Oil Price Poll 3
Posted by Prof. Goose on September 16, 2006 - 7:59pm
With oil prices around $63/bbl and news of reduced demand in the DrumBeat today, it's time for another poll: where are oil prices heading in the next two months?
(here's a link to our first poll from a while back, and here's a link to the second poll, where only 2% of those responding answered prices would "reach $63/bbl before they reach $83/bbl"...). Poll under the fold.
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If big oil is going to bring Jack 2 online the price of a barrel should be more like $95.
a) OPEC didn't seem to have any ability to halt oil moving to $78, a point far above which all conventional wisdom over the last three years said was too high. And a point $5 above the $73 listed in this poll and
b) if oil starts moving towards $53 from the current $63, I doubt OPEC could cut production fast enough in the given timeframe to stem the decrease. They would have to frighten the market by threatening huge cuts.
My guess is that the spread of opinions in this poll will be more evenly distributed among the three options. We've already seen $73. We've spent a good part of the year there. I don't think it's much of a stretch. I would have liked to have seen a $30 spread instead of the $20 one. Pick a card, any card.
$53 oil, ur pulling my chain, lol, it ain't going there. A $15 spread implies a low of $48-, that is seriously silly and highly unlikely.
Every Thursday, Bloomberg conducts a poll of about 40 to 50 oil analysts, with the question will oil rise, fall, or stay the same. I tracked it fairly closely for about 4 months one time. I found that the majority was right about 33% of the time. In other words, you may as well tack the options to the wall and have a monkey throw a dart at them over its shoulder.
I picked $53 - $73. While I think there is a very good likelihood that it will break past either or both in the next two months, I think it is about 80% likely that it ends up or averages in this range.
For more specific guesswork, I would say the price will say where it is or even drop in the next few weeks, then at some point climb back up to previous highs. Might take more than two months though.
I've marked in red the 12 times since the beginning of 2004 that oil has moved in either direction by $10 or more within 2 months. Some of these moves occured in as little as a month.
The next question is, how many times has it traded in a $20 band for 2 full months?
I'll be the 9th one to pick the $53 option, with the caveat that like SAT I am not particularly fond of the phrasing. I think that the chances of hitting either extreme (combined) are double that of trading in this $20 range. I think the distribution should be 33%-33%-33% instead of the current 10%-60%-30%.
I wanted to do more than "up" or "down" from today. That's not very interesting. So, I had to pick a time horizon and some sort of constraint.
If you wanted a 33-33-33 distribution, the middle range would have had to have been smaller, not larger, right?
so, perhaps a better way would be, "which is the next price point we hit," or something like that?
Yeah, like maybe 5 price ranges instead of 3.
I'd choose between $0 and $infinity. I'd be guaranteed a gloat for being correct. Unless of course they have to start paying to have it hauled away. So I guess I'd have to make it $-infinity to $+infinity for a 100% guarantee.
To me this poll has two different things: there's the "range" and the "which one first." It would seem better to separate the two, have one that asks about ranges, but still ask which specific amount is likely to be reached first. Then there's a more nitpicky thing about "remaining in $## - $## range"...is it nullified if it steps out of that range just once? Or is it valid if it stays in that range 95% of the time?
Hang on there, Big Guy. OPEC has some control on the pricing low end but none on the high end...
best --
"We both agree, they don't have that kind of control over production & pricing."
Well, I am glad you two agree, but allow me to say I sure as helll don't! :-)
We have spent the last ten plus years being told that OPEC was the "swing producer", the "pivot point" the focus fo the oil world....and now, all of a sudden, they have no power over pricing/production????
That boggles the mind. And moreso if you accept that the North Sea and Mexico are essentially peaked. If OPEC were to back production off, what "swing producer" then would step in and make up the production (and remember, I have more faith in non-OPEC production than the peakers do, and am baffled by this logic!)
It gets even more focused, to my view if you you accept any concept of world peak. Simmons logic goes that as Ghawar goes so goes Saudi, and as Saudi goes, so goes OPEC, and as OPEC goes, so goes the world....this would make the control of price centered not around OPEC, Saudi Arabia, but instead around Ghawar...I think Saudi Arabia has almost ABSOLUTE control over price if they should risk/be willing/desire to use it. ABSOLUTE.
