Two headlines dominate our papers today; escalating oil prices and news that Iran has developed uranium enrichment technology.
During the Iran-Iraq war (September 1980 to August 1988), Israel bombed Iraq's fledgling nuclear programme. This air strike signaled to countries like Iran that they should not put everything in one place. If The USA or its proxy, Israel, were to do another bombing, including the possible use of tactical nuclear weapons, the task is no longer simple and is likely to escalate to be widespread and prolonged. The consequences will be absolutely disastrous for our way of life.
Here are some interesting facts and specualtions that I obtained from reading an investment newsletter:
- Iran, awash with petrodollars, has been arming itself to the teeth as a response to the US invasion of its neighbour, Iraq. Its arsenal includes shiploads of sophisticated missiles
- If Iran was attacked it could easily shut off the narrow Strait of Hormuz which stops most of the oil from Iraq, Saudi Arabia and all of Kuwait's and the Arab Emirates.
- If it shuts off its own production, that means a total of 20 million barrels per day are taken off the market
- This would be catastrophic on a scale that will dwarf any of the previous oil shocks
- Oil will rise to more than US$120 per barrel overnight and many countries will simply have to go without!
If this happens, many people will be wishing they had still that spare bicycle in the garage propped next to the SUV. Higher energy costs impact on every aspect of our lives and we can expect this knock-on effect to be catastrohic and to go way beyond just the extra cost of a tank of fuel. While we have to adapt to escalating energy costs and shortages, we need time. Bombing Iran at any time would be downright stupid.
When the US invaded Iraq and then began talking tough about Iran, it was hardly a surprise that the Iranians responded by escalating their big defense spend, including getting closer to developing nuclear weapons. Iran, unlike Iraq, really does have a proper army that is armed to the teeth with modern weapons. Taking on the Iranians is not going to be any kind of pushover. Invading Iraq will probably go down as the dumbest Presidential act in US history; attacking Iran would be even dumber.
If you value your way of life, urge your politicians to lobby for moderation on this issue. It is time to exercise diplomacy and not to talk up the situation, or in any other way to add heat to an already tense situation.