Clearly, gaining control of what Wolfowitz once described as a country that "floats on a sea of oil" was one of the Pentagon's highest priorities in the early days of the invasion. As part of its planning for the assault, the Department of Defense established detailed plans to seize Iraqi oil fields and installations during the first days of the war. "It's fair to say that our land component commander and his planning staff have crafted strategies that will allow us to secure and protect these fields as rapidly as possible," a top Pentagon official told news reporters on January 24, 2003. Once U.S. troops entered Iraq, special combat teams spread out into the oil fields and occupied key installations. In fact, the very first operation of the war was a commando raid on an offshore loading platform in the Persian Gulf. "Swooping silently out of the Persian Gulf night," an over-stimulated reporter for the New York Times wrote on March 23, "Navy Seals seized two Iraqi oil terminals in bold raids that ended early this morning, overwhelming lightly armed Iraqi guards and claiming a bloodless victory in the battle for Iraq's vast oil empire."

This early "victory" was followed by others, as U.S. forces occupied key refineries and, most conspicuously, the Oil Ministry building in downtown Baghdad. So far, so good. But almost instantaneously things began to go seriously wrong. Lacking sufficient troops to protect the oil facilities and all the other infrastructure in Baghdad and other key cities, the military chose to protect the oil alone -- allowing desperate and rapacious Iraqis to go on a rampage of looting that fatally undermined the authority of the military occupation and the U.S.-backed interim government. To make matters worse, the very visible American emphasis on protecting oil facilities while ignoring other infrastructure gave the distinct -- and not completely inaccurate --impression that the United States had invaded Iraq less to liberate it from a tyrannical regime than to steal, or at least control, its oil. And from this perception came part of the anger and resentment that constituted the essential raw materials for the outbreak of an armed insurgency against the American occupation and everything associated with it. The Bush administration never recovered from this disastrous chain of events.

An Occupation Engulfed in a Sea of Fire

The Iraqi insurgency is not monolithic, and it is not always possible to determine the intentions of its various components. Nevertheless, it is clear that oil -- that is, the association between Iraqi oil and the American occupation -- plays a central role in the insurgents' hazy ideology. "The insurgents used this," Iraqi-born oil consultant Falah Alijbury said of American plans to privatize the Iraqi oil industry. As he put it, the insurgents are telling fellow Iraqis, "Look, you're losing your country, you're losing your resources to a bunch of wealthy billionaires who want to take you over and make your life miserable." From Alijbury's perspective, this is one of the insurgency's most powerful appeals.

The disparate Iraqi insurgent groups were also aware of Washington's intent to finance its war and occupation through sales of Iraqi petroleum, and so have made sabotage of Iraq's pipelines, pumping stations, and loading terminals one of their most important strategic objectives. According to one source, insurgents conducted 230 major attacks on Iraq's oil infrastructure between January 2004 and September 7, 2005, causing billions of dollars in losses. Here, for instance, is a listing of some of the most recent attacks, as compiled by the Institute for the Analysis of Global Security:

•  August 20: Attack on a major pipeline between Bayji and Baghdad stopped electricity to the capital.
• August 26: Insurgents sabotaged an exporting oil well north of Kirkuk.
• August 27: Bomb beneath an oil pipeline supplying the Daura oil refinery in Baghdad, causing an hour-long fire.
• August 29: Rebels fired a mortar at Iraq's oil ministry building in Baghdad.
• August 30: Lt. Colonel Mohammed Rashad, commander of a unit protecting Iraq's oil pipeline network, was assassinated in front of his home in Kirkuk as he was leaving for work.
• Sept 3: An explosion on oil pipeline 2.5 miles from Fatha, between Kirkuk and Bayji, stopping oil flow from Kirkuk to Ceyhan after insurgents ignited an oil leak.
• Sept. 5: Oil pipeline connecting Bayji and Baghdad was set on fine west of Samarra.

As a result of such attacks, which continue to occur on a near-daily basis, Iraqi oil output has actually declined since the United States invaded Iraq and overthrew Saddam Hussein. According to the DoE, total production stood at 1.9 million barrels per day in May 2005, compared to 2.6 million barrels in January 2003, just before the American invasion. Quite the opposite of paying for the American occupation, as promised by administration officials, Iraqi production is costing U.S. taxpayers billions of dollars per year. Underwriting the costs of using American soldiers and U.S.-paid private guards to protect Iraq's highly vulnerable pipelines and refineries has proved expensive indeed.

