It’s Not Oil Supply — It’s the High Fear Hype!

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israel_fighter_jet.jpg
This debate over oil and energy policy disgusts me because both Obama and McCain are trying to force short term, knee jerk responses to a major policy challenge for the nation. I remember hearing John McCain once tell me that “Congress never makes good policy decisions in the heat of a crisis.”
But that’s what McCain and Obama are trying to do to each other on offshore drilling and use of the strategic petroleum reserve.
The price of oil has been driven far beyond sensible demand/supply values because of Bush/Cheney sabre-rattling and fear-mongering against Iran and Ahmadinejad’s escalation of reckless rhetoric.
Gary Sick, an insightful and important sane voice on Middle East policy at Columbia University offered some confirming views in an interview with Research Magazine:

As for the economy, American households’ economic woes, as well as voters’ concerns, have a lot to do with gas prices surpassing $4 per gallon and heading higher. “There is no doubt that current oil prices incorporate a substantial political risk premium,” says Sick.
Sure, oil traders are worried about possible shortages of oil. But any such shortages wouldn’t happen before a decade from now. This is not why the price of oil has been bid up now, because currently oil supply and oil demand are basically in balance.
“Every time Bush threatens Iran by saying that all options are on the table, including the military one, oil spikes,” says Sick.
High though oil prices already are, Sick disagrees with those who believe that the market has discounted a military strike against Iranian nuclear sites. “Prices would go a lot higher, and stay there, too, if the market really believed that an attack on Iran were imminent.”

Another informed perspective on this comes from former First USA Bank and Barclays USA CEO Richard Vague whose views track with those of Gary Sick.
To get the price of oil down, candidates should work harder at thinking through what the characteristics of a new equilibrium in the Middle East and globally might look like. What kind of deal can be done with Iran that preserves Israeli security, Iran’s domestic energy interests, and does not leave Iran with a domestic capacity to covertly manufacture nuclear weapons? There’s much that can be done.
Why aren’t the Republicans demanding Nancy Pelosi and the House come back to debate a more sensible national security strategy than we have today? That might make some sense — compared to the Republicans demanding the House stay in session while racing to the airports with their packed bags.
The price of oil is not about supply — it’s about high-fear hype.
— Steve Clemons

Comments

25 comments on “It’s Not Oil Supply — It’s the High Fear Hype!

  1. Kathleen says:

    High fear hype, all right.. a bunch of old wrinkly guys being testerical

    Reply

  2. Sweetness says:

    “Cristol’ s jewish identity is important to his writing the book
    about the Liberty. And because as far as I know you have to be
    Jewish or an Israeli Jew to be in the IDF and Cristol was a IDF
    fighter pilot in Israel. Maybe I should have just said he was
    formerly a Israeli IDF fighter pilot instead of identifying him as
    an american jew.”
    Carroll, please explain to me in WHAT WAY Cristol’s Jewish
    identity is important to the book–or to the book’s reliability. I
    actually think that his role as an IAF pilot is more relevant to the
    book’s credibility than his Jewishness. After all, it was an IAF
    mistake and their procedures and protocols were involved.
    But I’m curious as to your answer, in any event.
    “As I asked, do you not find this mention of the 40 year old
    Liberty incident odd coming at this time? And why would Cristol
    be in Israel at this late date lecturing the Israeli forces on the
    liberty?”
    I can only speculate, obviously. Things are clearly heating up.
    The US is at war in the area. Israel is hinting at war. He wants to
    impart what he learned so that a similar incident doesn’t occur
    again. Same for the Mullens confab. Certainly, none of this is a
    secret, though it is clearly very worrying.
    As to it being a 40-year-old incident, it’s pretty clear that the
    incident is over, but not forgotten by Americans or Israelis by
    any means. Certainly, the Israelis haven’t forgotten it, as was
    made clear in that and other articles.
    If you’re suggesting that this means Israel is going to attack Iran,
    you can find much more obvious signs of that possibility than
    this fellow lecturing the IAF. And they are extremely distressing.
    Somehow, I don’t think that one fellow’s lecture–which, for all
    we know, has occurred before–means that war is imminent.
    So, to answer your question, I don’t know how weird it is.
    Sometimes, recurring events seem weird because we only
    become aware of them at a certain point.

