WaPo says Gasoline Price Increase Mysterious, Ignores US blockade of Iran Oil!

The Washington Post is surprised by the ‘mysterious’ high cost of gasoline in the US but does not mention in this article that the US government, at the insistence of the Israel lobbies, reduced Iran’s petroleum exports by 40% in 2012 by strong-arming countries to leave it in the ground and not import it on threat of third-party US sanctions.

Petroleum prices are at near-historic highs this winter. The average for gasoline in the US has jumped to $3.75 and it is much, much higher in Europe. The price of petroleum as a primary commodity is not a very complicated calculation– it is just supply and demand. The world is producing roughly 90 million barrels a day of oil. The world wants all of that and more, and hence the price is high. If Iran’s one million barrels a day — which the US has forced countries in Europe and elsewhere not to buy– were on the market, the price would be less. (There is a little twist in that sulphur-heavy, ‘sour’ crude is more expensive to refine into gasoline, so taking ‘light sweet’ oil off the market and trying to replace it with sour crude from e.g. Nigeria is costly).

Ironically, the high petroleum prices produced in part by the blockade of Iran oil sales cushion Iran’s government from the sanctions, since what oil it does sell goes for high prices and feathers the ayatollahs’ nests. Over time, some Iranian exports may be taken over by the private sector, which is not subject to the same sanctions as the government-owned enterprises.

The Neoconservatives behind the largely congressionally-led financial blockade against Iran’s oil exports (mandated by last year’s National Defense Authorization Act) promised that the policy would not harm the American economy because Saudi Arabia would be willing to pump extra petroleum to cover the Iranian shortfall. The Saudi ability to replace Iranian exports in the medium to long term, however, is doubted by many analysts, and Saudi exports fell slightly in the last quarter of 2012 from last summer’s heights. There was also a strike at a plant in Libya, and continued security problems for exports in northern Iraq. Not to mention that Syria and South Sudan exports have been halted by political upheaval, and that technical problems reduced the UK’s North Sea production.

Moreover, world demand is not stable, as the Neocons appear to have thought, and the prospect of an economic upturn in Asia this year will cause more petroleum to be used, increasing demand and magnifying the effect of the reduction of Iranian exports. Even the expectation of an upturn puts prices up on speculation.

Having West Texas crude go for nearly $100 a barrel is certainly a drag on the US economy, and as WaPo notes, it is hurting a lot of American workers and businesses. Polls show that drilling for oil in the US, even with environmentally dubious methods such as hydraulic fracturing, is popular with the US public. What they don’t seem to realize is that our sanctions on Iran are the same as closing down a sixth of US production.

Why WaPo and many other American news sources more or less cover up the effect of the US war on Iranian petroleum exports in keeping world oil and gasoline prices high is what is mysterious to me.

Posted in Iran | 21 Responses | Print |

21 Responses

  1. RE “Why WaPo and many other American news sources more or less cover up the effect of the US war on Iranian petroleum exports in keeping world oil and gasoline prices high is what is mysterious to me.”

    When I proposed the connection last year, many disagreed

  2. may be a repeat. if so, sorry.

    I disagree with the term “Israel Lobby.”
    You allow them to claim that they are FOR Israel, which does not appear to be the case from my POV.

    Rather, they appear to want to transform Israel into a racist radical jihadi secular imperialist religious state.

    If there appears to be a contradiction there (“secular religious,”) the religions of most people in the West are not organized like the handful of larger ones, and do not depend on the idea of a god or gods.
    The religion of the so-called “Israel Lobby” is a brand of secular humanism flavored with a contrived nationalism, which is derived from a faith they scoff at. Though they will invoke the God of the Jews they don’t trust in when it suits them.

  3. WaPo (and most Americans) are living in the past when there was much more oil than demand. Also, WaPo (and most Americans) are completely clueless about Asia in general and China in particular. I suspect that less than 1% of Americans realize that for other than a two hundred year period (1800s and 1900s), China was a MAJOR global power for over 5000 years and it is now progressing rapidly by making a five hundred year leap in less than 50 years. Note that for most of that 5000 years, China had a very innovative, entrepreneurial and vibrant “Merchant” (middle) class. Because Americans are so blind to their own failings, they can not comprehend just how innovative China is and how much energy China needs.