At present, American forces are protecting two main components of Iraq's oil infrastructure: the Kirkuk-to-Ceyhan export pipeline in the north, near Iraq's border with Turkey; and offshore loading terminals in the south, on the edge of the Persian Gulf. Protection of the northern pipeline is the responsibility of Task Force Shield, a mobile combat unit made up of Army forces drawn from Fort Wainright, Alaska and Fort Lewis in Washington State. In the Gulf, protection of the loading platforms is the responsibility of the U.S. Navy and the Coast Guard.

These oil-protection operations have proved extremely hazardous. In April 2004, for example, suicide bombers in a small boat approached the Khor al-Amaya offshore loading terminal and detonated their explosives when approached by a U.S. patrol ship, killing two Navy sailors and one Coast Guard sailor -- the latter being the first Coast Guardsman to be killed in combat since the Vietnam War. Adding further symbolism to this event, the platform involved was one of those occupied by Navy Seals in March 2003 in that "bloodless victory in the battle for Iraq's vast oil empire."

Despite the deployment of American troops at key oil facilities and the ever-rising amounts of money invested in pipeline security, the Department of Defense has made zero progress in its drive to boost Iraqi oil output. "In the north, Iraq's main export pipeline looks all but impossible to protect from sabotage," the British Financial Times reported in June. "Meanwhile in the south, local tribal disputes, which often go unreported, hamper efforts to restore oilfields, while security costs and other reconstruction bills all reduce the amount of money available for [the rehabilitation of] the oil industry."

Efforts to boost Iraqi oil production have also been hampered by two other problems: pervasive corruption in the Oil Ministry and severe differences between the Kurds, the Sunnis, and the Shiites over the future allocation of oil revenues.

Just how much Iraqi oil has been lost to corruption or black-market transactions is impossible to determine, but experts believe the amounts are substantial. "Administrative corruption takes on so many forms," Muhammad al-Abudi, the Oil Ministry's director-general of drilling, observed in March 2005. "The robberies and thefts that are taking place on a daily basis and on all levels... are committed by low-level government employees and also by high officials in leadership positions in the Iraqi state," he noted. Typically, these losses are blamed on insurgent activity, thereby diverting attention from the government figures actually responsible. "It seems there that there is an implicit alliance between the smuggling and sabotage forces aimed at increasing the rates of exhaustion of the state resources," Diya al-Bakka, another senior Oil Ministry official told Oil & Gas Journal in May.

The corruption and mismanagement has had another serious consequence for Iraq's long-term oil potential: in order to maximize output now, and thereby keep the dollars rolling in, Iraqi oil executives are employing faulty pumping methods, thus risking permanent damage to underground reservoirs. For example, managers are continuing to pump oil from Iraq's main Rumailia oilfield, one of the world's largest, even though water injection systems (used to maintain underground pressure) have failed; in so doing, they are thought by experts to be causing irreversible damage to the field. "The problem is that [underground] pressure problems could lead to a permanent decline in production," observed one European buyer of Iraqi oil quoted in the Financial Times last June. Even if U.S. companies later were to gain access to Iraqi fields, therefore, they might find yields to be disappointing.

Just as significant is the warring between Iraq's three main ethnic and religious communities over the distribution of future oil royalties. Most of Iraq's large oilfields are concentrated in the Kurdish north and the Shiite south. The Kurds and Shiites want most of the royalties to be distributed to Iraq's provinces on a per capita basis which would benefit them, but leave funds relatively scarce for the Sunni region and for any future central government in Baghdad. A failure to reach agreement on this issue was one of the main obstacles to final adoption of the new Iraqi constitution, and helped prompt the Sunni delegates to reject the final text. The Sunnis are also worried by provisions of the proposed constitution that allow groups of provinces (presumably in the Kurdish and Shiite areas) to form self-governing regional entities which could lead to the breakup of Iraq into three semi-independent statelets, with the Sunnis occupying the smallest and poorest region in the center. Not only would such a breakup enhance the Sunnis' sense of alienation from the Iraqi nation-building project -- thereby further invigorating an already vigorous insurgency -- but it would also disrupt Iraqi oil operations and make investment in Iraq's petroleum industry even less attractive to foreign oil companies. The net result, in all likelihood, will be a further decline in Iraqi petroleum output.