    Reply

  3. Mr.Murder says:

    Fact: we have less per capita refinery capacity now than we did under Ike. That’s a half century that the industry(and Congress as its abettor) acted to bottleneck prices.
    We had less total refinery under Dubya in ’03 than we had under Ike. A direct result of the Cheney energy task force.
    We also had plans to invade Iraq at that meeting.
    We also Ken Laye of Enron getting paid salary by our tax dollars to attend.Payback for flying GOP staffers into Dade Co. courthous for the coup in 2000.
    We also had the same interests bankrolling Ahnold’s putsch to run Grey Davis out of office in Cali to coverup the other end of the Enron fiasco.
    We also had Obama voting for Cheney’s energy bill.
    None of them have any real plan to reduce our dependency on fossil fuels in less than a decade, and several EU members were at 20% renewable use in 2002.

    Reply

  4. Tahoe Editor says:

    “The price of oil is not about supply”
    Steve, you’re starting to sound like Barack “I speak to you not as a candidate for president” Obama!

    Reply

  5. PissedOffAmerican says:

    Carroll, calm down, how do expect this jackass Sweetness to throw the anti-semitism bomb at you if you throw logic right back at her?

    Reply

  6. Carroll says:

    Posted by Sweetness Aug 05, 5:56PM
    >>>>>>>>>
    Do you have something to add about the oddity of the USS Liberty coming up or even being mentioned at this particular Iran crisis time and between Mullens and the Israelis or are you wanting to rant?
    Cristol’ s jewish identity is important to his writing the book about the Liberty. And because as far as I know you have to be Jewish or an Israeli Jew to be in the IDF and Cristol was a IDF fighter pilot in Israel. Maybe I should have just said he was formerly a Israeli IDF fighter pilot instead of identifying him as an american jew.
    As I asked, do you not find this mention of the 40 year old Liberty incident odd coming at this time? And why would Cristol be in Israel at this late date lecturing the Israeli forces on the liberty?
    I maintain…it’s weird timing.

    Reply

  7. Sweetness says:

    “There is though another oddity in this story in the JP. The jewish
    Judge in the US, Jay Cristol, that wrote a book defending the Israeli
    “mistaken” bombing of the Liberty is now in Israel talking to the IDF
    about USS Liberty attack.”
    For all those who’ve listened to the protestations that a person’s
    religion is never the point of many of the posts here…often never
    even mentioned…here is an example, but hardly the only one, of a
    person’s Jewishness as an oh-so-important trait. (I think last time
    it was Sarkozy’s Jewish grandfather–somehow that was important
    too.)
    Ole Jay Cristol…the Jewish judge. Here he come! Defending that
    “mistake” we know weren’t no mistake. Uh huh. LOL. I can see that
    avalanche of links now! Lotsa linking but hardly any thinking.

    Reply

  8. erichwwk says:

    There is an oil market articles by Alfred Cavallo on “OPEC,peak oil, and the end of cheap gas” that may be of interest in the current issue of The Bulletin of the Atomic Scientists
    http://tinyurl.com/create.php
    One by Kurt Zenz House on “Breaking the tyranny of oil” , may also be of some interest, although the best is contained in the first sentence:
    “Contrary to popular belief, high gasoline prices are good, and they are good precisely because high oil prices are very bad.”

