Gingrich Urges War with Iran and Skyrocketing Oil Prices

New Gingrich, sleep-walked into a declaration of war on Iran in last night’s Republican foreign policy debate. Here is the relevant exchange:

“BLITZER: The argument, Speaker Gingrich — and I know you’ve studied this, and I want you to weigh in — on the sanctioning of the Iranian Central Bank, because if you do that, for all practical purposes, it cuts off Iranian oil exports, 4 million barrels a day.

The Europeans get a lot of that oil. They think their economy, if the price of gasoline skyrocketed, which it would, would be disastrous. That’s why the pressure is on the U.S. to not impose those sanctions. What say you?

GINGRICH: Well, I say you — the question you just asked is perfect, because the fact is we ought to have a massive all-sources energy program in the United States designed to, once again, create a surplus of energy here, so we could say to the Europeans pretty cheerfully, that all the various sources of oil we have in the United States, we could literally replace the Iranian oil.

Now that’s how we won World War II.

(APPLAUSE)

GINGRICH: So, I think you put your finger, Wolf, on the — on the — you know, we all get sucked into these tactical discussions. We need a strategy of defeating and replacing the current Iranian regime with minimum use of force. We need a strategy, as Rick Santorum was saying, of being honest about radical Islam and designing a strategy to defeat it wherever it happens to exist.

We need a strategy in central Asia that recognizes that, frankly, if you’re Pashtun, you don’t care whether you’re in Pakistan or Afghanistan, because you have the same tribal relationships. So we need to be much more strategic and less tactical in our discussion.

But if we were serious, we could break the Iranian regime, I think, within a year, starting candidly with cutting off the gasoline supply to Iran, and then, frankly, sabotaging the only refinery they have. “

The new round of sanctions on Iran recently announced by the US, the UK and Canada have helped drive the price of Brent crude over $100 a barrel, and saber rattling toward that country is helping keep petroleum futures at historically high levels. Oil analysts typically dismiss the idea of a unilateral Israeli strike on Iran as a form of pressure on the West for stiffer sanctions. If they thought there was a serious prospect of such a strike, prices would move up substantially.

These high petroleum prices are hurting the European economies (most European countries import most or all of their oil) at a time when they are anyway in the doldrums. If you’re an American who commutes to work, they aren’t doing you any favors, either. Oil supplies are tight, and if the US and Israel really could succeed in taking the 2.3 million barrels a day that Iran exports off the world market, on top of the Libyan reductions, it would likely put the price up to more like $200 a barrel (i.e. for Americans $6-$7 a gallon for gasoline). Remember that Asian economies like India and China are growing rapidly, and demand for petroleum is actually increasing in Asia, which is also putting upward pressure on the price.

Petroleum is mostly used to fuel automobiles and trucks. Gingrich appears to assume that the United States has the capacity to increase its own petroleum production substantially, which is not true. Even if all the known reserves off the coasts in the lower 48 were developed, it probably wouldn’t amount to more than 400,000 barrels a day. Gingrich’s reference to the era of World War II, when Texas, Louisiana and Oklahoma were the world’s swing oil producers, is ridiculous. North America only has 3% of the proven petroleum reserves in the world. The Perso-Arabian Gulf has roughly 63% of the known reserves. The US has increased, e.g., ethanol production (which threatens high food prices and world instability by taking corn off the food market), but it cannot hope to both replace Iranian production and meet increasing Asian demand with any known “all-energy” policy in the short to medium term. That is a science fiction scenario.

The US could move to solar, wind and geothermal electricity production and use electric cars, but it will take many years, and Gingrich says he is against that step.

So the United States cannot protect Europe from the spike in oil prices that would ensue from an even more muscular policy toward Iran. Indeed, the US cannot even protect itself from such consequences, which Gingrich would have noticed when he filled up his gas tank if he didn’t have his chauffeur take care of such tasks instead, having made himself filthy rich by influence peddling for Fannie Mae and Freddie Mac.

