Monday, November 17, 2008

How cheaper gas might have temporarily saved the world

Iran seems to keep making the case that they need oil to be at least $70 a barrel to survive. So they keep pushing and backing OPEC cuts to stop oil prices from falling and indeed try to get prices to also start rising again. When oil was going up nobody in OPEC wanted to stop the rising cost. OPEC said it was just market conditions, which may have been true, but market conditions may not have had everything to do with the prices. Oil prices didn’t naturally rise a little bit at a time but over a four-year period or so prices climbed to over a 300% price increase. Over a little bit longer period of time the price of milk almost doubled but you don’t need a gallon of milk to get almost everywhere you have to go.

Russia and Iran among others were likely able to afford new military spending sprees with the increased revenue. Did they help facilitate the unnatural rise in oil prices toward that end? Possibly, but it’s hard to know considering wall street speculators had a lot to do with it. Could the speculators have been pushed by outside forces? Again the answer is possibly. Currently the outlook on the economy, together with the US being driven to actually buy less gas, has made gas prices fall back to what would have been very high prices four years but what seem like really good prices today.

Is Iran now trying to push oil prices back up so they can finish their military goals? I think it’s a good possibility. This market downturn may be costing a lot of jobs and doing a lot of real damage but if it helps weaken the forces of Iran and other enemies of peace it may have bought the world more time before a larger war will start. At best its only likely to have bought time not cancelled the situation. And the current scenario might even push those bent on war and destruction into a faster pace as they rush to finish what they started or because they feel war will increase oil prices and help them get to their goals.
It’s all speculation but it’s something to ponder.

No comments: