Monday, June 23, 2008

Why Oil Is $136, Why It Won't Go Down Soon, Why Obama Has It Right And Doesn't Know It

We've heard it all, haven't we? It's the Chinese, no, the speculators, no, the environmentalists, and on and on, but there seems to be no widely accepted solution to our big oil problem.
To be sure, yes, China's demand is surging. China, until recently, has been growing GDP at a 10% clip for the past several years. Yet, that is no explanation for world prices to double in a year.
Then there are the speculators. Yes, speculators do exaggerate price movements, but that can be said to the downside as well as the upside. Surely, if speculating on oil is a one way street, we would all quit our day jobs and become speculators. But, speculators lose their shirts too.
Oh, and those evil liberal environmentalists, if it weren't for them, we'd be awash in our own oil from the shores of Daytona Beach, or ANWAR in Alaska. Fact is, if you took every resource that we had, we still would only account for 3% of the world's proven reserves and we use 25% of the world's oil, so that doesn't add up.
Then come all the bad ideas to solve the dilemma. The pandering, counter-productive "gas tax holiday"(McCain/Clinton). The drill everywhere idea (McCain/Bush). And, the crackdown on those evil speculators (Obama/McCain). The fact is, none of these provide real solutions, and none of them addresses the real reason prices are so high.
So why are they so high? It's actually very simple. The oil markets are pricing in potential conflict between the US or Israel, or both, against Iran. Just think about where oil prices would go if there was a significant conflict in the Middle East. That's what traders are thinking and why prices are so high. Can there be any doubt that there is at least a 50% chance that our current administration or Israel with our consent will attack Iran before the current administration's term is out? This is why I firmly believe that we are stuck with this problem as long as we are stuck with the Bush administration and even longer if McCain is somehow elected.
So what's the solution? It hasn't been discussed a whole lot, but it is simple and straight forward. Obama actually has it right, but not by targeting evil speculators, environmentalists or the lot. What we have to do right now is put the gun down! And, sit down with our "evil doer" adversaries and work things out. The only thing that our saber rattling has done has been to rattle our economy and embolden and enrich our adversaries. Until that is done, we are simply laying blame, scapegoating, or posturing.Share B

4 comments:

  1. I think you should stick to real estate Andrew. You actually are blaming Israel and the Bush administration for Iran's rogue leaders seeking nuclear weapons with a stated intention of wiping Israel off the map? You really think that if we just sat down and talked with Iran's leaders that everything would be worked out? All that would do is embolden the evil maniacs running Iran even further.

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  2. You probably have a point!
    I am not blaming Israel. However, I do not think that our admin has done enough to solve our problems diplomatically. Iraq is a case in point. There is no doubt that the war was a waste of resources and lives and we could have easily removed Saddam. Saber rattling has done nothing for us.
    As for an attack. You would have to assume that on the current course that is where we are headed. Do we want Iran with nukes-absolutely not. Did we have to come to this point? I believe not.

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  3. p.s.... Sorry for letting my lefty side out. I've got a righty side too, but I usually keep politics out of my posts.

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  4. Iran has been a quiet enemy of the US for over 30 years.

    Iraq was a foolish mistake. The focus should have been on Iran and Afghanistan from the beginning.

    Hard to blame Bush for anything except being a wet noodle pushover dummy for the hawks :)

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