We are all now aware of supply, and, conversion constraints on gasoline. That is, gasoline typically rises in Mar and Apr each year as refiners switch the type they make. Summertime gasoline must have less butane and other cheap organic components because these criminals contribute to ozone (the ground-level type). It means more oil is needed to produce each gallon.
We also know of supply considerations such as a strike in Yemen, a Syria pipeline explosion, shenanigans in Sudan, and the Iranian cut of to much of the EU and finally, some US refineries shutting for good.
According to the Oil Price Information Service, Americans spent 8.4% of their household income on gasoline last year when gasoline averaged $3.51 / gallon, an all-time high. They will pay an even larger percentage this year is the guess of this organization’s chief oil analyst Tom Kloza, and this, notwithstanding the popularity of more efficient cars. Thus, craziness from Iran can be enough to put us over the edge, to launch gasoline and stop the world’s number one engine, the US consumer, dead in its tracks.
Yet are they really crazy? Are the mullahs just plain nuts? No. They just want us to think they are.
For example, it was these guys for goodness sake who established the precedent that enemies cannot be allowed to have nuclear weapons. They were the first to recognize the importance of taking out an enemy’s nuclear facility and they were the first ones to try it – 1980, the Osirak facility in Iraq (a botched job and the Israelis finished it the next year).
The Iranian thugs know that everybody else knows that they have enough natural gas for years of electrical-power; thus, they know that everybody else knows they are up to no good. And Iran is aware the West will indeed strike if pushed just a tad further, just as they themselves did 32 years ago. Thus, timing is key to them. They’ve got to get it just right.
Vic Hansen, a neighbor and one of the keenest observers of this region writes, “..the loonier and more suicidal it sounds, the more likely other countries are to grant concessions – successful states cannot afford to wager all that they have created on the likely hunch that a failed state like Iran is bluffing.”
Our view is that a strike on Israel is not their preference. They want nuclear to blackmail, not to incinerate; thus, they will always exaggerate the pace and potency of their program to gain concessions. Their government is a warped theocracy – an oxymoron to be sure – and knows its days are numbered; it knows the next bit of domestic unrest may well be successful. So key is to remain in power by wringing all the concessions possible, then stop the belligerence just an hour or two before the Israelis take off. Some of the masses will then be appeased by concessions gained; others will be fooled by Tyrant’s Rule #1 – when in trouble domestically, create an enemy offshore.
But even if they miss their timing, even if they miscalculate and are bombed, they know that well over half the world will side with them, thinking they never intended a strike, noting the gross injustice inflicted by the Western bullies.
Thus if we are right then we will see gasoline at $4.50+ over the intermediate term, but not $8 which is possible, even likely given violence in that region.
Robert Craven
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