How To Treble The Price Of Oil
Back in 2005 a group of experts set up a simulation to see what would happen if oil supplies were interrupted. They came up with some plausible scenarios which between them reduced oil supplies by about 3.5 million barrels a day (out of total world production of around 87 million barrels a day). This, combined with a cold winter, would have led to a near trebling of oil prices from the then price of $58/barrel up to $161/barrel. You might be able to read about this on the New Scientist website, depending on how much of the article it shows to non-subscribers.
Since 2005 the price of oil has already more than doubled to around $125/barrel (down from a recent high of $147, as the US economy struggles). In principle a significant disruption to supply could still push prices up beyond the £300/barrel mark. Actually, I don't think this would happen quickly, as western economies would suffer serious recession first, reducing demand, not least because our transport infrastructure depends so heavily on oil products. It seems that the Chinese and Indian economies, being less specialised, are less dependent on oil; paradoxically this would probably mean that their demand for oil would remain higher, keeping prices raised.
So how do you disrupt oil supplies by enough to make a serious difference? Easy. The picture above is of the Strait of Hormuz. At its narrowest point this is just 33 kilometers wide (about 21 miles), through which tankers carry around 16 million barrels a day. To the north lies Iran. So all it would take would be for Israel, with implicit US blessing, to carry out an attack on Iranian nuclear facilities. Iran blames the US (not unreasonable, since the Israeli defence forces are totally dependent on US military aid) and retailiates by closing the Strait. Given time a few million barrels a day could be transferred through pipelines, and the US navy could protect maybe half of the shipping through the Strait. That still leaves a shortfall more than enough to either treble oil prices or to force the west into major recession ... or both.
Actually, this raises an interesting question: where does Israel get its oil from?
This is just what I've been saying with respect to attacking Iran. The
U.S. would be stupid, and the world would suffer. This has to do with a
lack of respect from the U.S. as well as Israel with regard to our
adversaries. The U.S. is underestimating the damage Iran can put on us and
the world.
Too true, Capt. I think there is so much trouble brought about by people's
inability to disagree constructively. A lot of it's arrogance, an inability
to recognise that maybe the whole truth is wider than just the bit we have
already seen.