So what would lead to this wild perception that they don't? I can find only one thing....the belief, that came only from the Saudi Arabians own lips, that they did not want oil in the $70 dollar a barrel range, but shucky darn, dag gone it, it went there anyway!
What a ruse. I do not think for ONE SECOND the Saudi's minded oil going into the $70's, or frankly, it would not have gone into the $70's. I think anything under $100 would have suited them fine. The demand side was and is the only control valve until new oil comes on, some non-OPEC, and the rest, of course, OPEC and Saudi, which assures them control of price production as it has been since 1970 with that one bothersome little pest, the North Sea. That has been the only swing producer large enough, and for a time, reliable enough to mess with their monopoly. But it looks like those days are gone.
Where to now?
Laying aside for now radical changes in consuption of ALL energy by way of advanced technology (that is coming, but it will take at least 5 to 10 years to really get into the system, at which point it will be BIG beyone belief), for now, natural gas is the competitor. GTL, CNG, LNG, and LPG, that alphabet soup that is a thorn to crude oil producers, acts a s counterweight in the short term, nothing else.
So what price? Well, anything above $50 is well above the historical mean, I could see us touching that long enough to lull ourselves to sleep...but not real long. Then back to mid to high 60's for next summer, and everything else depends on war, weather, and price speculation. But the tide is turning very, very fast...we have maybe a half decade to whether this idiotic paradigm, before we demonstrate why the world invented applied science and technology, and artful design. the hackers and the kids are coming, and to them, limits on efficiency are just games to pushed around, and the barriers to be knocked down. This is gong to be fun, is there anyway us old guys can get back in there and play? :-)
Roger Conner known to you as ThatsItImout
http://energybulletin.net/4746.html
Manipulation of supply through the SPR and refinery product will have to come to an end. Once the economy ticks up in the next two months leading to mid-term elections, the yahoos who had been ready to vote their gas tanks and toss the bums (Repugnicans) out will have a change of heart and put the weasels securely in charge for another thrilling two years. Once that happens, back to the Iran problem. Look out for falling nukes! Look out for the Cantarell collapse. Look out for a China that no longer needs the US to ensure its economy. The US will drift into a curious position much like that of the USSR when we successfully bankrupted them. The US will be the next victim of that tactic. Meanwhile, the elites will put their money in safe havens and move away from what is fast becoming just another third world country. Secure in their hideouts, the conservative elites will watch as Joe Sixpack and Susie WalMart scrabble ever harder to make ends meet. The elites will chortle in glee at the irony of these common folk protesting abortion, stem cell research, gays, and them dang liberals. (They hate them edumuhcated liberals you know, always telling us 'Merkins to use our vote to get healthcare, good wages, free edumuhcation, and clean air, water and all that other commie bullshit). As the repugnicans clink their brandy snifters together and tell us once again that it is our own fault the US is in default, ruined, poisoned, and sick, and certainly not their fault, the rest of the world will finally get a chance to taste of the American dream. Too bad it will poison them as well.
Then comes the rising seas, the encroaching deserts, the famine. We bunch up at the poles, what few are left, and we pray that we can survive, for another day, or two.
By then a few will realize that arguing about when or how fast it would run out had been absurd, and that what was important was the certain knowledge that it will and that we had only one choice and one chance -- to change, to rationally reduce population growth, or face the limits to growth having squandered the very thing that could have saved us.
Oh, well.
Thanks.
That is all the time I've been allotted.
At this point the cornucopians and techno-lovers will give a lecture on why up is down and left is right if we use BRAND X !!!!! TECHNOLOGEE .
Again, thanks for your time.
Goodnight. Don't forget to turn out the lights on your way out.
I picked the middle choice because the world economy is still adjusting to the new, higher equilibrium range. OPEC & Russia are strongly incentivized to cut production if prices start to drop. Consumers will unwillingly cut their consumption only so fast, but any further price decrease will only rapidly juice the Energy Fiesta.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
China is still preparing to build and fill its 1 billion barrel strategic petroleum reserve:
http://www.easybourse.com/Website/dynamic/News.php?NewsID=53728&lang=fra&NewsRubrique=2
As far as I know, they aim to start filling soon and build up the reserve over about five years. That's an additional demand of 600,000 barrels per day - on top of the heady economic growth demands they already have.
