Iran, Iraq, The Dollar, And The Price Of Gas
To understand why Americans are paying over four dollars a gallon for gas, and what we could be paying in the future, there are a few factors which are seemingly obvious to anyone who cares to look, but which are not automatically equated by the average American as having anything to do with the price at the pump.
The first thing to look at is Iran, but to understand Iran's influence, we have to first sink into the seedy underworld of the black market. Drugs are a perfect example. Now, the black market is the only true "free trade" in the world -- prices are set and buyers pay depending entirely on what the market will bear. But while direct government intervention in the prices is non-existent, the indirect influence is enormous. Because when the price of illegal drugs is examined, it's easy to see how small a percentage of that price is the actual production of the drugs. The farmers in Afghanistan growing opium don't get rich, in other words -- the middlemen do. And they get rich because they charge a premium on the product they sell which takes into account the dangerous conditions they have to face in transporting the product from the producer (our Afghanistani farmer) to the consumer (an unnamed British pop singer, for instance). Most of the price is not paid to cover the production or even the transportation of the product, most of the price is for the danger, or the risk involved.
This is not just supposition. When Prohibition was repealed, the price of bathtub gin dropped by a factor of ten -- what was worth $10.00 when it was illegal immediately began selling for $1.00.
How does this relate to filling up the tank to go to the beach tomorrow, you ask? Well, oil is no different a commodity. Risk is a factor in the price. If peace broke out in the Middle East tomorrow, the price of oil would collapse world-wide. And the current run on a barrel of oil (say, from about $80 to the current $145) happened exactly when the Bush administration began threatening war with Iran. When the danger goes up, so does the price.
Speculators have been blamed for this precipitous increase. But a "speculator" is merely someone betting that, in the near future, the price of oil will be even higher, meaning that what they buy now ("futures") can be sold later for a fat profit. And increasing talk of war with Iran, or Israel attacking Iran, virtually guarantees that the price will go up.
Independent analysts vary as to how much we're currently paying for "risk," but even conservatively, this adds 30 percent to the price at the pump (some estimates are much higher).
The second big factor to consider is the unbelievably weak dollar. Only a few years ago, dollars and Euros traded one-for-one. Now it takes more than one-and-a-half dollars to buy one Euro (today's rate: $1.56). This has happened on George Bush's watch. This works out to 36 percent of the dollar's pre-Bush value lost. Meaning it takes fifty-six percent more dollars to buy what we used to be able to buy on the world market. Things like... oh, I don't know... oil?
Why is the dollar so weak? Bush's trade policy, for one. But the real reason is that the rest of the world isn't as confident in the American economy's future as they once were. They see our huge budget deficits, our refusal to make long-term economic plans for the future, our refusal to increase taxes in wartime, our enormous trade deficit, and our gargantuan military budget... and they make their predictions about America's future by what they'll pay for the dollar. But this doesn't even include the elephant in the room -- the fact that we're spending twelve billion dollars a month on our two wars in Iraq and Afghanistan. Money that we don't even have -- money we have to borrow from places like China.
All of this combines to give us $146 barrels of oil. But it never gets easily broken down for the public, which is a shame. For instance, I am now paying (roughly) $4.50 a gallon. If you live in cheaper areas, consider yourself lucky at my expense, I don't mind. Now, if 30 percent of that is due to risk (Bush's warmongering) and a further 36 percent due to the weak dollar, then that price should really be 66 percent lower, or $1.53. Some may have problems with the additive nature of my math, so let's do it another way. $4.50 minus 30 percent is $3.15. Subtract 36 percent of that and you get $2.02 per gallon.
Either way you work that, it's not too far off from where gas was when George W. Bush took office -- $1.49.
Now, I realize that neither candidate can wave a magic wand (if elected president) to immediately return gas prices to the $1.50-2.00 range. But they can point this out, which makes me wonder why at least Obama doesn't. People understand this kind of math.
At the very least, it would be worth pointing out what we could face if we (or Israel) attacks Iran. An unnamed oil market analyst on NBC last night put the price of a barrel of oil after an attack on Iran as "name your price," and then went further with "$300, $400 a barrel." Put in perspective, this would be around $10.00 to $13.50 per gallon to fill up your car. If your tank held 15 gallons, this would cost you from $150 up to almost two hundred dollars for a single fill-up.
I don't mind having a debate on the relative merits of attacking Iran, but I think the debate should be realistic in framing the question correctly for Americans to intelligently decide -- "Is keeping Iran from having a nuclear bomb worth paying ten to thirteen bucks for a gallon of gas for the foreseeable future?"
-- Chris Weigant
"Is keeping Iran from having a nuclear bomb worth paying ten to thirteen bucks for a gallon of gas for the foreseeable future?"