Gingrich’s prescription for dealing with Iran is K-r-aaaay-z-yyyy. He seems to be stuck with the propaganda talking points of two or three years ago, when Iran had temporary refinery capacity problems, leading to gasoline shortages. Iran launched a crash program to expand some refineries and open new ones, and is now more or less self-sufficient in gasoline. It is likely to be a major exporter of refined petroleum products, not just crude oil, in coming years.

So, blockading gasoline exports to Iran is no longer a plausible strategy.

As for “sabotaging” its “one refinery,” — this is fantasy. Iran has more than one refinery. The US doesn’t have the assets in Iran to conduct such extensive and massive “sabotage.” And, Iran could “sabotage” things right back. If he means bombing Iranian refineries from the air, that would be an act of war. It would in any case send the price of petroleum sky-rocketing because it would spook investors.

There are no Pushtuns in Iran or Central Asia, and Gingrich’s bizarre comments on Islam and Central Asia have nothing to do with Iran or its gasoline and petroleum production. Most post-Soviet Muslims in Central Asia are Tajiks or Turkic and are relatively secular.

As far as I can tell, Gingrich wants war with the whole Muslim world. Good luck with that.

In any case, Gingrich’s answer to Blitzer’s good question is a hodgepodge of power fantasies (he thinks the US can create fuel to replace Iranian production and meet rising Asian demand out of thin air) and little boy military daydreaming (“sabotaging” the alleged “one refinery”).

What his stated policies imply are 1) war with Iran and 2) astronomical petroleum prices.

32 Responses

  1. You are right about him recycling old talking points (re: only one refinery and vulnerable to sabotage). I distinctly remember hearing him using that talking point ~4 years ago or so.

    While not all of them are as loopy on Iran as Gingrich, all of them (save Paul) were promising to ratchet up tensions in some form or other. Romney promised “crippling sanctions.”

  2. “all the various sources of oil we have in the United States, we could literally replace the Iranian oil”

    ….And the Gingrich idea is that increasing US oil production will (somehow) reduce the marginal cost of buying oil in the US below the world market level?

    Or is the Gingrich idea that an incremental increase in US production will (somehow) markedly decrease world prices?

    Or just that producing oil (everywhere) becomes more profitable at a higher world price?

    Either way, the idea is absurd or irrelevant to Iran.

    Europe and the US buy from the world market. Iran sells to the world market.

    The convenience of shipping part of the (fungible) world oil supply from a nearby location (e.g., from Iran to Europe, or from Texas to Illinois) is 99% irrelevant — unless there’s a threat of a tight, military blockade on oil shipments to the US (!).

    Crazy indeed.

  3. And I can guarantee you that which ever Repug gets in power next year, we’ll be at war with Iran in his first year.

    And the oil companies will reap the profits, as will the military-industrial complex, the banks who finance them, and the rest of the scum running this country and the EU.

    While the rest of the non-military-industrial complex US economy evaporates, thousands of US troops die, and a million or more Middle East civilians die.

    By this time next year, the US and EU will be bombing Syria, Israel will be invading Lebanon, and the stage will be set for war with Iran some time thereafter.

    That’s the game plan. And there’s nothing anyone can do to stop it because the US population no longer controls its government.

  4. This is dangerously insane. The US can no more produce all of its own petroleum than we can move our whole country to the moon, and yet Gingrich seems to imply that we could not only supply enough for our own needs, but that we could also “cheerfully” provide the Europeans with replacement oil after cutting them off from Iranian supplies. And all this “within a year”… These are dangerous demagogues; I am scared.

  5. The bloody neocons at AEI, such as AEI’s own comb licking Paul Wolfowitz, were keeping score last night on how vicious and warlike each candidate’s answers were. They were not disappointed.

    It’s especially interesting that Ms.Bachmann, who pretends to be so interested in protecting the fetus, shows no concern when it comes to US policy preventing medicine and food from reaching Iranian children, just as Israeli policy is starving Palestinian children. There is something wrong with this picture.

  6. Excellent evaluation. I wish that we could say that the insane Republican approach to Iran was countered by a sane Democratic one, but Obama’s policy doesn’t seem to make any sense either. He was roundly excoriated for saying that he would meet with Iranian leaders “without preconditions” during the campaign, which was one of the reasons I voted for him.

