Rumors of War and the Price of OIl
Something Dick Cheney said in his recent interview with Chris Wallace caught my attention. Cheney said he was in favor of keeping the military option open in dealing with Iran. This ties into my theory that the threat of a U.S./Iran military confrontation caused oil to jump to a peak of nearly $150 a barrel in July 2008.
Those who deal in oil were probably very aware of the ongoing debate within the Bush Administration. As long as there was a good possibility that President Bush might accept the counsel of Cheney and other hard line advisors there was the possibility that the U.S. would directly, or through Israel indirectly, engage Iran over their proliferation of weapons grade nuclear material. Much speculation was made about whether Bush would act before his second term expired, especially knowing what would follow should Barack Obama be elected President. For whatever reasons Bush didn't go with Cheney and oil prices dropped sharply in the latter half of 2008 as the intention of the Bush Administration to not engage the Iranians militarily either directly or indirectly became clear.
This price drop was made more precipitous due to it coinciding with the fall in demand for oil due to the worldwide recession. The recession helped divert attention from the possible U.S./Iran confrontation from being the primary factor for prices to spike so sharply upwards. It was therefor also easy to blame greedy and evil "speculators" for driving up the cost of oil and hurting the average American driver. These "speculators", including major wholesalers and distributors, made an educated guess, a bet if you will, on the possibility of a major military flare-up in the Middle East. They figured securing some oil at a high price was better than have less oil at a much higher price. Such are the vagaries of the oil market. The "speculators", for the most part, lost their bet big time. No one weeped over or made note of their loss.
It was no accident that oil prices declined after July when Bush seemed to make it clear he did not want to upstage the ongoing Presidential campaign or leave the new President with the burden of dealing with Iran on a military basis. Would we have been so lucky that he would have taken the same course of inaction and decided against massively distorting the American economy by creating TARP or bailing out the U.S. auto industry. Obama was more than happy to escalate those actions of the Bush Administration.
Now we are left with oil trading in a more "normal" upward trending range subject to the viscissitudes of the true greedheads in Russia, OPEC, and elsewhere. This is the "comfort zone" Americans have had to live with due to the lack of spine shown by administrations for the past 40 years. The current administration continues this trend with no end being in sight.
Those who deal in oil were probably very aware of the ongoing debate within the Bush Administration. As long as there was a good possibility that President Bush might accept the counsel of Cheney and other hard line advisors there was the possibility that the U.S. would directly, or through Israel indirectly, engage Iran over their proliferation of weapons grade nuclear material. Much speculation was made about whether Bush would act before his second term expired, especially knowing what would follow should Barack Obama be elected President. For whatever reasons Bush didn't go with Cheney and oil prices dropped sharply in the latter half of 2008 as the intention of the Bush Administration to not engage the Iranians militarily either directly or indirectly became clear.
This price drop was made more precipitous due to it coinciding with the fall in demand for oil due to the worldwide recession. The recession helped divert attention from the possible U.S./Iran confrontation from being the primary factor for prices to spike so sharply upwards. It was therefor also easy to blame greedy and evil "speculators" for driving up the cost of oil and hurting the average American driver. These "speculators", including major wholesalers and distributors, made an educated guess, a bet if you will, on the possibility of a major military flare-up in the Middle East. They figured securing some oil at a high price was better than have less oil at a much higher price. Such are the vagaries of the oil market. The "speculators", for the most part, lost their bet big time. No one weeped over or made note of their loss.
It was no accident that oil prices declined after July when Bush seemed to make it clear he did not want to upstage the ongoing Presidential campaign or leave the new President with the burden of dealing with Iran on a military basis. Would we have been so lucky that he would have taken the same course of inaction and decided against massively distorting the American economy by creating TARP or bailing out the U.S. auto industry. Obama was more than happy to escalate those actions of the Bush Administration.
Now we are left with oil trading in a more "normal" upward trending range subject to the viscissitudes of the true greedheads in Russia, OPEC, and elsewhere. This is the "comfort zone" Americans have had to live with due to the lack of spine shown by administrations for the past 40 years. The current administration continues this trend with no end being in sight.
posted by tovarich at 3:22 PM
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