From a piece by Zaid Salah in OpenDemocracy…

It was revealed on 9 March 2006 that oil production in Iraq is in fact at the lowest rate since the war. In August 2004, oil exports stood at 1.9 million barrels per day (mbd). Less than a year later, in July 2005, they had fallen to 1.42 mbd. We have now learned that in December 2005 exports fell to 1.1 mbd, their lowest rate since the war. This stands in complete contrast to the declarations made by US and Iraqi officials on the state of Iraq’s oil industry. From Paul Wolfowitz, who famously declared that Iraq would be able to finance its own reconstruction, to Iraqi officials who declared in December 2004 that oil production would reach 3.5 mbd within less than twelve months: all have been involved in a huge operation of deceit.

The oil industry is crumbling, and the more it crumbles, the more we can write off any hopes for the rest of the country. This development impacts on Iraq in three ways. First, it translates into less monies available for the government’s general budget (by way of example, the ministry of justice’s budget for 2006 was reduced by two-thirds in comparison to 2005); second, oil shortages can be felt at petrol stations throughout the country, where average Iraqis often have to queue for days at a time in order to fill up their gas tanks.

Third, it affects electricity production, which incredibly also declined to its lowest point since the start of the war in March 2003, with the overstressed power network producing less than half the electricity needed to meet Iraqi demand. Most of Iraq’s power installations run on oil, so the fuel shortages have a direct impact on electricity production throughout the country. In addition, the fact that Iraq is exporting less will necessarily mean that reconstruction of the electricity sector, and even maintenance of the inadequate supply that is currently available, will suffer as a result.