Strike on Iran Would Roil Oil Markets, Experts Say

As the Washington Post is correctly reporting (http://www.washingtonpost.com/wp-dyn/content/article/2007/10/25/AR2007102502840.html?hpid=topnews), a strike by the USA on Iran would potentially cause chaos in the oil markets. Having once worked for an oil company as in-house counsel and remembering the mess created by the oil embargo in the 1970's, Bush and Cheney must be crazy to even contemplate such a policy. Oops, I forgot - they are crazy. Bush has had almost seven years to push the US towards less dependence on foreign oil - via conservation, better fuel economy requirements for cars, etc., and nothing has been done. The country is still as vulnerable as it was 30 years ago. The soccer moms need to dump their gas guzzling SUV's and the "butch" men need to get rid of their big ass trucks for starters. Here are highlights from the article:

A U.S. military strike against Iran would have dire consequences in petroleum markets, say a variety of oil industry experts, many of whom think the prospect of pandemonium in those markets makes U.S. military action unlikely despite escalating economic sanctions imposed by the Bush administration. The small amount of excess oil production capacity worldwide would provide an insufficient cushion if armed conflict disrupted supplies, oil experts say, and petroleum prices would skyrocket. Moreover, a wounded or angry Iran could easily retaliate against oil facilities from southern Iraq to the Strait of Hormuz.

"It will be chaos. . . . I can't really see it," said Abdulsamad al-Awadi, an oil trading consultant and former executive at Kuwait Petroleum. "Having been in the marketplace for almost 30 years, I can't see a scenario for it, or precautionary measures" that oil companies could take. "There are no precautionary measures." "If war breaks out, anticipate that all hell will break loose in the oil markets," said Robin West, chairman of PFC Energy, a District oil consulting firm. "Certainly when you lose 2.5 million barrels a day of Iranian production, which is the most likely case scenario, that will literally just make the market go berserk," al-Awadi said. Asked whether the companies he worked with had contingency plans, he said, "The oil industry does not have contingency plans. We are not military people."

"These crises have a habit of bursting on the scene and leading to unforeseen places," Drollas said. "Everyone wants it not to happen, but it's like a crash happening slowly. You can see the two cars coming toward each other. . . . There's an inevitability about it."

I am glad that I live close enough to my office that I can always walk if gas prices go through the roof or we have gas rationing as we did in the 1970's. Most people will not be as lucky.