    I agreed with the concept that meeting with another nation to talk to them does not somehow demean us, and that you get other nations to do what you want them to do by meeting with them and negotiating, not by demanding that they do it first before you agree to meet with them.

    But, he now has reverted to the absurd American policy of “We don’t talk to nations who aren’t doing what we tell them to do.”

  7. I’ll disagree slightly that the question was a good one–Blitzer seems to imply that since Europeans get a lot of their oil from Iran that taking Iran offline would only hurt Europe–oil is pretty much a unified world market, so if prices go up for Europe they go up for everywhere else, too.

    Sure distribution to Europe will have to adapt, but if Europe is suddenly offering $200/barrel for oil do you think US suppliers will keep their prices at $100 for the US?

    The fact that people refer to Newt Gingrich as a “thinker” or an “intellectual” is insane.

  8. The trouble is, Gingrich manages to sound well-informed to people who know little about the rest of the world. By layering on detail (albeit wrong), he gives the impression of extensive and comprehensive knowledge. That, with his pompous and didactic delivery, cements the impression that he truly is a well-educated, knowledgeable man, one who understands the way the world works.

    It’s a classic con strategy. Works every time on the rubes. (sigh)

  9. It is simply amazing that Gingrich can speak lunacy out of both sides of his mouth and listeners simply nod. The first paragraph you quote, about a massive all-energy effort by the US, is absolutely true, and in the end would be far less expensive than any new fairy tale military adventure to steal somebody else’s oil so we could avoid coming to grips with our own extravagant and unsustainable energy use. But that line is a toss-off lie as Gingrich and the Republicans have had a strict policy for decades of opposing and disabling any substantive moves to create sustainable domestic energy sources.

    The fundamental choice America faces is whether to invest dollars into national energy self sufficiency, or burn dollars by the truckload while making more enemies and destabilizing the planet on a military machine that by definition and experience cannot produce anything and knows only how to consume. Running its current debt, the US doesn’t have the dollars for either course without a massive change of national focus, and it certainly can’t afford to do both. The difference between the two is that determined investment in energy self sufficiency offers a possible route into a viable American future, while investment in the military erases any chance of a viable American future. Every buck handed to the military is more than one buck less we have to stop our energy (and political) dependency. Bring 90% of all those military people home and put them to work in America making America energy self sufficient.

    None of the Republican presidential wannabes even vaguely comprehend this. Nor, unfortunately, does Obama.

  10. I look forward to the day when important American political figures no longer make statements like this one:

    ” we could break the Iranian regime, I think, within a year …… sabotaging the only refinery they have.”

    Imagine if the President of Iran suggested attacking a refinery in Texas.

    • Not only is the suggestion insane and illegal, but look at the way the policy he advocates has worked against the North Korean regime. The idea that the NK regime was close to collapse and stronger sanctions would bring it down in as little as a year has been almost an unshakable faith since Kim Il Sung’s last years. Not so much. Our entire Iran strategy is cast in that same ignorant vein. So his policy it is not only insane and illegal, but it is ineffective and counterproductive, as well!
      AND THEY APPLAUD HIM!

  11. Cutting off gasoline supply to Iran? Iran makes its own and is about to become an exporter – thanks to the sanctions already in place. Cutting off gasoline is a perfect example of how Iran can’t trust external supplies and has to be self-sufficient in making reactor fuel too.

    • Gingrich is so stupid that he doesn’t know Europe also buys oil and gas from Russia? Cut off Iran, and Putin can afford to start building aircraft carriers again. Oh wait, a renewed Russian superpower is just what the GOP wants, isn’t it?

      Also, Iran is trying to convert its cars to natural gas, which it already has more than it knows what to do with, and doesn’t require refineries. I’m sure China would be willing to supply the cars in exchange for some more of that gas, since it’s the only short-term replacement for China’s disastrous coal economy.

      It’s a staggering compendium of ignorance. A massive all-sources energy program is meaningless because capitalist dogma requires it to all be run by the private sector. So no sources will be invested in unless they’re already proven to be profitable, or are fantasies promoted by the existing energy oligarchs like shale “oil”. The oil companies, honest to God, have been trying to make shale profitable for a whole century.