    Reply

  9. Carroll says:

    I am puzzling over the mention of the USS Liberty during Mullen’s recent visit to Israel especially since the visit was to talk about Iran.
    For those not familiar with the Liberty it was a US ship attacked and bombed by Israeli fighter jets and torpedo boats in international waters north of the northern Sinai Peninsula coast in 1967. The attack, which lasted at least 40 minutes, claimed the lives of 34 American soldiers and wounded at least 170 crew members. For more details you can goggle or go to Johnson’s Presidential Library for official documents.
    There are two mentions of Mullens and the USS Liberty in the Israeli papers.
    http://www.jpost.com/servlet/Satellite?cid=1215331092525&pagename=JPost%2FJPArticle%2FShowFull
    IDF Chief of General Staff Lt.-Gen. Gabi Ashkenazi discussed the incident with the Chairman of the US Joint Chiefs of Staff Adm. Michael Mullen during his visit to Tel Aviv last month. The attack on the USS Liberty was cited by the two as the type of incident that needed to be avoided in any future military operations in the region”
    http://www.haaretz.com/hasen/spages/999009.html
    “One of Mullen’s hosts noted at the end of the visit that even though Israel Defense Forces Chief of Staff Gabi Ashkenazi and the other senior officers did not discuss operational coordination, it was mentioned during discussions that both sides would like to avoid mistaken confrontations, of the sort that led to the IDF attack against the U.S. Navy ship, Liberty, in June 1967.””
    Given that any mention of the USS Liberty is the last thing on earth the Israelis would want brought up it’s pretty certain Mullen was the one who brought it up despite the spin in the Israeli papers. The Liberty is still a hot issue with much of the Navy and especially the Liberty survivors who claim the attack was deliberate and was covered up due to those famour old “political” considerations.
    Taking this odd mention of the Liberty and put it with this report in the WP by Ignatius on the latest US policy conveyed by Mullen on his visit to Israel:
    “Mike McConnell, the director of national intelligence, traveled to Israel in early June; he was followed in late June by Adm. Michael Mullen, chairman of the Joint Chiefs of Staff. Both officials explained to their Israeli counterparts why the United States believes an attack isn’t necessary now, because the Iranians can’t yet build a nuclear weapon, and why an attack would damage U.S. national interests.
    McConnell and Mullen also informed the Israelis that the United States would oppose overflights of Iraqi airspace to attack Iran, an administration official said. The United States has reassured the Iraqi government that it would not approve Israeli overflights, after the Iraqis strongly protested any potential violation of their sovereignty.
    “We have made our position abundantly clear to the Israelis and indeed to the world, not just in our public statements but in our private conversations, as well,” said Pentagon press secretary Geoff Morrell. ” Ignatius
    All of this leads me to think the mention of the USS Liberty on this visit was a not so veiled threat and warning to Israel there had better not be any Israeli “mistakes” or false flag provocations with US ships in the Gulf. Bush has backed off Iran due to oil realities and is telling the Israelis to back off and that they will be watched…..for now at least.
    There is though another oddity in this story in the JP. The jewish Judge in the US, Jay Cristol, that wrote a book defending the Israeli “mistaken” bombing of the Liberty is now in Israel talking to the IDF about USS Liberty attack. This is very weird timing also considering the Iran issue is current and that the bombing of the Liberty was 40 years ago. I don’t know what to make of Cristols visit to Israel for the purpose of discussing the Liberty.

