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Monday, January 16, 2006
Iran's Threat
More reasons why the United States needs a comprehensive energy independence program based on renewal resources. The Oil Drum:To give you the punchline up front, I'm going to argue that, with large (50%) uncertainties, a complete loss of Iranian production for an extended period might be expected to roughly double oil prices and cause massive economic impacts, while a halving of oil production due to sanctions, or retaliation to sanctions, might be expected to produce a 30-40% increase in price and significant economic impacts. If Iran is left alone, prices are quite likely to drift up somewhat anyway, but not by this much.Even with the uncertainty in the estimations, wonder if the possibilities will affect foreign policy?
2 Comments:
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I doubt Iran will cut off their oil. Their main customers are Japan S. Korea and China. They might restrict the Japanese, but all of their political cover is coming from China, so I don't think they would do anything to mess that up.
BUT, acting crazy and threatening raises the price of US oil, while enabling them to sell to the Chinese on the cheap. A win win for the Chinese and Iranians.
Mike