Posted on 01/17/2006 7:42:21 AM PST by Flavius
OPEC power Iran wields a potent weapon -- oil -- which if fired to ward off international pressure over its nuclear programme could blast prices to record levels last seen during the 1979 Iranian Revolution.
Emboldened by strong prices and stretched global supplies, Tehran could retaliate by removing all or part of its daily crude sales of 2.4 million barrels from thirsty world markets.
As the United States and its European Union allies lose patience with the Islamic Republic, President Mahmoud Ahmadinejad has kept the world guessing as to whether the world's fourth biggest crude exporter will withhold supplies.
"We have the necessary tools to defend our rights," he told a news conference on Saturday. "Those who use harsh language against Iran need Iran 10 times more than we need them."
Oil markets have taken the point, with crude above $65 and rising and consumers on edge over lost output in Nigeria. The mere possibility of an Iranian interruption will add to tension for months to come.
Further actual disruptions would be hard, if not impossible, for the world to cover with the Organization of the Petroleum Exporting Countries holding only 1.5 million barrels per day in reserve.
"Iran is in a very strong position and Ahmadinejad knows it. It's a sellers' market," said independent oil consultant Geoff Pyne. "And the West doesn't have a choice -- it needs the oil."
The United States and EU want Iran referred to the United Nations Security Council for possible sanctions over a nuclear programme they suspect is aimed at developing weapons rather than fuel for power stations. Iran denies the charge.
China, a key crude buyer from Iran and permanent member of the Security Council, has said it would prefer the case to be solved outside the world body.
Iran, OPEC's second biggest producer, has warned that world oil prices would be driven higher if the U.N. slaps on sanctions.
WAR CHEST
While analysts see only a remote chance of the U.N. imposing a blanket embargo on Iranian crude exports, they see higher odds for a defiant Tehran purposely withdrawing oil from the 85 million bpd world market.
Iran, which amassed a $40 billion war chest from export revenues last year, could afford a short break in oil sales.
It could copy the tactics used by neighboring Iraq when it halted crude exports under U.N. sanctions to pressure chief political foes the United States and Britain.
"The question is whether Iran will take the initiative and cut off its oil, even for weeks or a month?" said Mustafa Alani, an analyst at Dubai-based Gulf Research Center.
"The Iranians can play with the psychology of the market even by threatening to cut off their oil."
Some analysts insist Tehran will not unsheath the oil weapon for fear it destroys credibility with international oil firms and banks and damages trade relations with other countries.
But when it comes to Ahmadinejad, who has incurred Western wrath with his outspoken remarks against Israel, the world has come to expect the unexpected.
"The Iranians don't follow logical rules," said Pyne. "Things are done for domestic consumption."
Standing up to Washington and its allies by halting oil exports may win points at home, but the oil weapon could prove a blunt instrument in the end.
"Ahmadinejad must be very careful about issuing these threats," said Mehdi Varzi, president of Varzi Energy consultancy.
"Obviously a cut off would be serious, but not insoluble. As it proved after the U.S. hurricanes, the world community can actually get together and put millions of barrels into the supply system."
And the United States, the world's biggest oil consumer, may be prepared to pay the price for disarming Iran.
Under unilateral sanctions, Washington has banned its companies from importing Iranian oil or investing in Iran, but it would feel the pain of higher oil prices.
"If the price of oil has to go up then that's a consequence we would have to suffer," said Republican Senator John McCain of Arizona.
I'm not sure how many other people are thinking this, but I sure hope Jimmy Carter has lost his passport. This modern day Neville Chamberlain will be drawn to this like flies to pasture patties. Heaven help us if he pulls another North Korean style intervention.
We'll come kick your sand-chafed asses and take your oil. But don't worry, the Democrats will still love and defend you. Good luck with that!
Once again. this UNDERLINES the importance of drilling for oil in ANWAR as a hedge against oil supply disruptions by terrorist states.
Once again, Democrats and Rinos alike have allowed the continued oil extortion racket with their vote to stop ANWAR drilling. Iran has a lot of oil and will get nukes in exchange for their oil. And consumers will pay out the nose once again if Iran holds back it's oil from international shipments.
How could oil exploration and homeland energy production NOT be construed as vital to national security?
This is an obvious lose lose situation for America. We know the United Nothings and their worthless resolutions and embargo threats have little meaning.
And congress is an enabler of the terrorist state oil extortion racket. I'm glad my Senators voted for drilling in ANWAr. What about yours?????
