David Frum on Gasoline Prices and Iran (bzzzt Wrong)

I caught Republican strategist David Frum speaking on Erin Burnett’s magazine show on CNN Tuesday evening. I looked, but I couldn’t find a transcript yet, so this is from memory. Frum was a speech writer for George W. Bush and is said to have put the phrase ‘axis of evil’ in W.’s mouth. On the other hand, Frum has tried to stand against the Tea Party and the Palinization of the GOP.

Burnett was making the correct point that President Barack Obama is not responsible for the price of gasoline, which is set by world markets based on supply and demand.

Frum then complained about Obama’s move Tuesday to rein in speculation in the oil markets. Frum is likely correct that there isn’t that much speculation involved in trading oil futures nowadays. While 10% or 15% of the price of petroleum may derive from traders building the Iran crisis into futures contracts (which isn’t really speculation), mostly petroleum is high because demand is exceeding supply. Otherwise there should be a lot of petroleum just sitting around in depots, which is not the case.

But Frum then went on to say that there were two ways Obama could affect the price of petroleum. He could release some American reserves of petroleum, and he could offer more clarity on his Iran policy.

And this is where Frum went off the rails. Obama cannot reduce the price of petroleum simply by being clearer on his Iran policy. In fact, it is the clarity of that policy that is contributing to high prices. A more vague and ambiguous policy is what might calm the markets.

Obama’s Iran policy is to visit crippling sanctions on Iran and to attempt to impose a financial embargo on the sale of Iranian petroleum. If you are an oil futures trader and you hear that, you might well conclude that Obama is trying to take Iranian petroleum off the market. You would be right. Guess what: less supply, assuming constant or increasing demand, equals higher prices. So you’d build that into the futures bids. And that would cause gasoline prices to rise or stay high.

Obama’s further policy is that no options are off the table, which is an implicit threat to strike Iran militarily if the oil embargo fails in changing Iranian policy of enriching uranium.

If you are an oil futures trader and you hear that, you have to build the possibility of a military strike into the price six months down the road. And that would cause gasoline prices to rise or stay high.

So it is clarity that is producing the high oil prices.

If Obama were to be even more clear, and just say that eventually he’ll probably have to attack Iran, that would cause a big spike in gasoline prices.

Obama could lower those prices (maybe by 15 to 20 percent) by just stating publicly that he would never go to war with Iran without a United Nations Security Council resolution authorizing it. And he could say publicly that the US won’t try to starve Iranian children the way it did Iraqi children.

He won’t, of course, because he is running against a warmonger, and many among the American wealthy think wars are good for business, so he’d lose support if he spoke that way (not to mention that the American Israel Public Affairs Committee, which currently more or less works for mega-hawk Israeli PM Binyamin Netanyahu, would slam him).

Obama is mainly just doing to Iran what the American Right wing, including Frum, want done to Iran. But it is that clear, unambiguous policy that is helping drive up prices. The embargo may be causing Iran to export a couple hundred thousand barrels fewer per day than it would otherwise. The embargo, and sabre rattling toward Iran, are driving prices higher.

Frum helped beat the drums for war with Iraq, and maybe he favors another war, this time with Iran. But for him to tell the American people that such unambiguous warmongering would *lower* the price of petroleum is nothing less than a Big Lie.

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15 Responses

  1. I was responding to your first comment that Burnett was correct that Obama wasn’t responsible for high gas prices. But you go to explain why he is.

    Confusing…

    • The price is mostly set by supply and demand.

      The Iran war hysteria adds on 15% or so. Netanyahu, Khamenei, Congress & Romney fan that. Obama’s contribution marginal

  2. Frum, who would never stoop to wearing a military uniform, except maybe for the IDF, is one cog in the Israeli lobby wheel bent on pushing the US into waging another unnecessary proxy war for Israel.

    I pray that one day the US public will realize that neocons such as Mr. Frum, Joe Lieberman, Paul Wolfowitz, Richard Cohen, Bill Kristol, Chuck Schumer, to name a few, do not have this country’s best interest at heart.

  3. It took a big lie to sell the Iraq war, and it’s going to take another big lie–now in process–to sell an attack on Iran. In both cases, David Frum has been front and center.

