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.
Little sarcasm, Knowing that a nuclear exchange would turn Iran into a giant window pane.
Here's the timetable I see: as Iraq winds down in late 2006, we mount an attack on Iran in early 2007. Then, in another 12-18 months, we take out Syria. After that, possibly North Korea. Freedom is on the march.
Well, the US could probably reduce gas consumption by ONE THIRD without to much inconveniences - after all the average car in Europe or Japan consumes about that much less.
One solution is hybrids, another one of course is smaller cars:
http://www.autoblog.com/2006/01/04/2007-toyota-yaris-the-little-euros-official-arrival/
Or diesel engines: A Vauxhall (GM) Zafira gets 46 mpg and has room for 7:
http://www.vauxhall.co.uk/vx/carsandvans/brandcarhub.do?method=loadBrandHubCarPage&vehicleType=C&scope=S&brandName=newZafira
That alone would drastically reduce dependency on foreign oil without having to drive less.
STOP IT, you're making too much sense for this board.
Let them do it. It would hurt no doubt about that but that cuts both ways. It is like a store owner saying I'm not going to sell my wares anymore. Works fine until the storekeeper's bills come due.
Leave that stuff for Al Gore, wolf. Conservation only goes so far. We need to make sure that there is a safe, reliable source of oil if our economy is going to continue to grow.
The big advantage of corn based ethanol over cellulose is that the infrastructure is in place. A farmer can plant corn, till it and harvest it knowing that a transparent market exists for his product. I would guess (or maybe hope) that as the ethanol industry matures, distilleries will contract directly with farmers for the production of cellulose feed stocks. (that's sorta how most hog markets in this part of the mid-west work now. by and large, farmers no longer breed or fatten hogs with the hope of doing well at the public market; instead, they custom contract directly with one or more major packers, giving the farmer a guaranteed market at a guaranteed price and giving the packer exactly the type of carcass it wants).
By the way, it can be kinda fun, especially if you have young 'uns still at home, to raise dent corn in your garden. If you live in an area of the country where corn is planted, you can beg a cup full, or two, of seed from a dealer from his collection of broken bags. When my kids used to raise chickens, they raised their own feed in the garden (chicken sh*t is an excellent corn fertilizer), but it might be more fun for kids in town to raise earcorn for squirrel or bird feeders.
Interesting, I have a bag of corn for a squirrel feeder, it is hard so I guess that must be dent corn? The squirrels end up planting some in the ground so I have ears of corn that sprout up in the oddest places!
If we're growing the corn anyway we should go ahead and extract the ethanol. Building the plants will ensure that we have an industry in place that can handle cellulose ethanol when that comes on line. I believe you can also use the cornstalks as feedstock for producing cellulose ethanol.
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