    Reply

  10. Tintin says:

    One answer from MSNBC…
    With gasoline prices zooming toward $4 a gallon — and beyond
    — readers are looking for relief and explanations. If fuel is in
    such short supply, why are refiners shipping some of it out of
    the country?
    I just read that refineries are exporting diesel. Is that true? And
    if it is true, then it proves how the oil companies are
    manipulating the prices!
    — Craig, Fort Collins, Colo.
    You’re half right. Yes, despite its role as the world’s largest
    importer of oil and refined products, the U.S. also exports fossil
    fuels. As of March, the latest data available, U.S. oil refiners were
    exporting more than 1.8 million barrels a day of crude oil,
    gasoline, diesel, jet fuel and other refined products. The top five
    destinations for U.S. fuel were Mexico, Canada, the Netherlands,
    Chile and Singapore.
    But no, the export of crude oil and refined fuels doesn’t prove
    anything about pump prices. What it proves is that crude oil and
    gasoline are global commodities. They are produced in dozens
    of countries around the world and consumed pretty much
    everywhere.
    Since the market for oil and fuels is also global, it doesn’t matter
    where it came from. What matters is where the seller can get the
    best price. Since oil tankers burn fossil fuels to get where they’re
    going, higher fuel costs have increased the cost of shipping. So
    if you’re looking to buy or sell oil or gasoline, you’d rather deal
    with someone close by.
    This is one reason gasoline prices vary widely from one part of
    the nation to another. The biggest concentration of refineries is
    along the Texas-Louisiana coast, where you can usually find the
    lowest gas prices in the country.
    At this writing, a gallon of regular will set you back $3.75 at the
    Valero station in Texas City, Texas, the Gulf coast town where
    they make the stuff. (While you’re filling up, check out the
    Valero refinery on the other side of the street where, on a good
    day, they churn through close to 250,000 barrels of crude.)
    If you own one of those refineries on the Gulf coast, and you’ve
    got buyers for your product in New Jersey, California and just
    south of the border in Monterrey, your shipping costs to Mexico
    are much lower. Although Mexico is one of the world’s largest
    exporters of crude oil, our southern neighbor is a net importer
    of refined products like gasoline.
    Mexico ships us oil, we refine it into gasoline and sell some of it
    back to Mexico.
    The location of refineries plays another role in exports: Not all
    refineries in the United States are U.S.-owned. For example,
    Venezuela owns the three CITGO refineries in the United States.
    Most of the 750,000 barrels a day of fuel produced at those
    refineries is sold at the nation’s 14,000 CITGO gas stations, but
    about 30,000 barrels a day is shipped back to Venezuela, where
    you can fill up for the government-subsidized price of 19 cents
    a gallon.
    It’s also true that the U.S. exports crude oil — but only little.
    According to the latest Department of Energy figure, about
    29,000 barrels of U.S. crude left the country in March — and all
    of it went to Canada, which sends roughly 2.5 million barrels day
    our way.
    The exports to Canada represent a small part of the output of
    Alaskan oil that can be cheaply shipped to nearby parts of
    Canada.

    Reply

  11. Carroll says:

    Dear oil consultant:
    Please explain this to us in terms of US supply and demand…why are we selling fuel overseas?
    It is difficult for me to buy that we consumers are “being trained to use less by increasing prices for the good of “long term supply”. Since you say that:
    …”only a small percentage of driving is really ‘discretionary.’
    If discretionary driving is only a small percentage what is the plan for essential commerical driving?
    Are you saying that the higher prices will lower demand and therefore make the supply last longer? That appears to me what you are saying. I agree consumers could be more efficent but I am really interested in why we are selling US produced fuel overseas if supply and demand is such a big factor in US prices.
    How much of the 3 to 4 % discretionary driving “savings” of oil supply do we “lose” in the overseas sales of our fuel?
    Inquiring minds want to know.
    ANALYSIS-US oil firms seek drilling access, but exports soar
    Thu Jul 3, 2008 8:04pm BST
    http://uk.reuters.com/article/oilRpt/idUKN0325640920080703
    By Tom Doggett
    WASHINGTON, July 3 (Reuters) – While the U.S. oil industry wants access to more federal lands to help reduce reliance on foreign suppliers, American-based companies are shipping record amounts of gasoline and diesel fuel to other countries.
    A record 1.6 million barrels a day in U.S. refined petroleum products were exported during the first four months of this year, up 33 percent from 1.2 million barrels a day over the same period in 2007. Shipments this February topped 1.8 million barrels a day for the first time during any month, according to final numbers from the Energy Department.
    The surge in exports appears to contradict the pleas from the U.S. oil industry and the Bush administration for Congress to open more offshore waters and Alaska’s Arctic National Wildlife Refuge to drilling”.
    AND:
    “Congress has been notified by a Defense panel that Israel has requested purchase of double the amount of jet fuel (JP-8) it purchased last year. “‘On July 11, the Defense Security Cooperation Agency notified Congress of a possible Foreign Military Sale to the Government of Israel of unleaded gasoline, JP-8 aviation jet fuel, and diesel fuel. The total value, if all options are exercised, could be as high as $1.3 billion. The Government of Israel has requested a possible sale of 28,000,000 gallons of unleaded gasoline, 186,000,000 gallons of JP-8 aviation jet fuel, and 54,000,000 gallons of diesel fuel. The estimated cost is $1.3 billion.’ … JP-8 requests are not new….But the size of the buy is impressive. In July 2006, Israel requested up to $210 dollars-worth of JP-8. In September 2004, Israel requested up to $102 million dollars worth of JP-8….”