      Then the competing oligarchs will fight each other over which of these sources should get government handouts, and they will fight in the arena that they have purchased, our Congress. So nothing will even be started for years.

      Now, Canada could ramp up tar sands production with disastrous effects, but Gingrich is not running for prime minister of Canada, so how can he guarantee that the US will have any ability to make Canada speed up when it’s so profitable for it to just sit back and let prices rise? Will we invade Alberta?

      Also, Americans are completely confused about the difference between liquid fuels that could run our cars, and energy sources that produce electricity, like nuclear and coal. There’s a lot less we can do about liquid sources in any reasonable time frame unless, like Iran, we were willing to mandate that cars run on natural gas. Unlikely from the GOP.

      So Newt can start a war in January 2013, but he won’t have a god-damned barrel of oil to offer to Europe before he’s up for re-election in 2016. The America that could invent an atomic bomb in 3 years? It doesn’t exist anymore, and it’s largely capitalist actions that dismantled it.

  12. Gingrich will say stuff even he himself isn’t too ignorant to believe.

    Right now, his focus is on pandering to the Know-Nothings and muscular Christians and blind xenophobes of the radical right of the Republican base.

    These nuts are a large part of the voters in Republican primaries and they believe that Gingrich is too “soft” and liberal.

    So Newt’s talkin tough.

  13. I read somewhere that GINGRICH helped Bush plan the illegal, insane imperialistic bombing and invasion of Iraq. What was his involvement?

    I like most of the 312,658,000 Americans and the world population of 6,976,852,000 don’t want another war whether drone, conventional or nuclear. War is becoming obsolete?
    See link to census.gov

    How can any sane, slightly informed person even consider him? or any Republican or Democrat?

    I guess if your only exposure to news is the corrupt mass news media, you’re a potential target for the propaganda of the Billionaires and their puppets.

    If you’re reading this I assume you’re quite informed.

    How do we spread the existence of this site and others similar to it to the masses? How about an article or two in the mass news media? Time, Newsweek, local papers?

    Only 1 out of 157 people that I have mentioned Juan Cole or any of his interlocutors and friends to have recognized them. I’m reclusive and only a swimmer.

    What to do? Puts signs on my car, bike and backpack?

  14. By the way, Gingrich just denounced child labor laws as the greatest source of economic inequality in America. Because things were so much more equal when small children were dying in sweatshop fires and mine cave-ins. So I guess when he claims the effects on us of his war on Iran would be negligble, we have to consider that he believes going back to the 19th century would also do negligble harm.

  15. What kind of a brainless buffoon that guy must be! Is there any sane politician in the U.S.? I wish such raving morons would sober down.Otherwise, the world will be plunged into the Armageddon and the U.S. will not be spared.

  16. “Even if all the known reserves off the coasts in the lower 48 were developed, it probably wouldn’t amount to more than 400,000 barrels a day.”

    The Bakken formation in North Dakota alone, produced 450,000 barrels of oil per day, as of August 2011. Doesn’t include Gulf of Mexico, Prudhoe Bay, Alaska, Permian Basin, etc…get your facts right.

    • What I said was perfectly correct. I said if all the reserves off the cost of the lower 48 were exploited, it wouldn’t produce more than 400,000 barrels a day.

      The amount of petroleum in the Bakken basin is controversial, but it would be developed over 40 years and is relatively small in world terms. You couldn’t offset Iran that way, which has on the order of 150 bn. barrels in reserves. Most of the places you mention would be very expensive to develop and would have low yields in world terms and getting at them would a) damage the immediate environment and b) cause global warming.

      • These comments seem to be missing each other. Yes, if Bakken is now producing 450,000 barrels a day, it’s absurd to suppose that developing all these other places with it would add up to 50,000 less.

        But that’s not what Juan wrote. He said, “Even if all the known reserves off the coasts in the lower 48 were developed, it probably wouldn’t amount to more than 400,000 barrels a day.” That excludes Bakken, which is high and dry in the Dakotas. It is doubtless true that more can be squeezed out of the Permian Basin, the Central Valley in California and other such places, i addition to the off-shore stuff Juan mentioned. But it will be pricey.

