Iran, continued: The blogosphere remains abuzz with the latest news out of Iran (see my own recent posts here and here).
Since we last left the lands of Iran and non-Iran, the country's economic minister has made the predictable oil threat (hat tip: Kevin Drum).
Some have speculated that, were Iranian oil placed under UN sanction - contain your laughter, please - the price of crude could top $100 per barrel. Obviously I have no way of substantiating this claim or determining which supply restrictions would cause which particular price spikes.
But I do know that taking the world's fourth-largest petroleum producer off the market is bound to add unpredictability to the futures markets. In 1979-80, Iran's oil supply shocks were mitigated by Saudi Arabia's role as a swing producer. No such luck now; if Iran were sanctioned or chose to embargo the West, it would hurt and it would hurt plenty.
So where does that leave us? With a boatload of unpalatable choices. Are we willing to go the sanctions route and face $100+ oil? Unless (unlike Kunstler!) your "soy-diesel-powered one-man zeppelin" is ready, you are not ready to face $100+ oil and $4+ gas.
In a rational policy scenario, we would've weaned ourselves from the vile crude, created a viable mass transportation system at the state level, and broken the power of the cartels. Sadly we have not done this. We need what Iran has.
Furthermore, I think we all know that sanctions would only make Iran richer. Their oil would be officially off the market, driving up the price, but the same UN Security Council members who had sweetheart deals with Hussein's Iraq would likely reach similar accords with Iran. Never mind the unpredictable effect the sanctions would have on the regime's strength vis-a-vis its own people, who may well flock to their leaders against the Global Arrogance (our latest affectionate nickname).
No, we need their oil and we need it at current prices or better. So what then, air strikes? Herein lies the paradox: we have to present a 'credible threat of force,' but at the same time we have to make it clear we won't actually do it, because war with Iran would be crazy in light of current American troop strength. And everyone knows it.
No, for credible threats of force to hold any weight whatsoever, they would have to come from not only the U.S. but from those delightful European countries who would just as soon negotiate sweetheart deals witht them. So that's probably out, too.
We could always just let Iran obtain nuclear capacity and see what Israel does, which is tantamount to having no policy at all. But then, isn't that the strategy that has gotten us this far? "Roll the dice, devil may care?"
It's completely appalling that we have allowed ourselves to wander into this situation. We have known since 1973 that the swing producers of oil are on shaky political ground. In 1979 we learned that the shaky ground could turn into hostile ground. In 1990-91, it became further apparent that a hostile regime could do our current economic structure incredible damage if unchecked.
So after 33 years of clear warnings that our most precious resource was not under our power, we have done nothing to become less dependent on that resource. With Iran in 2006, we have reached the point where we can no longer choose to do anything; we cannot magically transition to another energy source in the next few months, nor can we simply remove the leaders of Iran and put more favorable leaders in charge who will sell us cut-rate crude.
Our wilfull blindness has led us to this. Iran is going to get nuclear capacity, and our dependence on oil has guaranteed it.
Since we last left the lands of Iran and non-Iran, the country's economic minister has made the predictable oil threat (hat tip: Kevin Drum).
Some have speculated that, were Iranian oil placed under UN sanction - contain your laughter, please - the price of crude could top $100 per barrel. Obviously I have no way of substantiating this claim or determining which supply restrictions would cause which particular price spikes.
But I do know that taking the world's fourth-largest petroleum producer off the market is bound to add unpredictability to the futures markets. In 1979-80, Iran's oil supply shocks were mitigated by Saudi Arabia's role as a swing producer. No such luck now; if Iran were sanctioned or chose to embargo the West, it would hurt and it would hurt plenty.
So where does that leave us? With a boatload of unpalatable choices. Are we willing to go the sanctions route and face $100+ oil? Unless (unlike Kunstler!) your "soy-diesel-powered one-man zeppelin" is ready, you are not ready to face $100+ oil and $4+ gas.
In a rational policy scenario, we would've weaned ourselves from the vile crude, created a viable mass transportation system at the state level, and broken the power of the cartels. Sadly we have not done this. We need what Iran has.
Furthermore, I think we all know that sanctions would only make Iran richer. Their oil would be officially off the market, driving up the price, but the same UN Security Council members who had sweetheart deals with Hussein's Iraq would likely reach similar accords with Iran. Never mind the unpredictable effect the sanctions would have on the regime's strength vis-a-vis its own people, who may well flock to their leaders against the Global Arrogance (our latest affectionate nickname).
No, we need their oil and we need it at current prices or better. So what then, air strikes? Herein lies the paradox: we have to present a 'credible threat of force,' but at the same time we have to make it clear we won't actually do it, because war with Iran would be crazy in light of current American troop strength. And everyone knows it.
No, for credible threats of force to hold any weight whatsoever, they would have to come from not only the U.S. but from those delightful European countries who would just as soon negotiate sweetheart deals witht them. So that's probably out, too.
We could always just let Iran obtain nuclear capacity and see what Israel does, which is tantamount to having no policy at all. But then, isn't that the strategy that has gotten us this far? "Roll the dice, devil may care?"
It's completely appalling that we have allowed ourselves to wander into this situation. We have known since 1973 that the swing producers of oil are on shaky political ground. In 1979 we learned that the shaky ground could turn into hostile ground. In 1990-91, it became further apparent that a hostile regime could do our current economic structure incredible damage if unchecked.
So after 33 years of clear warnings that our most precious resource was not under our power, we have done nothing to become less dependent on that resource. With Iran in 2006, we have reached the point where we can no longer choose to do anything; we cannot magically transition to another energy source in the next few months, nor can we simply remove the leaders of Iran and put more favorable leaders in charge who will sell us cut-rate crude.
Our wilfull blindness has led us to this. Iran is going to get nuclear capacity, and our dependence on oil has guaranteed it.
posted by Joshua @ 7:35 PM
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