NEXT YEAR'S WAR IN IRAQ AND AFGHANISTAN TO COST APPROXIMATELY $170 BILLION

According to testimony yesterday by Defense Secretary Robert Gates, military operations in Iraq and Afghanistan will cost approximately $170 billion above and beyond the $515.4 billion already budgeted for regular Pentagon expenditures in the next fiscal year. On a per day basis, that calculates to roughly $466 million per day in costs for the military actions in Iraq and Afghanistan, about $1.4 billion per day for regular Pentagon expenditures, and about $1.866 billion per day in total.

From The New York Times:

The military operations in Iraq and Afghanistan could cost $170 billion in the next fiscal year over and above the $515.4 billion regular Pentagon budget that President Bush has proposed, Defense Secretary Robert M. Gates said on Wednesday.

Mr. Gates gave that estimate in testimony before the Senate Armed Services Committee after cautioning the panel that any estimate would be dicey, given the unpredictability of war.

“Well, a straight-line projection, Mr. Chairman, of our current expenditures would probably put the full-year cost in a strictly arithmetic approach at about $170 billion,” Mr. Gates said in response to questions from Senator Carl Levin, the Michigan Democrat who is the head of the committee.

“While the monetary cost is not the most important part of the debate over Iraq or Afghanistan, it does need to be part of that debate, and the citizens of our nation have a right to know what those costs are projected to be,” Senator Levin said.

CRUDE OIL SURGES AS TURKEY VOTES TO USE MILITARY FORCE AGAINST KURDS

From Bloomberg:

Crude oil rose to a record $89 a barrel in New York after Turkish lawmakers voted to allow the use of military force against Kurdish rebels in northern Iraq.

The assembly in Turkey's capital of Ankara backed the motion by 507 votes to 19, Parliament Speaker Koksal Toptan told lawmakers. An Energy Department report today showed that U.S. oil, gasoline and heating-oil supplies rose last week.

``The Turkish vote has scared traders,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts. ``The doomsday scenario is that things will spiral out of control and lead neighboring countries like Iran and Saudi Arabia to become involved. This isn't likely but it encourages people to be long oil.'' Longs are bets prices will rise.

Crude oil for November delivery rose 31 cents, or 0.4 percent, to $87.92 a barrel at 1:20 p.m. on the New York Mercantile Exchange. Futures reached $89, the highest since the contract was introduced in 1983. Prices are up 49 percent from a year ago. This is the seventh straight daily gain.

On Oct. 15, prices passed the previous all-time inflation- adjusted record reached in 1981, when Iran cut oil exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, according to the Energy Department, or $84.73 in today's dollars.