    BTW – the production data for Saudi Arabia for the last 15 years clearly indicates that the Saudis are either at or past peak oil production, so it is impossible for the Saudis to help cover global shortfalls.

    Until Americans start interacting with the real world instead of the fictional worlds they have conjured up, they will continue top be surprised.

    Note though that the neocons only care about one thing, the supremacy of Israel, regardless how much the US gets damaged in the process. The good news is the neocons are blind to the fact that US “support” for Israel is very shallow and once Americans realize that Israel is harming them, Americans will throw Israel overboard in a heartbeat. Israelis are also living in a delusional world and will be shocked at how fast and viciously Americans will turn on them.

    Things could get real interesting soon.

    • “shocked at how fast and viciously Americans will turn on them.”

      On the other hand, the Israeli rulers have some 400 nukular weapons already on line, and how many more “latent” ones? It would be hard to believe that Dimona has been idle, these last “conservative” years…

  4. What’s mysterious?

    The news media which is a propaganda machine is controlled by the Billionaires that control Congress, that own the Federal Reserve and most banks that are responsible for the all the depressions, that run the Military Industrial Complex, etc. Do the large oil companies ever experience hard times? The Billionaires and their puppet millionaires just keep getting richer and richer.

    The bankers and investment industry created the mortgage crises. Yet, Obama and Congress lets those damn “white collar criminals” work out a recovery plan for their criminal actions which is part of the greatest ever Ponzi Scam, the Federal Reserve, a private corporation.

  5. This is a striking insight into a kind of systematic blindness. Do standard outlets ever focus on the broader effects of policies that are deemed intrinsically noble?

    U.S.wars are treated as essentially free. And the massive, absurd reaction to 9/11 cost the U.S. trillions, apparently.

    By contrast, any government steps to sustain a decent society must be viewed first and foremost as expenditures of our vital essence — money.

    One could imagine that this asymmetry is driven by cynical calculation on somebody’s part — but more likely, as the newspaper level, it’s just an ethos.

  6. “Having West Texas crude go for nearly $100 a barrel is certainly a drag on the US economy”

    All those oil royalties should enable the Texas oil well/ranchers to create many, many good paying jobs. Thats the meme spread by the conservatives. Right?

  7. News alert:
    ’5 Broken Cameras’ director detained in LAX on way to Oscars
    link to mondoweiss.net

    37 years ago Vanessa Redgrave spoke out when she was receiving her Oscar about how “Zionist thugs” were protesting her and her film Palestine. She was basically run out of Hollywood. Now a Palestinian’s film 5 Broken Cameras up for an Oscar but the film maker detained at the LAX airport. America and the I lobby

  8. Actually, there have been no unusual increases in either gasoline (FRED:DCOILWTICO) or oil price (GASREGW) since early 2011. These things vary seasonally and otherwise in a quasi-random fashion. The whole story is foolishness – there is nothing especially mysterious about gasoline prices currently.

    • Well, other than the entire drill-baby-drill party in the US continually telling us that if we sacrifice each others’ health and safety to suck out more oil and gas it will usher in a nirvana of cheap energy that will bring back the good old days.

      Looks more to me that oil prices are acting as a choker collar, making a real recovery impossible. Whenever there’s too much good economic news, the oil price spikes, and then people get scared and stop buying and investing, and then oil goes down a little. And it’s destroying the lives of Americans descended from ten generations who considered growth a birthright, thus leaving them unable to adapt.

      • “And it’s destroying the lives of Americans descended from ten generations who considered growth a birthright, thus leaving them unable to adapt.”

        This has got to be one of the best cultural critique lines I’ve read anywhere! It’s perfect. I’m going to use it!

    • …and since the Iranian oil is still being sold internationally, the claim that its restriction can generate major consequences for the global market is quite implausible.

      This story is an example of working much to hard to fit the evidence around the case you want to make.

  9. It seems to me WaPo and others just don’t want to point out the hypocritical and warmonger stance of this “great/greatest” nation. Any see you all on the drone camera zone.

  10. I don’t think it matters to your argument, but in fact Nigeria produces light sweet crude (preferred for processing into gasoline) not Iran.

  11. It is no mystery to me, Juan. The Washington Post is a pro-Israel, Israeli-centric newspaper, and will not assign any blame or responsibility to the state of Israel for burdens its actions imposes on the American people. It never has, and probably never will.

  12. “…it is just supply and demand…”

    That’s the myth we live by but I’m surprised to see you repeat it. It is true if you remove price spikes, but there is no shortage of articles about the affect of speculators (read ‘gamblers’) on fuel prices. Like here:
    link to mcclatchydc.com
    And then there’s the leveraged version of betting on the bets, which worked so well in the banking and insurance industries, as here:
    link to theglobeandmail.com
    And the national economic effect of fuel price increases on the “recovery” from previous gambling:
    link to businessinsider.com
    And someone’s observation that every 10 cent increase in fuel removes X billions of dollars from the national ‘profit’, and therefore from its ‘recovery’–sorry can’t find the citation.
    And then there’s Oil Christmas which I don’t need a calendar for because I know my car is suddenly getting about 15% poorer mileage, which translates into my spending 15% more for fuel for a third of every year, and 15% more seasonal profit for Big Oil, and 15% more road and other assorted fuel taxes the State gets, the los of which (if fuel gave the same performance for all the time) makes the State an unenthusiastic player in Solving the Problem. And then there’s the straight, no chaser Manipulation of Demand, which has simply become a standard business practice for those who know that riding price spikes is all they need to do to avoid producing anything and retiring early in style.

    • If “the government” played around with the price of oil the way the “market” does, the citizens would be angry. We are thoroughly brainwashed.

      Apparently some important people think the price of oil might well be manipulated for profit.

      ““We need to know whether the oil price has been manipulated in a similar way to Libor,” the MP for Harlow said. “This impacts on millions of people all round the country concerned about the price of petrol at the pumps.”
      Petrol retailers use oil price “benchmarks” to decide how much to pay for future supplies.

      The rate is calculated by data companies based on submissions from firms which trade oil on a daily basis – such as banks, hedge funds and energy companies.
      However, like Libor – the interest rate measure that Barclays was earlier this month found to have rigged – the market is unregulated and relies on the honesty of the firms to submit accurate data about all their trades.

      This is one of the major concerns raised in the G20 report, published last month by the International Organisation of Securities Commissions (IOSCO).”

      link to telegraph.co.uk

      why this is not being widely discussed is a mystery to me.

  13. Oil industry analysts note a drop in OPEC production chiefly from Saudi Arabia deliberately dropping supply to match demand. Supertanker bookings are down a third from 2012. Iran has nothing to do with current oil markets.

  14. Oh and we simply cannot forget non-state players, like the little unknown armed band (don’t think for a moment that knowing their identity means anything)that took over the refinery somewhere Over There where the oil is. Just think of the investment potential…a few pickups, some auto weapons, rpgs, grenades found for a pittance on the arms bazaars that we’ve facilitated (and no doubt supply)in Iraq, Aghanistan, various other ‘stans, and now Africa–anywhere there is a destabilized state with a non-functional government and porous borders. Which come to think of it is just about anywhere the US sends its troops to install Freedom. Voila! An incident that makes international news and sends shivers through the global oil and oil gambling industries, all save perhaps one who invested his five or ten grand in those pickups, pistols and patriots, who wanted to up his futures value, sway an election, or merely because he too is a patriot. Think of it as Bin Laden trickle down. With paranoid America mainlining oil and the American “press” deriding anything that doesn’t consume oil or move twice as fast as is legal, this kind of thing is so EASY now. Expect more!

  15. The amount of oil under Iranian government control, being kept off the market by US policy, is just not great enough to explain the current increase in the price of oil. Also, the US policy has been in place for a while, so it can’t be used to explain the rise of oil prices at this particular point in time. I suspect that the main culprit identified by the Washington Post article– nervousness in the market, and investors turning to oil as a good investment in this nervous time– probably is as good an explanation for the run in the prices as any (but I am no expert on this subject). The amounts produced by a nation like Iran aren’t going to affect the price of oil by much (and if and when the Canadian shale oil comes through the pipeline in a decade or so, that isn’t going to affect the world wideprice of oil much either– but it sure is going to turn western Canada into a huge oil sludge pit).

  16. Gas goes up always in March because that is the time that the first wave of income tax returns hit the streets, just check out other retail companies’ sales. May is another time and may have started when Bush stimulus checks came out and lots of that money was spent on the first “almost $4 gas prices”.

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