Take a look at the insert in the Economist about the world-changing growth of the developing nations as they begin to eclipse the "rich" West. By one measure, during this last year the developing nations surpassed the rich ones in total GDP. The further growth trends are alarming. Unfortunately, the authors assume the same kind of growth trajectory for the developing as once was the case for the developed nations, ignoring the soon-to-be-encountered insurmountable wall-- aka energy scarcity.
US is about 25% world GDP. Europe as a whole about another 25%. Japan c. 10%. Canada, Australia and New Zealand another 2-3%. So 60-65% GDP is in the Usual Suspects.
Even if you revalue China's GDP for exchange rates, it's not huge (about 2.5 trillion at official exchange rates, or about 1/6th of the US, I believe).
Depends in part where you put Taiwan, South Korea, Singapore, as the 'developing' countries which are, in fact, 'developed'.
http://www.economist.com/surveys/displaystory.cfm?story_id=7877959
From the leader (page 9 in Asian edition):
oops my numbers were out of date. Although I find that China number high, for a number of reasons (go there: this isn't a country that feels like it has a per capita income of $6800-- the average urban worker makes less than $2000 per year).
Rank Order - GDP (purchasing power parity)
Countries for which no information is available are not included in this list.
Rank Country GDP (purchasing power parity) Date of Information
1 World $ 60,710,000,000,000 2005 est.
2 United States $ 12,360,000,000,000 2005 est.
3 European Union $ 12,180,000,000,000 2005 est.
4 China $ 8,859,000,000,000 2005 est.
5 Japan $ 4,018,000,000,000 2005 est.
6 India $ 3,611,000,000,000 2005 est.
7 Germany $ 2,504,000,000,000 2005 est.
8 United Kingdom $ 1,830,000,000,000 2005 est.
9 France $ 1,816,000,000,000 2005 est.
10 Italy $ 1,698,000,000,000 2005 est.
11 Russia $ 1,589,000,000,000 2005 est.
12 Brazil $ 1,556,000,000,000 2005 est.
13 Canada $ 1,114,000,000,000 2005 est.
14 Mexico $ 1,067,000,000,000 2005 est.
15 Spain $ 1,029,000,000,000 2005 est.
16 Korea, South $ 965,300,000,000 2005 est.
17 Indonesia $ 865,600,000,000 2005 est.
18 Australia $ 640,100,000,000 2005 est.
19 Taiwan $ 631,200,000,000 2005 est.
20 Turkey $ 572,000,000,000 2005 est.
Interestingly enough looks like TOD is not too far off from these odds. It's pretty unusual for the team around here to agree with the market! Next thing we know everyone will start saying nice things about economists...
I, and others, have pointed this out to your before, and Oil CEO now says it in as plain language as I can recall - what the market "believes" usually has little bearing on what actually occurs with regards to oil pricing, especially as you get further out in time. Yet you continue to defer to the market about future price when the market has been wrong again and again and again.
As far as accuracy, yes, markets are often wrong - the future is inherently hard to predict. In this particular poll though we are really asking about volatility. What are the odds that the price will stay within a certain range?
According to Jim Hamilton at:
http://www.econbrowser.com/archives/2005/07/100_a_barrel_wh.html
oil volatility has been in the range of 29% to 36% per year for the past 30 years (and towards the high end more recently). Over a two month period there's not much difference between the low and high end of this range. This means that the market has been historically pretty accurate in forecasting the probabilities of these kinds of price moves. If the volatility were jumping all over the place then accurate forecasts would be impossible, but given that it is staying within this range then the degree of variation is quite predictable on the average.
You seem to be confusing 40-50 experts with the market. The experts there are just like us experts here. People with guesses.
The "market" in this context would be the futures market. Neither Halfin or anyone is claiming that the market can predict prices accurately. Again, since you seem to be having so much trouble with this:
In fact prediction, especially in fairly active markets, is virtually impossible. The futures markets have made millions of predicts about prices 24 hours a day for decades. So of course, markets have been wrong. But they have a public track record that can be followed and analyzed.
Broadly speaking the claim that I think Halfin is making is that markets are more accurate over time and over instance than any other single method of prediction.