        And aside from climate change, that’s an important point. Pricey means you need a lot of capital expenditure to do it. Problem is, that won’t happen unless the price per barrel is high, and when that happens, the economy crashes, pulling down the price, and ensuring that the capital won’t be there.

        We’ve been seeing that pattern, which began with the 1973 oil shock, more intensely now that world petroleum has peaked. A lot of 2008 was an oil shock, although aggravated by the corrupt financial system encouraged by the corrupt political class.

        Don’t forget, though, that even that, with its artful dodging by promoting of asset bubbles, arises to a great degree from the basic weakness of an oil-addicted economy whose supply is quickly becoming more cramped and expensive, so that asset bubbles have been the only way to keep the music playing in the face of actual contraction.

  17. Benign Global Hegemony is a wonderful thing. These hawks are truly insane, and can anyone really stop their drive towards destruction?

  18. Reality checks ….

    - The US passed peak oil production in the 1970s and regardless of the technology we try and the depths of water we drill, the US production has DECLINED every year since then. There is no way to increase US oil production more than a miniscule amount and the COST of that slight increase requires oil to be well above USD 85/bbl.

    - The US imports ~75% of the oil it uses. Even if every square yard of the US was drilled that number only decreases to … 70%. That is, full out drilling of the US, completely ignoring the environmental damage and the production costs would ONLY meet 5% of the US needs.

    - There is no possible way for the US to effect global market prices of oil unless it stopped using oil altogether (killing its economy).

    - The Bakken reserve has been in production for over 30 years (it is NOT new) and even with the use of horizontal drilling and fracking, the production has not increased very much because the pools are trapped in hard rock, are small and frequently dry up before the well even pays back its drilling costs. Not only that, but the “report” everyone cites is actually part of a stock scam and has long ago been discredited.

    - When Global Peak Oil hits (absolutely, mathematically guaranteed to happen), it will take the US tens of years and TRILLIONS of dollars to completely rebuild its energy production, distribution and usage infrastructure. Since, unlike China and most other countries, the US has completely FAILED to put energy transition plan in place for GPO, the US will have ten to twenty years of extreme economic collapse.

    - The current US energy infrastructure was built over a period of 150 years and has to be completely re-built to address future energy needs. The US KNEW in the 1970s that oil was going to disappear but has WASTED over 40 years doing absolutely NOTHING.

  19. What no one seems to have read is that the company’s testing the Three Forks below the Bakken formation have hit oil saturation which suggest that the entire Bakken/Three Forks formation has recoverable reserves of 24 billion barrels of oil equivalent, which effectively increases US reserves by 80%.
    While it is pricier than conventional drilling because it is shale/tight oil, the Bakken has exhibited IRR’s in excess of 60% at $80/bbl, which we are $15 dollars over at the moment. With IRRs that high, companies will spend the capex, and it is no surprise that Statoil, one of the most financially sound and well managed oil and gas companies in thw world, paid $72/bbl on a proven reserve basis to acquire Brigham Exploration.
    Bakken production should exceed 1 million barrels per day by 2020.
    Add that to all the oil sands/heavy oil in Canada, the trillions of cubic feet of shale gas that the US has (and has already started to build LNG facilities), I think North America can handle any energy issues going forward.

    • North America may increase production by about 3 million barrels a day by 2016 if sunny projections are borne out. But Iran produces 4 million barrels a day. The point I was making is that Gingrich’s boast that he could take Iran’s petroleum off the market and all of a sudden replace it for European allies or even for the US by a crash program to produce oil in the US is simply not true. The numbers don’t add up. Moreover, if demand grows over the next 5 years, then the extra North American production will be gobbled up and taking out Iran’s production would still cause a disastrous price spike. And, I wouldn’t count on there actually being 24 billion barrels at Bakken. Some estimates are for 2 or 3 billion. Hungry little oil companies have been known to hype fields in order to raise investment capital, only to come up dry.

