Oil prices would skyrocket if Iran Closed the Strait

[Aeolus]

http://www.nytimes.com/2012/01/05/b...rocket-if-iran-closed-the-strait.html?_r=1&hp

A scary article in today's New York Times.

I remember reading that during the 70's OPEC scare, long gas lines were at least in part caused by fear of a shortage, where drivers tried to fill their tanks in advance of a shortage.

For those of you youngsters who weren't here or oldsters who can't remember 1973, here's the fun we had.

In the U.S., odd-even rationing was implemented; drivers of vehicles with license plates having an odd number as the last digit (or a vanity license plate) were allowed to purchase gasoline for their cars only on odd-numbered days of the month, while drivers of vehicles with even-numbered license plates were allowed to purchase fuel only on even-numbered days.[30] The rule did not apply on the 31st day of those months containing 31 days, or on February 29 in leap years— the latter never came into play, since the restrictions had been abolished by 1976.

In some U.S. states, a three-color flag system was used to denote gasoline availability at service stations — a green flag denoted unrationed sale of gasoline, a yellow flag denoted restricted and rationed sales, and a red flag denoted that no gasoline was available but the service station was open for other services.[

 

[walter]

I remember those days in N.Y. Odd, even days for gas, what a pain in the ass. Back then gas prices were a little over a dollar if I'm not mistaken and barrels of oil were around fifty dollars. Our population has almost doubled since then. We as a country learned nothing from those days about supply and demand. We had fifty years to come up with new technologies and once again waited till the last minute, shame on us. :shock:

 

[coqui]

Despite Iran's threatening saber-rattling, I doubt USA or their allies would allow the closing of the Strait. Nonetheless, you're right, temporary pain in the form of shortages/rationing/price hikes etc would occur.

Scenario1: Sorry, Mr Employer, I cannot car-pool 100 people in my Leaf :lol:

 

[lpickup]

The question I have in all this is what kind of political capital will we have to expend to keep the masses at American gas pumps happy? Because yes, that's the more likely outcome. The US and the rest of the oil addicted world will do something to prevent that from happening. But at what cost?

 

[DaveinOlyWA]

price of oil is already going up in anticipation of "something" happening.

we will also set a record for oil EXPORTS this year, due to fact that our domestic has dropped due to high prices so the gas is "piling up??"

**FRUSTRATION Alert!!**

if you are upset over the lack of vision this country has shown towards our future economic and environmental health do NOT read the link below

http://online.wsj.com/article/APf917509ee61344a38638e2c08bc47090.html" onclick="window.open(this.href);return false;

 

[DaveinOlyWA]

I remember those days in N.Y. Odd, even days for gas, what a pain in the ass. Back then gas prices were a little over a dollar if I'm not mistaken and barrels of oil were around fifty dollars. Our population has almost doubled since then. We as a country learned nothing from those days about supply and demand. We had fifty years to come up with new technologies and once again waited till the last minute, shame on us. :shock:

you are mistaken. gas approached $2 a gallon (Riverside CA i was living at was about $1.80 or so) and oil was around $80

before the rise, gas was 40 cents a gallon. afterwards it was 70 cents and it never went any lower. its been all uphill since

**edit** oh wait!! sorry bad memory. what i was referring to was the 2nd oil crisis in 1980. oh well. whatever. which means NYT is wrong because there was most definitely odd/even rationing then as well

 

[lpickup]

**FRUSTRATION Alert!!**

if you are upset over the lack of vision this country has shown towards our future economic and environmental health do NOT read the link below

http://online.wsj.com/article/APf917509ee61344a38638e2c08bc47090.html" onclick="window.open(this.href);return false;

Oh God, I think I'll take your advice. The whole insanity over how gas prices behave is probably THE NUMBER ONE reason I considered looking at EVs about a year ago.

Oh crap, I can't help myself. I think I have to look....

 

[TonyWilliams]

The question I have in all this is what kind of political capital will we have to expend to keep the masses at American gas pumps happy? Because yes, that's the more likely outcome. The US and the rest of the oil addicted world will do something to prevent that from happening. But at what cost?

The cost the British announced this morning is military force.

 

[walterbays]

Remember from last time the strait was "closed" that it doesn't have to be closed to be effective. There just needs to be enough of a threat that insurers will not underwrite oil tanker voyages through the Gulf, so that shipping route becomes more expensive than overland and through the Suez. I recall convoys of oil tankers with American Navy escorts going through the strait to guarantee the physical safety of the ships, but if I recall correctly the US also became insurer of last resort to guarantee the financial safety of the cargo.

http://andrewsullivan.thedailybeast.com/2011/12/irans-oil-bluster.html

 

[Nubo]

For those of you youngsters who weren't here or oldsters who can't remember 1973, here's the fun we had.

