2AN ECONOMIC ANALYSIS OF ASPECTS OF PETROLEUM AND MILITARY SECURITY IN THE PERSIAN GULF

Geologic estimates of remaining global petroleum resources place about 50 % in the Persian Gulf. Production costs are estimated at $5 per barrel there, and $15 per barrel in the North Sea and Alaska. Using mathematical methods derived from depletion theory, the present value of economic rent from oil is on the order of $20 trillion. Game theory is utilized to explain the $15-$20 per barrel price band that existed from 1986 to 1999. New economic forces have displaced this previously stable pattern; a new price range of $22 to $28 may be emerging. International trade in petroleum and conventional weapons are analyzed with econometric methods; the occurrence of nuclear weapons capability in the Persian Gulf region is explored. In 1980, shortly after Saddam Hussein assumed the Presidency of Iraq, that country attacked Iran in the southwest Khuzistan region. Iraq sought control over two major geographic goals: the Shatt-al-Arab channel, a shipping route for export of Iraqi oil; and the petroleum production facilities i