And THAT question has to be asked in the context of what Iran will DO with a nuclear bomb..
So, perhaps the REAL question would be, "Is keeping Iran or Hezbollah or Hamas or Al Qaeda from having a nuclear bomb worth paying ten to thirteen bucks for a gallon of gas for the foreseeable future?"
The question is enough of a possibility to be of concern...
The answer is self-evident. As much as I would hate paying $10+ p/gallon for gas, I would hate more to have millions dead from nuclear terrorism..
Michale.....
Careful, Chris. Don't fall into the trap.
Iran has no nucular bombs. Remember how Republicans used weapons of mass destruction to start a war with Iraq?
Sounds like the same plan to me. Stir fear, create justification, go to war. The question is, are we going to fall for it again?
It's really about trying to secure the oil. Have you noticed the phrase "Energy Security" seeping into the candidates speeches recently?
Security implies going in, getting it, and making sure we've got access to it. This is our great plan for the future. Nuclear weapons just make it sound like we're some kind of good-guy James Bond. When we're really the biggest oil-addicted consumer in the world trying to make sure no one else can get our fix.
Of course you're completely right that risk will drive up the price of oil as speculators make bets.
What I can't understand, though, is with Iraq such a costly raging failure, why anyone would want to do this again?
Bryan
Michale -
You may be willing to trade $10 a gallon for such a perceived good, but I am willing to bet most Americans are not. I could be wrong, but feel free to ask around. Ask this question of anyone you bump into on the street, and see what their reaction is. I'd be interested to hear.
Bryan -
What I can't understand, though, is with Iraq such a costly raging failure, why anyone would want to do this again?
(Cue John Williams theme... DOM DOM DOM, DOM DA DOM, DOM DA DOM...) His name is Vice President Darth Cheney, and he has gone over to the Dark Side of the Force. Seriously, there are neo-cons who believe "Iran will be so shocked and awed by our bombing strikes that they will be shaking in their boots and not retaliate." I wish I were joking, but I'm not. They have learned nothing in the last seven years... nothing.
-CW
@dvdb
According to the latest IAEA report, if Iran were to completely withdraw from the NNPT and eject inspectors ala Saddam Hussein, Iran could have a working nuclear bomb in 6 months..
Do we REALLY want to wait until they actually HAVE a nuke before something is done??
@CW
We're having some family over for BBQ today. I will do just that. However, I have to concede that you are probably right. By and large Americans can be quite selfish sometimes and fail to look at the big picture.
Michale....
@Chris - Agreed. Never ceases to amaze me though. Especially given that it's such a failure. But from a political standpoint, it has been a success for them. That's probably why they keep doing it: to try to make Democrats look weak. About all Republicans have left. Go around bullying countries and claim Democrats are weak if they don't do it.
@Michale - Why would you believe anything the government says in one of their reports about a country that they want to invade? They made a big deal about virtually no evidence to invade Iraq. They want to invade so of course one way or another they're going to find a reason. Nuclear materials is today's WMDs.
Isn't it time Republicans listened to the troops on the ground?
"This is a very unstable part of the world, and I don't need it to be more unstable," Chairman of the Joint Chiefs of Staff, Adm. Michael Mullen, July 3, 2008.
The only troops on the ground Republicans listen to are the ones that they've selected because they are "yes" men. Notice all the top military officials who've "retired."
Here's what no one wants you to know: you're being used, Michale. They're playing politics: trying to make the Democrats look weak by talking big. And they're using patriotic Americans such as yourself who are actually worried about terrorism to further their political ends.
Bryan
"Peace Sells But Who's Buying?" - Megadeth
Ah, crap. Me gig is up. I suppose that's one of the dangers of trying to create a persona. Or having a persona that sort of creates itself. Alas, it is good to be me again.
Though I still can't understand why it's ok to let the President invade Iran and spy on Americans to stop terrorism, yet it's not ok to make him king to stop terrorism :).
David
Monarchy Now (Dictatorship Later)!
@Michale - Why would you believe anything the government says in one of their reports about a country that they want to invade?
Uh... This report was from the US government. This report was from the IAEA. Since that orgainization is anti-US anyways, I doubt they would put out propaganda that would SUPPORT the US's position.
Ergo, it has the ring of truth..
Michale.....
GRRRRRR I really need to get more Diet Coke in me before I post!!
That should read, "This report WASN'T from the US Government."
Michale.
I'm glad you don't trust the propaganda our current administration is pumping out.
And ok, you got me, it's not a U.S. government report, but our government is only emphasizing those pieces that provide justification to go to war.
The International Atomic Energy Agency "has not seen any diversion of nuclear material to nuclear weapons or other nuclear explosive devices," Director General Mohamed ElBaradei said in a report to the IAEA's board.