    Reply

  12. ej says:

    Here’s how I see it.
    The market goes along doing what it does – taking care of the bottom line. The people within the marketplace proceed with their doings within that parameter of thought, motivation, and purpose.
    Those with more power in the marketplace predictably have more influence to the point of possible manipulation – ethically or not.
    Politicians go about doing what they do – raising money and trying to win votes. In that process they are often less than forthright. I used to think that somewhere within the motivations for politicians was serving the common good. I’m not so sure about that anymore although I believe most politicians still tell themselves that that is part of their motivation to serve.
    I guess it doesn’t really matter because in the end it is the people who are usually the one’s who get smashed to various degrees by both forces – politics and the marketplace.
    I hear the reasons why the price of oil is so high. I listen to the politicians say what they will do about it, I think of the motivations and priorities of those I’m listening to, I keep in mind who I’m dealing with here, and I take it all with a hugh grain of salt.

    Reply

  13. an oil market consultant says:

    Minor correction… the date on the “Mofaz bump” was June 6.

    Reply

  14. an oil market consultant says:

    There’s one major thing you and Hindery are missing on oil — and that’s the fact that the market is pricing in long-term structural concerns about supply adequacy. I completely agree with you that much of the partisan debate on this right now is blather — US output won’t rise much under any circumstances, and releases from the SPR are just a short-term fix which does nothing about the long term problem. However, the supply concerns are very real, in an environment where expectations for long-term Saudi output growth have been adjusted downward over the past several years (biggest factor I would argue), and the top reserve holders include Russia, Iran, Iraq, and Venezuela — all with obvious problems reaching their full output potential. Prices have to reach a level which will blunt some of that demand growth — $140 clearly overshot, but we’re not going back to $60 either. The big factor driving the decline is evidence of a tipping point in US consumer behavior, where people are beginning to change their driving habits. Recent gasoline demand has been about 3-4% below where it would have otherwise been, though there is a limit to this sort of short-term adjustment since only a small percentage of driving is really ‘discretionary.’ The political factors you mention have driven some of the volatility, but aren’t the primary drivers of the long increase we’ve seen since 2003. There’s never been a point when the majority of oil traders I talk to have taken the threat of war with Iran very seriously — if there ever was, you’d see it in a big way. (The $10+ “Mofaz bump” in May was a small taste of that.)
    The fact that I don’t think much Iran/Gulf risk is priced in right now is part of what scares me about the Iran scenario — we’ve proven over the past couple of years that demand is even less price elastic than we previously thought, and the short-term adjustments to discretionary driving which are possible are already being made. The fact that such a high level of per capita consumption is hard-wired into the US economy would make us disproportionately vulnerable to the effects of an extreme price shock.

