Iran Problems Could Cause $200 Per Barrel Crude Oil

 

Oil.  Our world revolves around it and nearly everything our society does is dependent on it.  Most of us couldn’t get to work or the store and groceries and other supplies couldn’t be delivered around the country or around the world without it.  This is a relatively new dependence in our world today, but when we get addicted to something we do it in a big way.

It’s been said that one gallon of gasoline has the equivalent of three weeks of human work.  (source.)  Three weeks!  It’s no wonder the internal combustion engine has allowed the clever human race to advance to where we are today.  But there’s one little caveat here…

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Our economy is driven by oil.  When oil prices go up so does the price of our food.  It’s all interconnected with our economy and when you have a system that dependent on something you’ve got the potential for big trouble.  Enter Iran and potential big trouble.

It’s well known that Iran doesn’t care for the United States and when their country is the fourth largest oil exporter in the world (source) it can cause some tension.  I won’t go into the politics of the issue at this point more than to say that Iran is now threatening to close the Strait of Hormuz, through which runs 20% of the worlds oil.  With the way the markets  react to news today I’m surprised oil hasn’t already gone above $150 a barrel.  If this sabre rattling keeps up I wouldn’t be surprised to see gas prices go well over $4 at the pump in the next few months.

Could Iran really block the strait if the rest of the world decided they wanted it open?  Probably not, but all it would take is a couple of anti-ship missiles hitting an oil carrier and it wouldn’t really matter.  I suspect ship owners and captains wouldn’t want to run their expensive tankers and cargo through the strait until things had settled down a little.  Maybe not enough to put a big dent in the oil supply, but certainly enough to drive up gas prices and put a strong economic headwind on the “recovery” that’s being touted in the United States.

Arguably we have passed the point of peak oil and to me it seems unlikely that oil prices are ever going to go back to where they were before.  When there’s a shortage of something what happens to it?  I’ve rarely seen prices go down on something that was in high demand.

This post isn’t about sounding the trump of doom, but it is a good idea to keep your eye on situations that could potentially cause problems in important areas such as transportation, food prices, heating oil prices and yes, even an economic crash due to high energy prices.

Check out some oil and energy predictions and thoughts here.  And for those of you interested in military action here’s a threat assessment for the Iranian military threat.

Are you ready for high gas prices?  What have you done to prep for it?

-Jarhead Survivor