As much as I don't want to see it happen, that is when an electric car goes from being "wacky" to "brilliant" in general public perception overnight.

No, I don't want to see that happen. What I'm hoping for is a major shift to alternative energy so that regimes such as Iran do not hold such sway over the world's economy and nobody much cares if they throw a tantrum and close the strait and we don't have to send more kids to die for oil. That's really the number one reason I wanted an electric.

 

[cwerdna]

http://www.sfgate.com/cgi-bin/blogs/parenting/detail?entry_id=83789" onclick="window.open(this.href);return false; has some pics and stories about the oil crises in the 70s. I wasn't born for the 1st one but have vague memories of the flags and odd/even system on the 2nd one.

A few responses to http://priuschat.com/forums/freds-house-pancakes/90757-remembering-1973-oil-crisis.html" onclick="window.open(this.href);return false; has some people recounting their experiences during those days.

 

[derkraut]

Uh..I was already "mature" in 1973, when the US experienced its first "gas crisis". Actually, I drove a 1959 Mercedes 180D Diesel car at the time, so I had no problem filling up wherever there was a diesel pump. There was no shortage of diesel fuel, for some reason. What was really funny though, was that whenever I pulled up to a diesel pump to refuel, there was no line, so a bunch of cars always pulled in behind me to avoid the long lines at the other pumps. When I walked back to politely tell them that I was filling with diesel, They really got pi$$ed off at me....like it was my fault. :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol:

 

[aqn]

An observer on the PBS News Hour commented that if Iran closes the strait, it'd be cutting off its nose to spite its face, since its own oil exports goes out the strait. Furthermore, he says, this time around, China is a much bigger consumer of Iranian oil and will be much more pissed than the last time Iran threatens to close the strait.

(I don't believe that whether or not Iran actually closes/blocks the strait is a prerequisite for oil prices to sky rocket again, given the oil companies' track record.)

 

[ttweed]

An observer on the PBS News Hour commented that if Iran closes the strait, it'd be cutting off its nose to spite its face, since its own oil exports goes out the strait. Furthermore, he says, this time around, China is a much bigger consumer of Iranian oil and will be much more pissed than the last time Iran threatens to close the strait.

China has actually halved its usual oil imports from Iran in the last two months over last year's levels:
http://www.reuters.com/article/2012/01/05/iran-oil-china-idUSL3E8C5EFP20120105

China, which buys around 10 percent of Iran's crude exports, cut its January purchases by about 285,000 barrels per day, just over half of the total average daily amount it imported in 2011. "February would be the same as January, with the same cut," said a Beijing-based senior crude trader who deals with Iranian oil.

This appears to be more of an economic pressure play by China over terms of their purchases, taking advantage of the sanctions imposed by the US and EU, than a cooperative effort by the Chinese in pressuring Iran over nuclear issues, since they have also loudly denounced the US effort to impose its will internationally through the use of sanctions. Nevertheless, the result has been extreme economic pressure on Iran and a huge drop in their currency exchange rate (over 30%) in the last month, which is causing much economic stress on the the Iranian people and fueling the threats of war coming out of Iran's government. http://www.washingtonpost.com/world...itical-point/2012/01/05/gIQA8oygdP_story.html

This stark contrast has been evident in the Iranian capital this week as a top military commander declared a “critical point” in the country’s long feud with the West and ordinary Iranians stocked up on essential supplies. Merchants watched helplessly as the Iranian currency, the rial, shed more than a third of its value, triggering huge increases in the prices of imported goods.

TT

 

[evnow]

Naval blockade is an act of war. So, unless Iran wants to start the war, they won't "close" the strait.

They may be sabre rattling just to push the oil prices up.

 

[Yodrak]

Iran has shown itself to be quite adept at self cutting.

An observer on the PBS News Hour commented that if Iran closes the strait, it'd be cutting off its nose to spite its face,

 

[cwerdna]

T. Boone Pickens made a decent succinct post about hidden costs of protecting Middle East oil interests:
https://www.linkedin.com/today/post/article/20121005180623-27307105-the-hidden-costs-of-middle-east-oil?trk=NUS_UNIU_PEOPLE_FOLLOW-megaphone" onclick="window.open(this.href);return false;