One more time:
I think the only reason you have so much trouble with this is a kneejerk reaction to "markets" that makes everything else go red. All a market is is a huge number of people making predictions, in which they need to put money behind.
http://www.abc.net.au/insidebusiness/content/2006/s1742710.htm
Interestingly, he confirms climate change is real and the best thing to do for both CC and PO is to institute a drive for efficiencies. He also seems to confirm problems remain for 'conventional' crude in 'conventional' locations.
In terms of prices he was very cagey but suggested $40-50 (a la Lord Browne from BP?):
http://en.wikipedia.org/wiki/F-distribution tweaked and re-centred to zero. That way you could easily say up $10 is as likely as down $5.
All I'll say is I think $60 is the short term rebound price and $150 after inflation adjustment is the long term rebound price.
As I have stated before, I think that this model and its implications for oil importing countries are underappreciated.
The graph:
http://static.flickr.com/97/240076673_494160e1a0_o.png
WestTexas's quote:
Jack's response:
I disputed Jack's point of view, arguing that the windfall oil revenues in Saudi Arabia (if it even makes sense to speak of windfall revenues, since they're likely to be permanent), were being leveraged, through economic diversification, in a way which made a future curtailing of domestic demand implausible.
Here are some interesting articles which illustrate what i'm talking about:
http://www.ameinfo.com/89954.html
http://www.ameinfo.com/85533.html
http://www.ameinfo.com/87830.html
http://www.ameinfo.com/92511.html
http://www.ameinfo.com/75318.html
http://www.ameinfo.com/65654.html
My conclusion: the Saudi diversification program (which, by the way, was modeled to a large degree on the wildly successful UAE diversification program) combined with greatly increased foreign direct investment due to SA's recent entry into the WTO and the accompanying economic liberalization, will likely cause the kingdom's future domestic consumption numbers to be revised up, not down, in coming years.
As WestTexas has rightly pointed out, the increased domestic consumption of exporting countries, especially if combined with peak oil, will have dramatic consequences in importing countries like the U.S..
I think oil will hit $57 about two months from now. I don't think it will ever hit $53. It'll hit $73 soon enough, but not until maybe five or six months from now. I wouldn't call what we're in right now a trading range, though. By the time we get down to where I think we're going, we'll have seen a fairly serious bull market correction of more than 30%.
BTW, I do agree with you that the ME nations are at least attempting to use their windfall in a more productive manner than they did back in the 70s...
I definitely see a difference between oil money going towards diversification and oil money going towards subsidies, but I think most of these countries will be so flush with cash that they will continue to be able to do both. As I noted in a post below, it's hard for me to imagine any scenario where Saudi oil revenues don't continue to go up. Even if their own oil production peaks, prices will spike to the point that they will still be raking in record revenues. So I don't really buy the unrest scenario.
I don't dispute that oil revenues combined with subsidized petroleum prices have led to increased consumption in exporting countries. I agree that many oil exporters are trying to invest to diversify their economies.
Where we seem to differ is in the following two points:
- I think this trend has to level off and do not think exporters will ever reach the point where they shut off exports. I see the situation as self-regulating. At some point, the cost of local consumption gets high and the countries will reduce or eliminate subsidies. This will come about because the countries will need to buy foreign products such as cars, machinery, etc. At the same time, as reduced exports drive prices up, the benefits of exports grows.
- Talk about diversification and successfully transforming an economy are very, very different things. Taking economies that have been single product-based and converting them to the point that they no longer export that product would seem unprecedented.
I am sure there are many articles discussing this. However, I find your reliance on a single news source that seems dedicated in part to promotional activities weak. I have no doubt that cash is flowing into the Middleeast like mad, so gushing articles detailing it don't impress me much. Money was pouring into US real estate a few years ago and plenty of press releases from that time claimed the market would run forever. I would like to see a more analytical viewpoint.Ameinfo's sources include:
http://www.ameinfo.com/content/
While the ME has boomed an crashed in past oil cycles, I do believe this time is different. I think oil prices will stay high and countries will manage to increase domestic investment. However, I expect, as your article indicate, this will come mostly in the form of resource processing.