    • Tito, our country is already dying with oil at current prices. It’s been dying since 1973, which just happens to be when US production peaked and we lost our position as the world’s dominant producer. We literally needed to dominate world oil production to the extent that Saudi Arabia dominates it today just to keep our way of life from bankrupting us. Are you seriously claiming the US could increase production from under 5 million bbls a day all the way back to its original peak of 10 million, which would now be only a small part of current consumption and still wouldn’t cause prices to go down? If anything, we should consider reducing production before we suffer another BP catastrophe, but you clearly have already written off the Gulf as a necessary sacrifice to feed the beast.

      Worse, you’re offering this in defense of a madman’s scheme to destroy the Middle East. Do you not see that oil itself is the toy of tyrants and warmongerers because it concentrates power into too few hands, and thus inexorably corrupts them? Our invasion of Iraq took America to levels of evil on the international stage where it had never gone before, and it was because of our paranoia to defend what the war criminal Cheney called our non-negotiable way of life.

  20. Hungry little oil companies? Talking about Exxon, Hess, EOG and Continental? Exxon is the largest or 2nd largest company in the world. The smallest of the lot, Continental is itself a large-cap company.

    Those USGS estimates of 2-3 billion barrelsare only on the Bakken, they have not tested the 4 benches of the Three Forks formation below it.

    You are neither a geologist, nor a reservoir engineer, so I don’t think your opinion on whether there are 24 billion barrels or not carries any merit.

    You may not believe in the Bakken/Three Forks geology, but there are people who do, and if they hit those recoverable reserve estimates, then your argument would have a tiny hole in it.

    • no, my argument stays the same. The US.cannot replace 4 million barrels a day taken off the world market. Period. You don’t seem to realize that 24 bn barrels in the ground is not that much. The US uses 6,6 billion barrels a year alone. Your Bakken is only 3 years supply. Not to mention questions of whether it is there or can be recovered profitably. What Gingrich said is ridiculous and Bakken doesn’t change the absurdity of it.

    • Wow, Robert, that’s WONDERFUL!

      We have lots of oil, so it’s okay for us to exterminate the people of Iran! I knew you oil guys had only the best intentions for the world!

    • Juan,

      Unfortunately, Robert and Tino (above) are actually fairly representative of just how delusional many Americans are when it comes to energy. I have had long detailed discussions with many people and they are JUST NOT CAPABLE of understanding.

      Part of the problem is a complete lack of knowledge of basic science, especially basic thermodynamics, and high school mathematics.

      Most Americans can not understand that oil is a finite resource and that once it has been extracted as much as humanly possible, there is effectively no more (yes scientifically there is still some left but no amount of technology and/or money will bring it to the surface).

      You and I both know there is not enough oil left in the US to make any difference in our future, but NO ONE is willing and able to explain this to the general public (Carter tried, but was ignored and Ronnie Raygun changed all of Carter’s policies).

      As a result, the US public keeps believing the scams like the Bakken myth and the Natural gas myth, the hydrogen myth and all the other “cheap energy” myths that are out there. Every one of the myths has been soundly debunked but Americans continue to believe them (like Tino and Robert).

      The general consensus (outside the US) is that Global Peak Oil will hit about 2020 and that is the date China and most countries are using for their planning date (if it hits a few years later, all the better). Unfortunately the US has NO PLANS for Global Peak Oil, zero, zip, nada.

      I really wonder what it will take for Americans to realize a very, very bad (but preventable) future is rushing at them.

      Iraq proved that the US can NOT take oil by force because the oil production infrastructure is easily destroyed and hard to protect, so going to war with Iran will just destroy the US economy, no matter what that [self censored] Gingrich may delusionally think.

      Robert and Tino will deny there is a problem until long past the day they can’t get any gasoline for their cars.

  21. When American presidential candidates campaign on policies such as ‘war’, ‘sanctions’ and ‘Israeli security’, I can’t help but think that they are lobbying the AIPAC – the puppet-master of the office of ‘US president’. Surely it is a sign of times when our would-be leaders are seeking the appeal of lobbies and corporate interests rather than the general public. And campaigning on the aforementioned slogans is definately not what the general public deems to be their priorities. Our would-be leaders are no longer interested in the needs of the masses but rather those of the powerful minority and hence their campaignes are in reality directed at them. We have lost control of our governments. This trend is surely a sign of the impending end of anglo-saxon civilisation as we knew it.

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