http://thehill.com/blogs/e2-wire/e2-wire/216179-iran-strike-could-mean-6-per-gallon-gas
“I think you will see $5- and $6-a-gallon gas,” said Andrew Lipow, president of Lipow Oil Associates.
Submitted by testosteronepit on 03/15/2012 15:35 -0400
Israeli strike on Iran could raise gas prices to $6 per gallon, analysts say
- 03/15/12 10:44 AM ET
An Israeli military strike against Iranian nuclear enrichment sites would spike gas prices to between $5 and $6 per gallon, according to market analysts.
This would be well beyond the record highs hit in 2008, when nationwide average retail prices hit $4.11 per gallon, analysts say.
Other analysts agreed that airstrikes would cause a spike in global crude oil prices, and a corresponding jump in U.S. gasoline prices that are currently averaging $3.82 per gallon. But some declined to predict how large that spike would be.
The pain at the pump has created election-year political jeopardy for President Obama, who on Thursday was set to offer his fourth recent speech on his administration’s energy policies. Congressional Republicans and Obama’s rivals in the GOP presidential primary have sought to pin blame for the rising prices on Obama’s policies.
All of the analysts questioned by The Hill said there are a number of variables, such as whether Iran seeks to block or attack tankers in the Strait of Hormuz, a key shipping lane for Middle Eastern oil supplies.
Other fallout could include major supply disruptions from Iran as a result of military action, including damage to Iran’s oil and related infrastructure that hinders exports.
“You would almost inevitably see some disruption, even if it is only a few days in terms of export capability,” said Suzanne Maloney, an Iran expert with the Brookings Institution.
Israel has not ruled out airstrikes to set back Iran’s nuclear program, which Western powers argue is geared toward weapons production while Iranian officials insist it is for peaceful purposes.
Obama and his administration have sought to get Israel to wait and allow time for economic sanctions to punish Iran. But Obama also has not ruled out any options for preventing Iran from gaining nuclear weapons.
The United States does not import oil from Iran, but a supply disruption would affect U.S. gasoline prices because they’re tethered to crude prices set on global markets.
The wide-ranging potential effects of a strike could also include Iran, which is OPEC’s second-largest oil producer, willingly holding supplies off the market, and even attacks by Iranian proxies against oil production sites in other nations, experts say.
“The key of course would be the Iranian response,” said Guy Caruso, a senior adviser with the nonpartisan Center for Strategic and International Studies.
Caruso said the “most likely” scenario is an attack against Israel by Hezbollah from bases in Lebanon, which he estimates would have “relatively little” impact on oil prices, perhaps $5-$10 per barrel.
Sabotage against oil facilities in Iraq or Saudi Arabia is a lower probability but would have a bigger effect, said Caruso, who headed the independent federal Energy Information Administration during the George W. Bush administration.
Caruso estimated that such sabotage would send crude oil prices up by $10-$20 per barrel, with a corresponding increase in gasoline prices of 25-50 cents per gallon in the short term.
Damage to Saudi Arabia would be extremely worrisome to oil markets because the kingdom is OPEC’s dominant oil producer and the only member with the ability to substantially ramp up production to offset losses elsewhere.
Experts say that an Israeli attack would instantly drive up prices as traders would react to the potential for major supply disruptions.
“You would get a quick spike, and then markets would wait to see what would happen,” said Michael Lynch, president of Strategic Energy and Economic Research Inc.
He predicted that an Israeli strike would quickly send crude oil prices up by 10 percent to 20 percent over two days as “everyone on Wall Street goes nuts,” and from there it would depend on what comes next.
Lynch said an Iranian missile attack on oil tankers in the Strait of Hormuz is the most aggressive potential response, and forecasted that it would prompt a 50 percent jump in crude prices.
“I am not one of those who says we are going to hit $5, except briefly in the worst-case situation,” Lynch said.