    Reply

  15. Carroll says:

    Glad to see I think along the same lines as Vauge and Sick.
    I also don’t think demand has increased enough or supply dwindled enough to justify current prices. And giving up weekend joy riding is a drop in the bucket and doesn’t have much if any effect on the price fluctuations.
    A lot of it is the fear factor used by investors every time a threat is issued by Bush or Israel. Every time the threats heat up the price heats up. Israel’s loud threat last month was not unnoticed and the market spiked.
    I think the recent price drop is probably due more to some statements of US poilcy made recently than any increase in supply or drop in demand.
    Jim Lobe mentions what has already been widely reported:
    “Citing most of the same evidence that I have written about over the past few weeks, Washington Post columnist David Ignatius, whose access to key policymakers (outside of Vice President Dick Cheney’s office) is second to no other Washington daily journalist argues in his Sunday column that the Bush administration is unlikely to bomb Iran before it leaves office. It’s an important column, not only because he is more specific about the messages conveyed by the chairman of the Joint Chiefs of Staff, Adm. Michael Mullen, (and DNI chief Adm. Michael McConnell before him) to top officials in Israel this summer — that the U.S. would “oppose overflights of Iraqi airspace to attack Iran” — but also because he has been told by a “senior official” that the administration will announce what has been rumored for the past month — that Washington will indeed open an interest section in Tehran. Given the trauma of the 1979-81 hostage crisis, I personally believe that the presence of U.S. diplomats in Tehran virtually guarantees that the U.S. will not attack Iran so long as they remain there. If the prediction of Ignatius’ senior official comes true, it’s a very, very big deal in my view.”
    Of course this statement to Israel and action by the adm could be a stop gap to halt the price sprial. I don’t think it is, I think it is reality taking over, but true or not the messages affect the speculation prices.
    It is also interesting to remember how congress has ginnned up so many resolutions against Iran and the usual suspects continue to beat the war drum. Those haven’t been ignored by the market either.
    So while congress has itself also upped the oil fear factor, they are at the same time trying to blackmail us into Anwar and offshore drilling with their dog and pony shows about gas prices and pretending they want to do something for the little people.
    McCain’s and Precious Obama’s hard line talk about Iran “will be stopped” and “won’t be allowed” to get nukes doesn’t help either. They are becoming Bush as Bush is fading.
    It’a all ends against the middle, the middle being US consumers.

    Reply

  16. reg says:

    We also have a strengthened OPEC due to the Iraq debacle. Remember Mr Murdoch saying the best thing that could come out of the war on Iraq would be $20 a barrel oil? That was because the dunderheads thought a successful invasion would smash OPEC.

    Reply

  17. Spunkmeyer says:

    The moment the Middle East can fulfill its oil production sales to
    China and India, and forget us entirely, it will do so.

    Reply

  18. JohnH says:

    Amen to Steve! The candidates need to get serious about energy. Even putting Iraq at the end of a barrel of a gun could not force it to produce more barrels of oil. And Iran can’t be bombed into producing more either. But the world’s largest consumer of oil–the US military–gets all the money it needs to waste even more.
    Supply is in fact a serious problem. And the crux of the problem is how to get countries with huge oil reserves to produce more. They’re already rolling in dough, so they don’t need more. America’s ruling elite understand the problem all too well–it’s tough to get spoiled, rich kids to work.
    And if they do produce more, their economies can’t absorb the windfall, so they have to save it in increasingly worthless dollar based assets. So where’s the motivation to produce more today? They’re better off not producing and letting the value of their energy assets rise.
    The other serious problem is the demand side. And here is where the candidates really come up short. Where are the demands for ultra-light, ultra high mileage electric vehicles to use off-peak electricity that is wasted today? Where are the calls for high speed rail to replace air travel in high density corridors? Where are the calls to encourage affordable housing and jobs in energy-efficient, dense urban cores instead of sprawling suburbs?
    The car-centric, sprawl-based American way of life is in danger, despite Bush 41’s statement that it is not negotiable. The candidates should be helping transition the country to an attractive, new way of life and the opportunities it offers, instead of engaging in fear mongering about what will inevitably be lost.

