Tracking oil is not so easy. It may be possible to identify oil by either analyzing its chemistry or putting a unique chemical marker in it. But in an industry where a single tanker of oil may change hands 300 times from the time it is filled to when it reaches its destination, keeping tabs will always be difficult. And tracking will not even be attempted until we fully acknowledge the problem of conflict oil. As Esser said, "Understanding and ending the cycle is important to bringing peace."

But this is, after all, America, and we have ways of bringing important issues to the attention of policy makers. We need a movie, definitely. And it must have catchy line: "In America it's vroom vroom, but here it's boom boom"? No, that isn't working for me. Please send suggestions.