Weeks before the attacks that killed 129 people in Paris, U.S. warplanes resumed sorties above Syria and Iraq, targeting anew oil fields and other parts of a vast petroleum infrastructure that fuels—and funds—Islamic State, one of the richest terrorist armies the world has known.

These airstrikes were launched not because U.S. officials were prescient. They came after the Obama administration found and quietly fixed a colossal miscalculation. U.S. intelligence had grossly overestimated the damage they'd inflicted during airstrikes on the militants' oil production apparatus last year, while underestimating Islamic State's oil revenue by $400 million. According to U.S. Department of the Treasury officials and data they released in the wake of the Paris mayhem, the terrorist group is actually taking in $500 million from oil a year. What's more, just a few hours before the first Islamic State suicide bomber blew himself up outside the Stade de France on Nov. 13, U.S. Army Colonel Steve Warren conceded at a press briefing that some American airstrikes disrupted IS oil operations for no more than a day or two.

The Obama administration "misunderstood the [oil] problem at first, and then they wildly overestimated the impact of what they did," says Benjamin Bahney, an international policy analyst at the Rand Corp., a U.S. Department of Defense-funded think tank, where he helped lead a 2010 study on Islamic State's finances and back-office operations based on captured ledgers. He says the radical revision on oil revenue came after Treasury officials gained new intelligence on Islamic State's petroleum operations—similar to the ledgers Rand used for its study—following a rare ground assault by American Special Operations Forces this May. U.S. forces, operating deep into the group's territory in eastern Syria, targeted and killed an Islamic State "oil emir," a man known by the Arabic nom de guerre Abu Sayyaf, Pentagon official