One way or another it appears they are looking for any reason to go to war.
- D
"This is a very unstable part of the world, and I don't need it to be more unstable," Chairman of the Joint Chiefs of Staff, Adm. Michael Mullen, July 3, 2008
The International Atomic Energy Agency "has not seen any diversion of nuclear material to nuclear weapons or other nuclear explosive devices," Director General Mohamed ElBaradei said in a report to the IAEA's board.
Sadly, that was a report from Feb of this year, so it is woefully out of date.
""This is a very unstable part of the world, and I don't need it to be more unstable," Chairman of the Joint Chiefs of Staff, Adm. Michael Mullen, July 3, 2008"
And having Iran with a nuclear bomb would make it "more unstable"....
Wouldn't you agree???
Michale.....
Ok, from the latest report then:
"The Agency has been able to continue to verify the non-diversion of declared nuclear material in
Iran. Iran has provided the Agency with access to declared nuclear material and has provided the
required nuclear material accountancy reports in connection with declared nuclear material and
activities." - June 15
There are pieces that the Iranians are still hedging about complying with, but the signs are that diplomacy seems to be working and there has been no evidence of a nuclear program.
So I'm sticking with the Chairman of the Joint Chiefs and believing that another war is not what we need right now.
Especially since the first two have been sooooo successful. There's more terrorists than ever before, bin Laden is still out there, and the people of our country keep voting for the same people who are doing nothing but trying to scare the bejesus out of them.
There's no evidence for a war, the past two we've started have been expensive failures that have not made us safer, and I think it's time we had a different foreign policy other than invading countries we don't agree with.
Besides, what would Spock say about this clear violation of the Prime Directive? :)
David
Besides, what would Spock say about this clear violation of the Prime Directive? :)
"The needs of the many, outweigh the needs of the few. Or the one."
-Captain Spock
You are quoting from a report released on 2 Jun, but the report was for the calender year of 2007.
Regardless of that, here is an important part that you left out..
However, it is regrettable that we have not made the progress we had hoped for with respect to the one remaining major issue, namely clarification of the cluster of allegations and Secretariat questions relevant to possible military dimensions to Iran´s nuclear programme. The so-called alleged studies remain a matter of serious concern. This issue is among those which the Security Council directed the Agency to clarify. Following an initial period during which Iran was reluctant to fully discuss this issue, Iran finally agreed to address it. Iran maintains that it has never had a nuclear weapons programme and that the documents related to these alleged studies are "forged" or "fabricated".
Again, I have to ask..
What is more destabilizing??
Iran, Hamas, Hezbollah et al as nuclear powers??
Or a preventive strike designed to prevent the afore??
Michale....
Just in case anyone wants to read the full report:
http://www.iaea.org/NewsCenter/Statements/2008/ebsp2008n005.html
Michale.....
Ever read EXECUTIVE ORDERS???
http://www.timesonline.co.uk/tol/news/world/africa/article4276460.ece
Michale.....
More good news from Iraq..
http://www.timesonline.co.uk/tol/news/world/iraq/article4276486.ece
Michale.....
Do you work for our government, Michale?
I'm just wondering because your suddenly deciding that Iran is the epicenter of terrorism oddly seems to coincide with our government deciding the same thing.
Or is it just that you completely trust our government? I'm just curious.
What about Osama bin Laden? Whatever happened to going after the terrorist who has attacked us?
You got me with the story about the monkeys, though. I'm now truly terrified of Iran shipping germ-laden monkeys to our country and disguising them as trucker sidekicks (ala B.J. and the Bear).
What's it like to live in constant fear of Iranian monkeys attacking us?
(I know. I know. Millions of people could die from the monkeys ... yada yada.)
David
Do you work for our government, Michale?
I used to...
I was a LEO and an FSO for almost quarter of a century.. I have served in two branches of the US Armed Forces and was an MI EllTee during Desert Storm. I have been a military and intelligence liaison in a dozen different countries spanning the globe..
Or is it just that you completely trust our government?
No, I don't "completely" trust our government. I also don't live in fear that every move our government makes is designed to bring about a Nazi Police state, as you do..
As to the monkey issue, you are not really aware of bio-terrorism, are you??
Ignorance can be a dangerous thing... Especially WILLFUL ignorance...
Michale.....
I am now retired...
I'm just wondering because your suddenly deciding that Iran is the epicenter of terrorism oddly seems to coincide with our government deciding the same thing.
A- I am not "suddenly" deciding anything. It's always been common knowledge in my profession that Iran is a source of terrorism...
@Bryan...I mean...@David...or akadj...
I pardon you all.
"Nobody can get the truth out of me because even I don't know what it is. I keep myself in a constant state of utter confusion." - Colonel Flagg, M.A.S.H.