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BushCo. And Iran ‘War’ Threats Drives Up Oil Prices : Are They Both Conning Us Into Paying More For Our Fuel?

If Iran is hit with air strikes, we’re all going to pay for it. But whether or not BushCo. and/or Israel hits Iran, petrol prices are still climbing due to the ‘global supply instability’ festered up from the exchange of threats and tensions.

This story from the Washington Post quotes numerous oil industry experts saying a War On Iran is highly unlikely, because the global economic destruction wrought by massive increases in oil prices - soaring beyond $120 a barrel - makes the whole idea just plain inconceivable.

A U.S. military strike against Iran would have dire consequences in petroleum markets, say a variety of oil industry experts, many of whom think the prospect of pandemonium in those markets makes U.S. military action unlikely despite escalating economic sanctions imposed by the Bush administration.

Fair enough. But the same story reveals some remarkable facts about the international oil trade and oil supplies, and just how vulnerable they claim these supplies are.

“It will be chaos. . . . I can’t really see it,” said Abdulsamad al-Awadi, an oil trading consultant and former executive at Kuwait Petroleum. “Having been in the marketplace for almost 30 years, I can’t see a scenario for it, or precautionary measures” that oil companies could take. “There are no precautionary measures.”
“If war breaks out, anticipate that all hell will break loose in the oil markets,” said Robin West, chairman of PFC Energy, a District oil consulting firm.

“If it were a botched job with lots of targets and civilians dying and Iranians retaliating . . . it could escalate and the price of oil could shoot up to God knows where.”

Saudi Arabia, which accounts for about 8.7 million barrels a day, produces almost all of the world’s excess oil and is capable of boosting output by about 2.5 million barrels a day, Drollas said. Iran produces 2.5 million barrels a day.
“Can the world do without Iranian oil exports at the present time? The answer is: just,” said a senior planning executive at a major European oil company who spoke on condition of anonymity because the company has a policy not to publicly discuss oil prices. “There is enough spare capacity to offset Iranian exports, but it would be very tight. If every spigot were open everywhere, including Saudi Arabia, that should just about cover it. But it’s not comfortable.”

He and others noted that Iran would not need to attack well-guarded facilities in places like Saudi Arabia or harass tankers in the U.S.-patrolled Strait of Hormuz, at the head of the Persian Gulf. It could simply collaborate with Shiite forces in southern Iraq to cut off Iraq’s roughly 1.7 million barrels a day of production, further weakening its neighbor while driving up prices for its own exports.

“Certainly when you lose 2.5 million barrels a day of Iranian production, which is the most likely case scenario, that will literally just make the market go berserk,” al-Awadi said. Asked whether the companies he worked with had contingency plans, he said, “The oil industry does not have contingency plans.”

Most industrialized nations do have contingency plans; they have strategic petroleum reserves that could be tapped during an emergency. The U.S. Strategic Petroleum Reserve, which was tapped during Operation Desert Storm in 1991 and after Hurricane Katrina in 2005, has nearly 700 million barrels, enough to cover about 68 days of U.S. oil imports from all sources.

At my local 7-11 last night, customers queuing to pay for their petrol were groaning about the coming petrol price rises, mostly due to new war tensions from BushCo., Iran and Turkey. One extremely irate man spun the following theory (rough quote) :

“It’s bullshit, mate. They’re all in on it together. All these big oil countries, they argue and threaten each other and the prices go up. They get rich off their bullshit. Look at them. That bloke in Venezuela, the Iranian nutjob, the Saudis, Bush…they’re fucking laughing at us. We’re this close to going to war, they all yell, and we pay another 10 cents a litre. They’re fucking us, and they’re fucking laughing at us! They do this over and over again, and it always works. Bush and his oil mates get rich, Iran gets rich, the Saudis get even richer, they’re bleeding us fucking dry.”

Sometimes you have to wonder just how close to the truth this punter actually is.

If you’re a NeoCon with a mouthful of easy threats, you can get almost unlimited access to the American media, and through them the world’s media. Make enough threats, create a reality of tension and coming war, and watch the oil prices climb. It’s perhaps then no great coincidence that so many in the White House and the NeoCon elite have such strong ties and business interests in the oil industry.

Make a threat, shout some crap, cream a rich profit off people just trying to get to work.