Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
Joined: Oct 15, 2004 Posts: 2020 Location: Arkansas
Posted: Wed May 14, 2008 8:00 am Post subject: Is Iran Playing the Oil Card? If so, why?
Is Iran using the oil weapon? Oil prices rose to their highest level ever yesterday after it was reported Iran may cut their production and further reports that Iran is doubling its oil held in tankers and not shipping it (driving up tanker costs). News stories here:
Iran has long threatened to play "the oil card" in its stand off with the West, but why play it now? One possibility is its in response to recent comments by U.S. Sec of Defense Gates and US Chairman of of the Joint Chiefs of Staff, Mullen, keeping all options on the table, but it seems more is going on here, and I can't put my finger on it. For example, why store oil in tankers driving up tanke cost when its cheaper just to not pump the oil?
Joined: Sep 03, 2007 Posts: 541 Location: Sunny Virginia, USA
Posted: Wed May 14, 2008 8:11 am Post subject: Re: Is Iran Playing the Oil Card? If so, why?
seahorse wrote:
For example, why store oil in tankers driving up tanke cost when its cheaper just to not pump the oil?
Just a guess, but if you keep tankers in harbor, you limit how much can be shipped. I believe tankers account for a lot of the fuel being shipped to the US.
However, IMHO, this plays in to the hands of the Bush administration. Piss off the sheeple with antics like this and they will demand that King George attack Iran and then we'll all be in the soup. _________________ When somebody makes a statement you don't understand, don't tell him he's crazy. Ask him what he means. -- Otto Harkaman, Space Viking
Joined: Oct 15, 2004 Posts: 2020 Location: Arkansas
Posted: Wed May 14, 2008 8:25 am Post subject: Re: Is Iran Playing the Oil Card? If so, why?
One of the big impediments to a US attack was the supposed "devastating effect" an attack would have on the world economy by increasing oil prices. Thus, Iran has supposedly always had a trump card, its "oil card." So why play it now? I don't know, but it seems that by witholding tanker shipments it is being played and not just threatened.
So, how will the US respond? With Iran playing the oil card, it seems to chip away at any reluctance to attack. For example, the US has wargammed several scenarios of rising oil prices caused by various things. Here's a report of at least one "wargaming" the economics exercise.
Posted: Wed May 14, 2008 8:25 am Post subject: Re: Is Iran Playing the Oil Card? If so, why?
I heard reference to this on some financial tv (internet version) which said that the oil was being stored in tankers because no one wanted to buy that grade of oil, and that as the tankers are full there is nowhere else to store it and so production must be cut.
From this I guess that they are trying to sell a lot of "heavy" oil. _________________ We should teach our children the 4-Rs: Reduce, Reuse, Recycle and Rejoice.
Iranian President Mahmoud Ahmadinejad told the state Fars news agency yesterday the second-largest producer in the Organization of Petroleum Exporting Countries is assessing oil output. The country is holding 20 million barrels of crude on tankers, about five days' of production, people familiar with the situation said last week.
The Organization of Petroleum Exporting Countries will eventually have to cut production as members begin to decrease production of heavier crudes, Iranian OPEC governor Hossein Kazempour Ardebili said in an interview from Tehran today.
However, according to this Google News search result, it seems that the Bloomberg article was updated recently, and this quote was removed:
Quote:
Iran says ``they do have quite a few tankers sitting offshore that no one wants so that might be their logic'' for a cut.
Google News may update their cache soon, so you may not be able to see that quote anymore.
Joined: May 29, 2006 Posts: 31 Location: Southwest Missouri
Posted: Wed May 14, 2008 8:46 am Post subject: Re: Is Iran Playing the Oil Card? If so, why?
If these are sitting in the strait of Hormuz, what would happen to the strait if we attacked and the Iranians just blew up these tankers? Would it do enough damage to shut the strait?
Linda _________________ Blessed are the cracked, for they are the ones who let the light in. - Maxine
Joined: Apr 27, 2007 Posts: 4118 Location: The Great Sonoran Desert
Posted: Wed May 14, 2008 8:58 am Post subject: Re: Is Iran Playing the Oil Card? If so, why?
Saddam Hussein lit Kuwaits fields on fire as they retreated in GWI...
Stocking oil has many advantages from their perspective:
1) It keeps people guessing (ala this thread)
2) They could be used to block sea lanes
3) They could be used for emergency supplies in the event of an attack...(why would the US bomb tankers in the PG?)
4) They are effecting tanker pricing currently
5) They can.
