Why not $100 - or more?

October 31, 2007

If there's an upside to high oil prices, it's this: They might make it harder for the Bush administration to go to war against Iran.

Yesterday, a barrel of oil fetched almost $94, up $10 in the two weeks since fears of a Turkish invasion of the Kurdish areas of northern Iraq began to take hold. Everybody understands that if Turkey enters into the war in Iraq on a side that's not exactly the same as America's, there will be untold turmoil and a whole lot of dread. That's why the price of oil shot up when Turkey began to bluster, and why it would take off toward dizzying heights if the Turks actually crossed the border in a major way.

And that's just Turkey and Kurdistan. Iran is a different story altogether. Believed to have the third-largest reserves of oil in the world, Iran also sits in an oil neighborhood, stretching from the Strait of Hormuz to the Caspian Sea. If Iranian oil were pulled from or otherwise lost to the world market, and if Iran believed it was in its interest to disrupt oil from southern Iraq (easy) or the Arabian peninsula (harder, but not out of the question) or Azerbaijan (a choice it probably wouldn't make, except that Moscow might be pleased to see the West shut off from Caspian oil) - prices would skyrocket. Even if global oil traders began to fear that Iran was thinking of such actions, there would be almost no stopping the upward pressure.

Naturally, this is a price that Americans might feel they had to pay - if they believed that war against Iran was necessary to the preservation of American freedom. But as far as we can tell, no sensible American thinks that way. Put aside all the other fallout from a war against Iran: Would President Bush really want to saddle the country with the economic devastation that a huge spike in the price of oil would wreak? A very large number of people might decide the cost wasn't worth the benefit.

An argument can be made that today's high oil prices can't last forever. They encourage stepped-up production, more technologically advanced extraction, conservation and so forth. Eventually, this argument goes, they'll swing back to a point of equilibrium. And this may well be the case, though trying to make predictions in the petroleum business seems like a loser's game. At the moment, we're in the here and now, and so is President Bush - and the Turkish scare, which is costing American consumers an extra $200 million a day, should be putting the brakes on any ill-advised plan to launch an attack against Iran.

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