    Reply

  19. JohnH says:

    Amen to Steve! The candidates need to get serious about energy. Even putting Iraq at the end of a barrel of a gun could not force it to produce more barrels of oil. And Iran can’t be bombed into producing more either. But the world’s largest consumer of oil–the US military–gets all the money it needs to waste even more.
    Supply is in fact a serious problem. And the crux of the problem is how to get countries with huge oil reserves to produce more. They’re already rolling in dough, so they don’t need more. America’s ruling elite understand the problem all too well–it’s tough to get spoiled, rich kids to work.
    And if they do produce more, their economies can’t absorb the windfall, so they have to save it in increasingly worthless dollar based assets. So where’s the motivation to produce more today? They’re better off not producing and letting the value of their energy assets rise.
    The other serious problem is the demand side. And here is where the candidates really come up short. Where are the demands for ultra-light, ultra high mileage electric vehicles to use off-peak electricity that is wasted today? Where are the calls for high speed rail to replace air travel in high density corridors? Where are the calls to encourage affordable housing and jobs in energy-efficient, dense urban cores instead of sprawling suburbs?
    The car-centric, sprawl-based American way of life is in danger, despite Bush 41’s statement that it is not negotiable. The candidates should be helping transition the country to an attractive, new way of life and the opportunities it offers, instead of engaging in fear mongering about what will inevitably be lost.

    Reply

  20. danl says:

    Steve,
    I’m pretty sure most economists agree that oil prices are supply/demand issues. Speculation (and by what I believe you’re referencing, energy security) play a part in price, but given the increase in non-traded commodity prices as well, it seems more of a supply issue. See what Paul Krugman wrote on this last month.

    Reply

  21. carsick says:

    Due to current issues and timing, and the fact most voters are low information voters, McCain found a potential wedge issue. Obama needed to lessen the gap. On Obama’s side though. he has stated he sees the gimmicks as a possible negotiating tool to pass a comprehensive energy plan. Where as McCain is implying (since he has offered no detailed energy policy) that more drilling and nuclear is the only answer to the current and coming challenges.

    Reply

  22. FOR RICK NORIEGA says:

    This analysis is incomplete. U.S. energy policy is influenced as much by public opinion in Texas as it is by events in the Middle East. Pay attention to Rick Noriega. There is nothing “strange” about his positions.
    In addition to roots in Washington political culture, the Iraq Recession has cross-border roots. There is nothing “strange” about that. http://threetrilliondollarwar.org/

    Reply

  23. rich says:

    Steve,
    Is this being overly even-handed?
    “both Obama and McCain are trying to force short term, knee jerk responses” to the energy crisis.
    I’ve seen McCain absolutely pummeling Obama about supply, supply, supply —saying “we must drill here and we must drill now.” It’s obvious McCain is intent on spurring offshore drilling by exploiting high gas prices, and hardly honest about the impact.
    Obama’s had to immunize him against that gambit.
    But has Obama really done the same thing? I don’t get the sense he’s bum-rushing Congress to raid the strategic petroleum reserve. It’s a rhetorical countermove on the campaign trail. And Obama’s too prudent to raid the strategic reserve as Prznt.
    Can we really equate the two candidates? Are both using high-fear tactics? It might cover a message sent in your post to one campaign, but I don’t see it. Potemkin balance is no balance at all.

    Reply

  24. Steve Clemons says:

    Yes, in fact Sam — both speculators and holders of oil contracts are beginning to think that it’s unlikely that the Bush administration will bomb Iran and think as well that it’s unlikely that Israel will do so either in the near term. That’s not enough to really get them down — but I would pose the same to you….has supply increased? or is the decline of 25% due to people giving up weekend joy riding??

    Reply

  25. Sam Sherraden says:

    There are certainly security dimensions in the Middle East that give oil a “risk premium”, and it is important the next administration construct a sustainable Middle East policy, but I would not be so quick to dismiss supply. And along with supply, demand.
    There has been a tremendous increase in oil demand in the world over the past decade and during the past year, supply has basically reached a plateau.
    Right now oil is down 27 dollars to below 120/barrel in expectation of a global slowdown. Have any significant tensions been cooled in the Middle East?

    Reply

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