4-25-08 by dugan
Today’s $3.00 per barrel spike in crude oil was a perfect example of market traders capitalizing on hasty news. Initial reports, from military sources, said a U.S. military "contract’ ship fired on boats that were likely Iranian Revolutionary Guard. Soon after, it was not so much — the boats were unidentified:
U.S. defense officials, speaking only on condition of anonymity, first said they suspected the boats were Iranian.
But a Fifth Fleet spokeswoman quickly backed away from that charge.
"We cannot speculate on who they are. We just don’t know. We have no proof of who they were," said Lt. Stephanie Murdoch, another spokeswoman for the Fifth Fleet.
Iran itself minimized the incident. But the price of oil stayed up about $2.50, near $120 a barrel. And gasoline continued its relentless rise.
The report has raised concerns that a conflict between US and Iranian forces could cut oil supplies from the Persian Gulf and undermine crude security.
The report was believable because of saber-rattling against Iran by U.S. military officials and the Secretary of Defense himself. As the Washington Post reported this morning:
The nation’s top military officer said today that the Pentagon is planning for "potential military courses of action" against Iran, criticizing what he called the Tehran government’s "increasingly lethal and malign influence" in Iraq.
Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, said a conflict with Iran would be "extremely stressing" but not impossible for U.S. forces, pointing specifically to reserve capabilities in the Navy and Air Force.
"It would be a mistake to think that we are out of combat capability," he said at a Pentagon news conference.
Mullen’s statements and others by Defense Secretary Robert M. Gates recently signal a new rhetorical onslaught by the Bush administration against Iran, amid what officials say is increased Iranian provision of weapons, training and financing to Iraqi groups that are attacking and killing Americans.
In a speech Monday at West Point, Gates said Iran "is hell-bent on acquiring nuclear weapons." He said a war with Iran would be "disastrous on a number of levels. But the military option must be kept on the table given the destabilizing policies of the regime and the risks inherent in a future Iranian nuclear threat."
But while Mullen and Gates have recently stated that Tehran must know of Iranian actions in Iraq, which they say are led by Iran’s Revolutionary Guard, Mullen said he has "no smoking gun which could prove that the highest leadership [of Iran] is involved in this."
Saber-rattling at a major oil state is "disastrous" by itself–for the U.S. economy. Gasoline will just keep zooming. The $3.58 national average is now likely to reach $4.00. California, at $3.88 on average, is past $4.00 at plenty of locations.
Oil companies already reporting record 1st quarter profits will wallow in even more billions. Truckers, motorists and food shoppers can suck it up and suffer–or call their elected representatives and share their rage.