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Iran: Troubled waters over oil
James Surowiecki, New Yorker
The past few months haven’t been easy for Iran’s President, Mahmoud Ahmadinejad.
…This latest confrontation with the U.S. should have been the capper to a bad winter for Ahmadinejad. Strangely, though, it may instead have brought about an upturn in his fortunes. Soon, oil prices started to rise, jumping twenty per cent in just two weeks. As a result, the Iranian regime suddenly has an extra twenty million dollars or so to spend every day, a windfall that will help Ahmadinejad to placate his critics and solve some of his country’s more pressing economic problems.
The jump in oil prices wasn’t entirely a geopolitical phenomenon-the cold snap in the U.S. was also a big factor-but it was driven in part by an increase in what oil traders call the “risk premium.” When buying and selling oil, traders don’t just look at today’s supply and demand. They also try to forecast the future. And if buyers think there’s a chance that supply is going to be lower down the line-because, say, Iranian oil fields will be shut down-they will be willing to pay a higher price today in order to guarantee that they will have the oil they need.
…This helps Ahmadinejad enormously, because Iran has made huge commitments to government spending that can be kept only by relying on oil revenue.
…What really keeps the risk premium high is the American penchant for public responses to Iran’s provocations. So cooling down the martial rhetoric-even if we plan to take military action eventually-would likely bring oil prices down for a time, making Iran weaker.
(19 Feb 2007 issue)
Iran – (U.S.) Ready to attack
Dan Plesch, New Statesman
American military operations for a major conventional war with Iran could be implemented any day. They extend far beyond targeting suspect WMD facilities and will enable President Bush to destroy Iran’s military, political and economic infrastructure overnight using conventional weapons.
British military sources told the New Statesman, on condition of anonymity, that “the US military switched its whole focus to Iran” as soon as Saddam Hussein was kicked out of Baghdad. It continued this strategy, even though it had American infantry bogged down in fighting the insurgency in Iraq.
The US army, navy, air force and marines have all prepared battle plans and spent four years building bases and training for “Operation Iranian Freedom”. Admiral Fallon, the new head of US Central Command, has inherited computerised plans under the name TIRANNT (Theatre Iran Near Term).
…With little military effort, the US air force can hit the last-known position of Iranian military units, political leaders and supposed sites of weapons of mass destruction. One can be sure that, if war comes, George Bush will not want to stand accused of using too little force and allowing Iran to fight back.
“Global Strike” means that, without any obvious signal, what was done to Serbia and Lebanon can be done overnight to the whole of Iran. We, and probably the Iranians, would not know about it until after the bombs fell. Forces that hide will suffer the fate of Saddam’s armies, once their positions are known.
Dan Plesch is a research associate at the School of Oriental and African Studies. He has written for the Guardian, the Independent, the New York Times, the Observer, Tribune, the Washington Post and the Washington Times. He has regularly provided live political and military analysis of evolving news stories for the BBC, CNN, ITN and other news media.
(19 Feb 2007)
Also at Znet.
Iran: Crude Reality
Wall Street Journal via The Oil Drum
…Iran sits on one-tenth of the world’s known oil supplies but is using so much energy these days it may start rationing gasoline as soon as next month…
Iran, where a huge population bulge is reaching adulthood, is confronting the export crunch earlier and more acutely than others. Iran already consumes more oil than all but 15 other countries on earth, according to the International Energy Agency, which monitors the world energy market. In 1995, Iranians used the equivalent of 34% of the oil they pumped from the ground, exporting the rest. Last year they used 40%. In Iran’s natural-gas industry, the pinch has already begun. Although Iran has 15% of the world’s gas reserves, the country imported more than it exported in 2005. In January, Iran briefly cut off gas exports to Turkey as the Iranian government struggled with a surge in domestic use during a stretch of cold weather….
subsidies make energy practically free in Iran, discouraging any serious energy conservation. Gasoline, for example, costs about 40 cents a gallon at the pump. That’s encouraged an explosion of use, as Iranians add new cars while continuing to use fuel-guzzling old models.
(20 Feb 2007)
Excerpts only at The Oil Drum. The original article at the WSJ is subscription only.