But Maloney, the Brookings expert who is also a former State Department policy adviser, said military action against Iran would have a sustained effect on oil markets.
“We are looking at some immediate implications as a result of a strike, and then very possibly a kind of sustained series of crises over weeks and months ... that would make it very difficult to control the volatility in the oil market,” she said.
“It would be a sustained period of pressure on oil prices and a very difficult time keeping the price at the pump down.”
and.......
The $10-Per-Gallon Gas Has Arrived, In Paris
Wolf Richter www.testosteronepit.com
In early December, Christophe de Margerie, CEO of Total, the Exxonà la Française, shocked the French when he said that there was "no doubt" that a liter of gasoline would reach €2 and that the only question was when. He cited the calamities in the news at the time to justify the skyrocketing prices of oil and gasoline—source of Total’s mega profits. He was talking his book, obviously, which isn't illegal, not even in France.
And now, €2-per-liter gasoline has arrived! More precisely, it has arrived at a gas station in the Rue Saint-Antoine in Paris, not far from the Bastille, in the 4th arrondissement. I used to walk by it every day an eternity ago when I lived in “le Marais” as the arrondissement is called. It’s a tiny gas station with rip-off prices by a parking garage entrance. And now it had the audacity to be the first in France to charge €2.02 per liter. $10 a gallon.
It was reported on Carbeo.com, a site that tracks gas prices across France, and then made the national news, though it must have done little to bring business to the station. The national average, which has been hitting all-time highs since late last year, was €1.62 ($8 per gallon) as of last week, also a record, according to the Ministry of Sustainable Development—they have a ministry for everything in France.
Fuel is taxed heavily in France (and in Europe), which explains part of the difference in price to the US. But now there is an additional reason. In 2008, when gasoline in the US hit all-time highs, the euro was strong against the dollar, and since oil is priced in dollars, Europeans got a sweet deal, or at least they didn’t feel the pain as much. But the weaker euro has changed the scenario, and record gas prices have been washing over the Eurozone for months.
The tab is rising. France paid a record €61.4 billion in 2011 for its energy needs, an increase of 32% over prior year. It amounts to 3.1% of GDP, up from 2.5% in 2010. Most of that increase is due to the rising price of oil as measured in euros. Electricity—the 59 nuclear power plants of state-owned EDF generate 78% of the country’s power—played only a small role.
Consumers, who have to absorb the majority of the oil price shock, are reeling. And they might kick France into a recession. Even Mario Draghi, president of the ECB admitted it when he said that it could heat up inflation—after graciously handing a trillion euros to his banker cronies since he came to power in November last year. The goal of these “Long Term Refinancing Operations” was to drive up the value of sovereign bonds of debt sinner countries in the Eurozone. But it seems to be hitting oil as well.
As in the US, the price of fuel has become a hot item in the presidential election. Socialist François Hollande, still the frontrunner, trotted out the idea of capping fuel prices, which President Nicolas Sarkozy, in his deadpan manner, called a “joke.” But Hollande has other ideas as well. Most intriguingly, he offered his compatriots a new 75% income tax bracket aimed at the chieftains of the largest corporations and banks. Instant revolt. Not among his targets, but in the world of soccer, the people’s sport. For how this has mushroomed into a calamity for Hollande, read....Killing a 75% Income Tax.
Sarkozy has his own demons to fight. Five years ago, he ran on a platform of reforming the economy. One of the planks was the relaxation of the 35-hour workweek. “Work more to earn more" was his slogan. But since then, nagging voices have turned it into "work more to earn less" and now "work more to fill up your tank”—which may cost over €100 ($130) even for a smallish tank.
And then France woke up to the news—quelle horreur—that Sarkozy, their presumed loser, was suddenly ahead in the polls. Amid all this chaos, two fundamental cross currents in the French economy went practically unnoticed, though they should have caused an outburst of national soul searching. Read.... Plot Twist While French Businesses Are Dying.
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