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Iraq's oil flow

From Mary Snow

Wolf Blitzer Reports
Oil and Gas

NEW YORK (CNN) -- Whether it's paying more than $2 a gallon at the pump, or shelling out more for home heating oil, consumers are feeling the pinch of record oil prices and energy observers say Iraq is partly to blame.

"If there is a direct cost of the Iraq war to consumers besides the impact on the federal budget, it's certainly being seen at the gas pump," says John Kilduff senior vice president of the Fimat Energy Risk Management Group.

Prices at the pump are caused by a tightened oil supply linked to Iraq.

Two years ago when the Iraq war started, there was the anticipation that oil would see a dramatic increase in output once Iraqi dictator Saddam Hussein was overthrown.

"The biggest disappointment is that oil is not getting out of the north which is supposed to be Kurdish-controlled," says Kilduff.

Attacks on oil fields and refineries like one in Kirkuk has slowed the oil flow.

Currently, there's actually less oil coming out of Iraq than before the war started.

In 2003, it's estimated that 2.5 million barrels were coming out of Iraq each day.

Now, that number is fewer than 2 million.

"We see attacks on a regular basis. Since the end of major military operations in April of 2003, there have been close to 250 attacks against oil pipelines, refineries and oil facilities and that has been pretty significant in reducing... up to a million barrels a day of potential production," says Gal Luft, a director at the Institute for the Analysis of Global Security.

Just how much oil is in Iraq is unknown since much of it is untapped, but it's estimated to have the world's third largest reserve.

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