If I am Prez of Iran - and have a few billion tons of steel sitting off my porch with guns pointed at me...I too am hedging. _________________ "There must be a bogeyman; there always is, and it cannot be something as esoteric as "resource depletion." You can't go to war with that." Emersonbiggins
"... hope is a rotten-thighed whore" Niko Kazantzakis
Posted: Wed May 14, 2008 9:05 am Post subject: Re: Is Iran Playing the Oil Card? If so, why?
Iran is a puppet controlled by forces that control Russia. The oil card is about global domination. _________________ Just look at us. Everything is backwards; everything is upside down. Doctors destory health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the major media destroy information and religions destroy spirituality.
Joined: Apr 27, 2007 Posts: 4118 Location: The Great Sonoran Desert
Posted: Wed May 14, 2008 11:01 am Post subject: Re: Is Iran Playing the Oil Card? If so, why?
mmasters wrote:
Iran is a puppet controlled by forces that control Russia. The oil card is about global domination.
China gets Iran
Russia gets Caspian
US/UK get Iraq
The world has already been divied up, _________________ "There must be a bogeyman; there always is, and it cannot be something as esoteric as "resource depletion." You can't go to war with that." Emersonbiggins
"... hope is a rotten-thighed whore" Niko Kazantzakis
Joined: May 27, 2007 Posts: 886 Location: The Post Peak Oil Historian
Posted: Wed May 14, 2008 11:58 am Post subject: Re: Is Iran Playing the Oil Card? If so, why?
5 days supply makes a nice strategic reserve in case of 'unforceen circumstances'. Ready to ship at a moment's notice as well. In other words a 'Mobile Strategic Reserve', which could be sold all at once to another country if someone else needed it. You could also use it to cover an ally's contracts, if an ally suddenly needed it. (for instance, if Venezuela were suddenly blockaded). _________________ In a time of deceit, telling the truth is a revolutionary act.
- George Orwell
Posted: Wed May 14, 2008 12:47 pm Post subject: Re: Is Iran Playing the Oil Card? If so, why?
theozarker wrote:
If these are sitting in the strait of Hormuz, what would happen to the strait if we attacked and the Iranians just blew up these tankers? Would it do enough damage to shut the strait?
Yes. The shipping lane is only 2 km wide. Fill that lane with shipwrecks and it would be very disruptive.
Not to mention the giant, flaming oil slick that would be left behind... _________________ The whole of human history is a refutation by experiment of the concept of "moral world order". - Friedrich Nietzsche
Joined: Apr 07, 2005 Posts: 225 Location: West of Chicago
Posted: Wed May 14, 2008 1:09 pm Post subject: Re: Is Iran Playing the Oil Card? If so, why?
If you spin the chessboard around for a moment and look at the West from their perspective...they've got nothing to lose and everything to gain.
In a way, it is almost like economic terrorism (hear me out before the flames start) -- by rattling sabers, goading the West into sailing their hardware around offshore, keeping the word 'war' in the papers, talking about cutting production, continuing with their nuclear program all continues to hold/drive prices up, and it costs them nothing.
It affects John and Mary Sixpack who read about it in the paper and wonder how they are going to afford gas at all if we do attack Iran and begins to take the edge off any support the next president would have to go in Iran and kick ass.
It's a great play for them.
If no one wants those tankers, there is a scrap shortage right now. I'm sure there are many scrapyards that would gladly take them.
Joined: Aug 03, 2006 Posts: 3873 Location: Graceland
Posted: Wed May 14, 2008 1:37 pm Post subject: Re: Is Iran Playing the Oil Card? If so, why?
canis_lupus wrote:
If you spin the chessboard around for a moment and look at the West from their perspective...they've got nothing to lose and everything to gain.
In a way, it is almost like economic terrorism (hear me out before the flames start) -- by rattling sabers, goading the West into sailing their hardware around offshore, keeping the word 'war' in the papers, talking about cutting production, continuing with their nuclear program all continues to hold/drive prices up, and it costs them nothing.
It affects John and Mary Sixpack who read about it in the paper and wonder how they are going to afford gas at all if we do attack Iran and begins to take the edge off any support the next president would have to go in Iran and kick ass.
It's a great play for them.
If no one wants those tankers, there is a scrap shortage right now. I'm sure there are many scrapyards that would gladly take them.
I agree. If all you have to do is talk crazy to make more money, then I would expect Iran to keep talking crazy and taking small but provocative steps toward the U.S. for as long as that works for them.
Really, I'm not sure what would need to happen for Iran's strategy to stop working. The U.S. doesn't have anything Iran needs (other than a country without a bunch of bomb craters in it), but Iran does have the ability to affect something that the U.S. very much needs--i.e., a ready supply of oil and prices that are not off the chart.
No U.S. military strategy for an Iran attack makes a lot of sense (to me anyway), so it seems that Iran has the stronger position in the short to medium term, and they are just playing it. _________________
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