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Stop blaming oil speculators and start listening to them: A war with Iran would devastate the economy

Matthew Yglesias, Slate
War for No Oil

Responding to questions from reporters yesterday, Barack Obama promised to restart a gimmicky Justice Department inquiry into whether speculators have unlawfully inflated oil prices. This task force was announced with great fanfare the last time gas prices were a big political issue, but it rarely met and didn’t accomplish much of anything. In other news yesterday, the price of Brent crude oil tumbled in response to both bad economic news from Europe and good diplomatic news from Iran. The juxtaposition should serve as a reminder that the idea of a rigorous separation between supply, demand, and “speculation” is nonsense. Speculators are speculating on, among other things, the likely outlook for supply and demand.

Under the circumstances, it’s ironic that the Obama administration is often attacked politically for its alleged softness on Iran. In the grand scheme of things, if the Iranian nuclear program really is a dire threat to American security, maybe something as petty as the fate of the economy doesn’t matter. But make no mistake, a war with Iran would have enormous consequences on the global price of oil, and it’s perfectly reasonable for speculators to take to the futures markets to try to bet on it.

How big of an impact on oil prices are we talking about?
(7 March 2012)

We Can Live with a Nuclear Iran

Paul Pillar, Washington Monthly
Fears of a bomb in Tehran’s hands are overhyped, and a war to prevent it would be a disaster.

… even without an Israeli decision to start a war, recent U.S., Iranian, and Israeli actions already constitute an escalation toward one. Rising tensions have increased the chance that even a minor incident, such as a seaborne encounter in the Persian Gulf, could spiral out of control. And Iran’s own covert actions—perhaps including the recent spate of car bombs targeting Israeli officials in India and Georgia and last year’s bizarre alleged plot to blow up a restaurant in Washington, D.C., and kill the Saudi ambassador—feed even more hostility from the U.S. and Israel, escalating further the risk of open conflict.

Thus we find ourselves at a strange pass. Those in the United States who genuinely yearn for war are still a neoconservative minority. But the danger that war might break out—and that the hawks will get their way—has nonetheless become substantial. The U.S. has just withdrawn the last troops from one Middle Eastern country where it fought a highly costly war of choice with a rationale involving weapons of mass destruction. Now we find ourselves on the precipice of yet another such war—almost purely because the acceptable range of opinion on Iran has narrowed and ossified around the “sensible” idea that all options must be pursued to prevent the country from acquiring nuclear weapons.

Given the momentousness of such an endeavor and how much prominence the Iranian nuclear issue has been given, one might think that talk about exercising the military option would be backed up by extensive analysis of the threat in question and the different ways of responding to it. But it isn’t. Strip away the bellicosity and political rhetoric, and what one finds is not rigorous analysis but a mixture of fear, fanciful speculation, and crude stereotyping. There are indeed good reasons to oppose Iranian acquisition of nuclear weapons, and likewise many steps the United States and the international community can and should take to try to avoid that eventuality. But an Iran with a bomb would not be anywhere near as dangerous as most people assume, and a war to try to stop it from acquiring one would be less successful, and far more costly, than most people imagine.

What difference would it make to Iran’s behavior and influence if the country had a bomb? Even among those who believe that war with the Islamic Republic would be a bad idea, this question has been subjected to precious little careful analysis. The notion that a nuclear weapon would turn Iran into a significantly more dangerous actor that would imperil U.S. interests has become conventional wisdom, and it gets repeated so often by so many diverse commentators that it seldom, if ever, is questioned.

Paul Pillar teaches in the Security Studies Program at Georgetown University and was the national intelligence officer for the Near East and South Asia from 2000 to 2005.
(March/April 2012)

Oil creeps toward top of Asia’s economic worry list

Reuters via Arab News
SYDNEY: High oil prices are fast replacing Europe as the biggest danger to growth in Asia, threatening to smother consumer demand while taking a knife to exports and reigniting inflation.

Brent crude topping $128 a barrel is also a headache for central banks as it makes it harder to use easy monetary policy to cushion growth.

And any threat to Asia is a danger to all, as the world is counting on the region to keep growing to offset recession in Europe and a fitful recovery in the US.

“Just as the threat of a financial crisis has receded, the steep rise in oil prices in the first two months of 2012 has resurfaced as the greatest perceived threat to the outlook,” warned Nomura’s chief economic adviser, David Resler, in a note to clients.

Oil matters to Asia. The region is now the largest consumer of the commodity having surpassed North America in 2007 to account for more than 31 percent of world demand. Asia is home to four of the world’s 10 largest oil-consuming countries in China, Japan, India and South Korea.
(7 March 2012)

10th ASPO-International Conference in Vienna May 30 – June 1

The Oil Drum
The 10th International ASPO Conference will take place in Vienna, Austria over the course of three days from May 30 to June 1st 2012. The program nears completion and confirmed speaker details can be found below the fold. The conference will cover a wide range of energy topics including the future availability of fossil energy, geopolitical perspectives on energy and infastructure, economic and societal consequences of the 2nd half of the oil age, peak oil & urban design. To keep updated on conference details and for registration visit the conference website

We are happy to announce that Vienna will be hosting the 10th annual ASPO Conference, a gathering of international top experts on the depletion of oil and the future of energy and society. ASPO, the Association for the Study of Peak Oil & Gas, is an international network of experts. ASPO conferences are a well known platform of exchange for scientists, the business sector, public authorities and NGOs from all over the world. It is the first time that Austria is the host country of an ASPO International conference.

The 10th Annual ASPO Conference will take place at Palais Niederösterreich in Vienna´s beautiful city center during May 30 – June 1, 2012.

Objectives of the conference

The 10th annual ASPO conference will bring together decision makers, scientists, the business sector, public authoritities and NGOs to discuss challenges and opportunities of Peak Oil and review scenarios on energy supply and demand. High-level speakers, discussions and networking opportunities will allow exchange and know-how transfer on an international level.

The diversity of the program and participants from many different regions will bring new aspects into the discussion and create new perspectives on analyses, strategies and solution approaches.
(7 March 2012)

Ölreserven: Der “Doomsday” war gestern

Roman David-Freihsl, derStandard
Die Diskussion um die knappen Ölreserven hat sich in den letzten Jahren grundlegend gewandelt

Wien – Als vor zehn Jahren die erste Aspo-Konferenz im schwedischen Uppsala abgehalten wurde, galten jene Experten und Fachleute, die vor einem nahen “Peak Oil”-Szenario warnten, noch weitgehend als eher durchgeknallt. Eine “Association for the Study of Peak Oil & Gas”? Die weltweite maximale Erdöl- und Erdgasförderquote solle schon sehr bald erreicht sein? Das seien doch “Doomer”, die davor warnten, hieß es.

Eine Sichtweise, die sich binnen zehn Jahren deutlich gewandelt hat – auf beiden Seiten. Dass die Zeit des “Easy Oil” vorbei ist, wird inzwischen wie selbstverständlich akzeptiert. Großes Aufsehen erregte vor allem der World Energie Outlook 2010 der Internationalen Energie Agentur (IEA), in der erstmals offiziell, aber wie nebenbei, angemerkt wurde, dass der Peak der konventionellen Ölförderung bereits 2006 überschritten worden sei. Sprich: Die Zeiten, dass man noch riesige Ölfelder finden könnte, bei denen man sozusagen einfach ein bisschen in den Sand stierlt, und es beginnt zu sprudeln – sind eindeutig vorbei.
(8 March 2012)