If I were president, I would be leading a full court press to free us from dependance on oil from countries led by goofballs. This is scary. I think a lot more ethanol is coming online this year and we should accelerate that. Everbody better fill up and stay ready.
Our Missouri Governor proposed in his State of the State Address that Missouri require a 10% ethanol blend in all gasoline sold in the state. No doubt special interest groups will do their best to prevent anything becoming law that reduces oil consumption.
If every state required a 10% blend of ethanol, our oil consumption would drop instantly by 10%.
However I believe there will be shortages of ethanol due to the limits of current production.
The current price at the pumps reflects anxiety over Iran.
If they actually carry out their threat, we will see record prices guaranteed.
As much as the Iranians kicked his political ass in 1979, it is hard to see, but then Jimmy has been willing to pull down his political pants for anything and everything, no matter how embarassing.
I think he simply beyond embarassment, and is driven by bitterness.
At what temperature does sand turn to glass?
This President, while speaking the right words on the War against Islamo-Fascism has not been strong on this front. He should start selling the leases for drilling in ANWAR, and off the shores of this country. If he is blocked, he should use the military corps to begin drilling, of course under the supervision and with the equipment leased from experienced oil exploring companies. This is a national security issue, and should be treated as such. What would Roosevelt do? That is the question that should be asked.
A 10% mix of ethanol and fuel, doesn't translate into 100% of the fuel economy of regular fuel. Prove that the mileage is the same, or uses less fuel to do the same chores, and we'll talk. I suspect that making this additive, costs more fuel than it saves. Like wind power, it cannot stand on its own, it needs a subsidy to compete.
"it needs a subsidy to compete."
Are you talking about oil imports? How much military subsidy is spent protecting foreign oil fields we depend on for the exports?
Either way we go there is some kind of subsidy. My preference is that the subsidy benefit the peaceful application of supporting American enterprise rather than enhancing sales of jihad controled oil.
Ethanol has been around for 30 years so I would venture to say that if ethanol is really a negative energy factor it would have died a slow death. Also ethanol is a proven non-petroleum pollution reducer, cutting smog in major cities considerably Considering drilling in ANWAR is dead for now, ethanol has a lot of life left, there is plenty of really cheap (compared to 1960's dollars corn) and it is an American produced product.
I have used ethanol blends for almost as long as it has been available and it sure beats the low octane gas we are stuck with in performance, with no problems. Have you ever tried an ethanol blend of gasoline, or just followed the oil company rumor mill?
All the naysayers of ethanol production are quick to point out their oil company propaganda. But they never have any viable solutions to reducing oil imports other than sell the SUV.
I have run the 10% blend in my work van, because it was cheaper. When I started tracking it, my mileage was less, although the performance was similar. A mechanic friend told me it ruins carbs.
National security is more important the price per gallon.
Iran's economy will not hold out long without income. They might have a 40 billion war chest, but no one mentioned that the annual budget is 40 billion and their annual exports of oil worth 45 billion.
I have driven several vehicles beyond 200k miles that have used almost exclusively ethanol blend gas with no problems. period.
I pride myself in at least supporting American industry and cutting MY dependence on foreign jihad oil.
A 10% blend of ethanol may not actually represent a 10% reduction in oil consumption, but even 1% less foreign oil consumption is better than the status quo of being held hostage by Jihad Oil Company.
And to my knowledge, ethanol has NO terrorist connections.
More powerful people than me will make decisions regarding energy policy, I have little to say about it except for where I buy my fuel. I buy by a combination of price + convenience. The one way to end energy dependence, is open up any and all fields to exploration, then let the market decide what is feasible and cost effective. Governments place is to regulate by way of legislation, not let the bureaucracy set the rules, and let rumor win the publicity war.
"If I were president, I would be leading a full court press to free us from dependance on oil from countries led by goofballs."
Revise to read:
If I were president, I would be leading a full court press to free us from dependance on oil. Period.
I agree with you completely on our inability to make energy related decisions.
Congress is in the hands of Jihad Oil Company and we are not drilling on American soil.
The bottom line is, nothing is being done by the people in power on the federal level. That is why I applaud the Missouri Governor for creating an initiative state wide.
Whoever controls energy supplys holds the balance of power in their hands.
Why after 30 years does it still need tax breaks and subsidies?
Several hundred thousand degrees less than a nuclear explosion.
Why do you ask?
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