  4. I hear liberal radio hosts blaming high gas prices on speculators, without explaining why speculators are acting different now than they did a year ago. The Left understands that the free market is not the panacea that libertarians say it is. But their understanding of markets ends there, to their detriment.

    • Sure, but what does it mean when conservatives have zero idea of how markets work either? They’re the ones saying that if we scrap all pollution and environmental protections we will produce enough oil to lower prices, but oil is sold in a world market with rapidly growing demand. We even hear them talking about somehow outlawing oil exports as if that wouldn’t cause a nightmare of retaliation and the death of the free market they are willing to destroy the middle class to defend.

      If people were actually taught how markets work and can be rigged or oligopolistic, they’d be a lot more radical than they currently are, which implies they are kept ignorant on purpose. A hundred years ago, workers and farmers discussed the effects of markets on them as a matter of life and death.

  5. Reza Shahabi: Prisoner of the Day
    Imprisoned trade unionist on hunger strike

    iranhumanrights.org & itfglobal.org: Labor activist Reza Shahabi, who has been in prison since his 12 June 2010 arrest, embarked on a dry hunger strike on 22 November in protest of the Evin Prison authorities’ lack of medical treatment and attention to his illness. As his health deteriorated, he was briefly transferred to hospital last week, but is now back inside Evin Prison, where he is said to be continuing his hunger strike. Shahabi is a trade unionist and a board member of Syndicate of Workers of Tehran and Suburbs Bus Company >>>
    link to itfglobal.org
    link to iranhumanrights.org

  6. Just because instant loan brokers are setting up shop in gas stations is no reason to stand in the way of the “Job creators.”

  7. “Obama is mainly just doing to Iran what the American Right wing, including Frum, want done to Iran. But it is that clear, unambiguous policy that is helping drive up prices. The embargo may be causing Iran to export a couple hundred thousand barrels fewer per day than it would otherwise. The embargo, and sabre rattling toward Iran, are driving prices higher.

    Frum helped beat the drums for war with Iraq, and maybe he favors another war, this time with Iran.”

    David “axis of evil” Frum started beating on the strike Iran militarily drums at least 8 years ago along with Reuel Marc Gerecht, Cheney, Micheal Rubin, Feith, Bolton, etc etc on every MSM outlet that welcomed more warmongering. Hell on many MSM outlets the same cast of invade Iraq characters did not have to push the unsubstantiated claims about Iran many host would do it for them. Terri Gross and Rachel Maddow two of the worst repeaters of these false claims

  8. Under the rubric of Eschew Obfuscation, here is a bit from a paragraph of Naomi Klein’s THE SHOCK DOCTRINE: ” . . . the parties with the most to gain never show up on the battlefield. And in Iraq there was plenty to gain: not just the world’s third-largest proven oil reserves but territory that was one of the last remaining holdouts from the drive to build a global market based on Friedman’s vision of unfettered capitalism. After the crusade had conquered Latin America, Africa, Eastern Europe and Asia, the Arab world called out as its final frontier.”

    As my friend, Tim Perales observed “Wars are fought by people who need money–for those who don’t.”

  9. Frum is part of Cadre of right wing Canadian Jewish imports that are relentess in driving the extreme Likud agenda in the US.Charles Krauthammer(Dr.Strangeglove),Mort Zuckerman are 2 others.

  10. The last military incursion the U.S. had against Iran ended in American humiliation – the attempted rescue of U.S hostages in April of 1980 under the command of Green Beret Colonel Beckwith.

    One commentator pointed out that an American invasion of Iran could result in one suicide bombing per hour due to the supply of fanatics Iran can muster to attack Americans.

    Should Obama order the U.S. Armed Forces into Iran there will be serious casualties and the American public shall vote him out of office this fall.

  11. “And he could say publicly that the US won’t try to starve Iranian children the way it did Iraqi children.
    He won’t, of course, because he is running against a warmonger, and many among the American wealthy think wars are good for business, so he’d lose support if he spoke that way”

    Support for what, exactly? A bit of reductionism and: “In order to have the Great Society, I had to give them Vietnam”.

    So how many dead Iranian children are worth…what?, What’s the trade-off?

    Is it Rumi or Saadi who talks about the Sufi and the sick king? Maybe Obama should read more.

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