However, the level of transformation required to fulfil the ELM seems to me to be speculative at this point. The barriers to developing Middleeastern countries remain massive, although abundant cash will help. The UAE is an amazing story and features growth at China levels.
However, I would guess it has less than 2% of ME population and less than 3-4% of its GDP. I expect that booming oil markets will flood the coffers of Russia, Iran, and Saudi Arabia. I don't think it will fuel their transition to modern industrial leaders that can compete with Asian, or other economies, in non-oil-based industries.
I do think the ELM is useful, but plotting a fixed 2.5% growth rate for domestic consumption has to be regarded as "for demonstration purposes only"
I would add "try to" into that making it: "At some point, the cost of local consumption gets high and the countries will try to reduce or eliminate subsidies." As a few articles that've been posted in the drumbeat have shown, that is not something that comes particularly easy and whether they'll reduce the subsidies and risk rioting and getting kicked off the throne or out of office, or wind up backing down remains to be seen. From the examples thusfar, the smart money is on not rocking the boat.
Newsclippings reporting riots is a poor proxy for reform success. In Thailand, where I live, any time the government threatens sdubsidies, there will be small "riots" by taxis drivers, truckers and fishermen in an effort to force a government rethink. Once that fails they go back to work. Around the world the subsidies have stayed removed and the "riots" are gone.
Indonesia and the UK are very, very different from Middle Eastern countries. The UK was never a petrol state. It has been a wealthly country with a developed economy large compared to its oil resources. Indonesia also has a diversified non-oil economy and the fourth largest population in the world.
I recognize that removing subsidies is not easy and that Middle Eastern leaders have benefitted by handling out cheap oil to the populations. But transforming their economies will require this sort of toughness. I am not convinced by the argument that these countries will take all of the heroic tough steps they need to completely change the industrial and economuic bases of their countries, but not be able to take the smaller step of subsidy removal that has been successfully been done by others around the world recently.
The Financial Times of Saturday, 16 September, has a fantastic lead editorial on this exact subject that all sides will find something to like in. If anyone has access to it, please post.
BTW, someone posted a news item about Russia a couple of days ago, to the effect that oil production has (supposedly) rebounded, but that oil exports are down substantially.
IMO, we are going to finish up 2006 with a substantial decrease in net oil exports versus late 2005.
Just on the point of Fossil Fuel exporters, it appears that Russia wants to seriously ramp up Nuclear Power at home while selling Natural Gas abroad.
http://en.rian.ru/russia/20060912/53788772.html
The article also quotes the Russian exec as saying their Natural Gas reserves will be depleted in 50 years. I guess he's a Nuclear guy so he's talking down the competition but it's interesting that this thinking is high up amongst the Russian Powers That Be.
That's a smart strategy by Russia. I think most of the big oil exporting countries seem to, "get it," this time around, in the sense that they are planning to leverage their oil resources to the max. One exception to this rule might be Venezuela, which seems to be repeating many of the errors the ME countries commited the first time around, back in the 70's.
I've always found it odd that people seem to think that peak oil will be devastating for the oil exporters. So far, Saudi Arabia's oil production has held steady and they are making record profits. If production peaks, prices will spike, and they will still be making record profits. I see it as a win-win for them, especially in relative terms (relative to the economic outlook for importers). Other countries, like the UAE, are in an even better situation, since their production is decades away from peaking.
Over the next 20 years, I think we will see a continuation of what we have seen over the last 4 or 5 years -- a massive transfer of wealth from oil importing countries to oil exporting countries. IMO, this trend is only in its infancy. Also in its infancy are the oil exporters' plans to diversify their economies. After 4 or 5 years of consistantly high oil prices, the Saudis are now able to launch a 700 billion dollar effort to diversify their economy. After prices stay high for the next 4 or 5 years, you will seen them launching even more ambitious efforts, and they will also be able to build on their prior successes. This was something they weren't able to do in the 70's, since the boom quickly turned to bust.
I would say that Venezuela's recent past investments are better than Russian planned nukes.
I have previously referenced Chris' comments regarding future ME production. Remember, he was there based on Saudi Aramco's recommendation.
Chris repeatedly said that the ME is not going to produce the amount of oil that consumer are expecting, and he said that countries with long life reserves have different long term goals than companies like ExxonMobil that want to maximize current production.
