Re: Why the price of gas will go up (anyway). There is currently a great deal of gnashing of teeth and girding of loins over Iran closing the Straights of Hormuz, thereby slowing the flow of oil to the world market. While I’m ever so easily persuaded towards anxiety (and Daddy loves him a good loin girding), I find myself discounting this possibility for the simple fact there aren’t people in the streets of Tehran calling for a military solution to the sanctions. While we expect the world to be as focused on the nuanced and subtle machinations of our government as we purport ourselves to be (but obviously aren’t), we often neglect to notice the interplay of forces at work in the politics of foreign nations. As witnessed by the popular “Green” uprising in early 2009, the Iranian government, military, and theocracy are most focused on just staying in power at the present time and, without loud, continuous protests in the streets for a military confrontation with, essentially, the rest of the world, that confrontation is just not going to happen. Not to mention, China is just not going to be down with that. Not yet. With the Iranian government, the bottom line about sanctions is they’re not a problem until the people tell them they’re a problem and that’s months (if not years) down the road. As long as the people believe their politicians have us right where they want us, which I’m sure they’ve been told, and they’re sure they are going to “win” (however that is defined over there) this situation will remain just how it is: loud, angry, but essentially peaceful on all fronts. There is no advantage to be gained, on any front, by forcing the issue. That, I would hope, is good news. The bad news is gas prices will go up anyway because, and feel free to correct me on this one if you must, the oil companies see a reason to speculate on this “risk premium“. As long as the fear of a supply interruption can reverberate through the economy, it is in the best interest of the oil companies to promote that fear for both the financial gain and the political power. With the fortunes of the domestic economy beginning to turn, and the election hinging on the continuing improvement, there will be no better time for Big Oil to play their hand. All the media is focused on NH, SC, and Florida while the next president is traded daily in the oil pits. As witnessed by the popular “Occupy” uprising in 2011, the US government, military and theocracy are most focused on just staying in power at the present time and, without loud, continuous protests in the streets for a confrontation with the oil companies, that confrontation is just not going to happen. Not to mention, Saudi Arabia is just not going to be down with that. Not yet. (See? We’re not so different after all.) All the best, TVA. Ps. Remember, it’s still winter here: tell me I’m wrong in the spring.