IMO, the Saudis are going to soon start claiming that they are voluntarily cutting back on production from older fields to maximize the long term recovery from the older fields, while they aggressively try to to expand production from newer fields.
BTW, as I noted down the thread, there are lots of examples of net oil exporters becoming net oil importers, e.g., Indonesia.
http://www.ameinfo.com/96423.html
In case anyone missed it, Total has now agreed to get involved with Inpex of Japan in the development of the Azadegan field (29 billion barrels).
http://www.rigzone.com/news/article.asp?a_id=35814
Sanctions anyone?
Being a doomer does not mean one can no longer hope.Also I see far far more motorcycles out on the byways and highways. People keep asking me what kind of gas mileage I achieve. More SUVs on used car lots(seen yesterday). In fact the saleman said that they just wholesaled a huge number of Grand Cherokees and just kept the best of the best.
Therefore, my expectation is for oil to increase in 4Q2006 and early 2007 (to upper 60's) and then fall as the year progresses (mid-50's).
Receint issue of business week had a large article about arm's. Made the case that the latest run up in real estate prices was prolonged by these risk-prone loans. Housing Price overshoot or just a slow down in the increase?
If most american jobs are due to "discresssionary(sp?) spending" and people have been using thier homes as giant ATM's then this would indeed lead to what...? A slowing economy? Lower oil prices? Drop in precious metals? Lower incomes(layoff and reemployment at lower/less benefits?)
I see very little room for huge improvements. Take the reducing finacial capacity and needed investments due to peak oil this looks like we will get shot with both barrels.
I bet on the drop to $53 and then back up again as the closest fit to what makes sense.(ie Westaxas's sine wave?) Lower prices (for elections) and then let er rip as we need(be forced to) to compete globally for what is left. IMHO If Bush can threaten Iran and invade Iraq He sure a hell could tell the oil companies to tow the line or else. Repulicans are still in control and they know people are worried and unhappy with fuel prices and they want to be re-elected. Create enough pain to make big oil $$$ but not too long or too severe lest they loose thier seat of power. Look gas is at ONLY $2.62 and we are so happy...just before election season starts(hmmm...) When they can't control it will they panic for real.
As an aside- we live next to a fresh clearcut- Many people are unhappy - I ask a few questions- do you live in a wood house? do you use computer paper? Or toilet?(duh)
I feel like I'm telling them we are living on Easter Island. They understand but still want it to be someone else's problem.
There is a funny website called despair.com with great posters about our collective stupidity. I highly recommend it. ;-(
Want to see how bad things are in your area? Next time you go to bank as the teller about the banking habits of the average person. Try a few different branchs too. The teller will likely tell you that the majority of people are living paycheck to paycheck and have little or no savings. They are literally, one paycheck away from finance disaster.
>I bet on the drop to $53 and then back up again as the closest fit to what makes sense.(ie Westaxas's sine wave?)
Remember that US consumption is only 25% of global consumption. Its likely that price may remain in the 60's if China, India and other continue consumption growth and if they decide to begin filling strategic reserves. I think if prices fall to the high 50's China will use the opportunity to fill its strategic reserve. The US is also likely to resume fill its strategic reserve too.
>Receint issue of business week had a large article about arm's. Made the case that the latest run up in real estate prices was prolonged by these risk-prone loans. Housing Price overshoot or just a slow down in the increase?
On flip side of the coin, builders have produced an over supply of new homes that will further pressure prices. When prices start really fall, funds for loans will disappear as few lenders will want to risk money on declining real estate prices, which might be the trigger to cause real estate prices to go into a tailspin.
My advice for what its worth, would be to sell your real estate and rent. If you were able to sell soon, you would be selling near the top. If you lose your job because of the recession, you will be able to easily relocate. If your stuck with a mortgage, you either need to wait until you sell your home (much harder in a recession), or be stuck trying to find a new job locally (limiting the available job opportunities.) Renting offers you much more flexibility during an economic downturn. Also, rents may fall in a recession where as a mortgage, payments are fixed.
Best of Luck to you.
Future price spikes will occur. Then a fall off again. That is how markets often work
Addressing Peak Oil by talking about oil prices is like focusing on a high fever, instead of the underlying infection.
Volatile oil prices, IMO, are just a symptom of the problem--a series of auctions for declining net oil exports. For a number of reasons, the price of oil at the auctions can go up and down, but the available data are showing declining net oil exports worldwide.
SUBJECT: Polling for the Resource War?
Most of you are already aware of my feared '3 Days of the Condor' scenario. I wonder if the Charles Krauthammer link in this Sunday's Drumbeat helps shift American attitudes to the 'Nuke their Ass--I want Gas' mindset and acceptance of resource wars? Makes one wonder if the CIA/NSA conducts their own specific polling, but, of course, we will never see the results.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
What war with Iran would look like
POSTED: 10:46 a.m. EDT, September 17, 2006
Editor's note: The following is a summary of this week's Time magazine cover story.
(Time.comexternal link) -- The first message was routine enough: a "Prepare to Deploy Order" sent through Naval communications channels to a submarine, an Aegis-class cruiser, two minesweepers and two minehunters.
The orders didn't actually command the ships out of port; they just said be ready to move by October 1.
A deployment of minesweepers to the east coast of Iran would seem to suggest that a much discussed, but until now largely theoretical, prospect has become real: that the U.S. may be preparing for war with Iran.
The Bush team, led by Secretary of State Condoleezza Rice, has done more diplomatic spadework on Iran than on any other project in its 5 1/2 years in office.
For more than 18 months, Rice has kept the administration's hard-line faction at bay while leading a coalition, which includes four other members of the U.N. Security Council, that is trying to force Tehran to halt its nuclear ambitions.
But superpowers don't always get to choose their enemies or the timing of their confrontations. The fact that all sides would risk losing so much in armed conflict doesn't mean they won't stumble into one anyway.
So what would it look like? Interviews with dozens of experts and government officials in Washington, Tehran and elsewhere in the Middle East paint a sobering picture: Military action against Iran's nuclear facilities would have a decent chance of succeeding, but at a staggering cost.
And therein lies the excruciating calculus facing the U.S. and its allies: Is the cost of confronting Iran greater than the dangers of living with a nuclear Iran? And can anything short of war persuade Tehran's fundamentalist regime to give up its dangerous game?
No one is talking about a ground invasion of Iran. Too many U.S. troops are tied down elsewhere to make it possible, and besides, it isn't necessary. If the U.S. goal is simply to stunt Iran's nuclear program, it can be done better and more safely by air.
An attack limited to Iran's nuclear facilities would nonetheless require a massive campaign. Experts say that Iran has between 18 and 30 nuclear-related facilities. The sites are dispersed around the country -- some in the open, some cloaked in the guise of conventional factories, some buried deep underground.
A U.S. strike would have a lasting impression on Iran's rulers. U.S. officials believe that a campaign of several days could set back Iran's nuclear program by two to three years. Hit hard enough, some believe, Iranians might develop second thoughts about their government's designs as a regional nuclear power.
Some U.S. foes of Iran's regime believe that the crisis of legitimacy that the ruling clerics would face in the wake of a U.S. attack could trigger their downfall, though others are convinced it would unite the population with the government in anti-American rage.
Given the chaos that a war might unleash, what options does the world have to avoid it? One approach would be for the U.S. to accept Iran as a nuclear power and learn to live with an Iranian bomb, focusing its efforts on deterrence rather than pre-emption.
The risk is that a nuclear-armed Iran would use its regional primacy to become the dominant foreign power in Iraq, threaten Israel and make it harder for Washington to exert its will in the region. And it could provoke Sunni countries in the region, like Saudi Arabia and Egypt, to start nuclear programs of their own to contain rising Shiite power.
Those equally unappetizing prospects -- war or a new arms race in the Middle East -- explain why the White House is kicking up its efforts to resolve the Iran problem before it gets that far. Washington is doing everything it can to make Iran think twice about its ongoing game of stonewall. Everyone has been careful -- for now -- to stick to Rice's diplomatic emphasis.
"Nobody is considering a military option at this point," says an administration official. "We're trying to prevent a situation in which the president finds himself having to decide between a nuclear-armed Iran or going to war. The best hope of avoiding that dilemma is hard-nosed diplomacy, one that has serious consequences."