Economic Reasons to be Cautious With Iran

Economic Reasons to be Cautious with Iran

The Saudi government and people, the Persian Gulf nations, and the world economies and nuclear powers definitely don’t want a war with Iran.

The Saudi’s and the Gulf states must be shocked that in one strike, Iran or others managed to put out of commission over half of Saudi oil output.  The Iranian weapons must be accurately flown or programmed drones and missiles.  The 19 weapons sent were also flown at little cost and no casualties to the aggressors.   Tonight, we learned that the missiles or drones got past 6 US Patriot anti-missile systems, each costing one billion dollars each.  It may be that some worked, but I doubt such data will be given.  For some reason, NBC news said that the administration was claiming that Iran “sponsored” the attacks, rather than they outright committed them.  

The Saudi government is funded 87% by Saudi Aramco Petroleum revenues.  42% of Saudi GDP comes from oil.  Only 30%-40% of Saudis work.  The work force is 80% non-national.  The per capita purchasing power parity income is a high $55,260.  The Saudi’s clearly don’t want the rest of their oil income capacity damaged or destroyed by a second raid.  Even if the Saudi’s can repair damaged areas in a few months, they can’t keep redoing that.  Whereas civilian and military targets takes a lot of raids and bombs, oil facilities easily explode with minimal attacking weapons.  I there are further raids to totally cut off Saudi oil, 10% or 10 million barrels a day of world oil will be cut.

Iran is having a commemorative parade of 200 attacking boats on the Persian gulf.  They could not only easily attack oil facilities of the other Gulf states, but attack their navies and their oil tankers.  17 million barrels per day pass through the Straits of Hormuz.  

Out of 100 million barrels used worldwide, this is 17% now at risk going through the Straits of Hormuz.  This is quite a threat to the entire world transportation and economies.  The US relies on the Strait for 18% of total crude oil and condensate imports, and 7% of total US petroleum liquids consumption.  California imports 15% of it’s oil from Saudi Arabia, and a total of 25% from the Persian Gulf.

The seven nuclear powers who signed onto the Iranian nuclear non-proliferation treaty called the Joint Comprehensive Plan of Action (JCPOA) have still been trying to keep up trade and hold Iran to the treaty.  It began in 2015, and had elements good for 10 and 15 years.  Yet Trump repeated over and over again that the treaty was only good for a few more years.  It would have outlived all of Trump’s three terms in office!

Trump would normally consult with Netanyahu, who also apposed the Iranian treaty, but so far there is not a coalition government to consult with.

Since Trump has gotten nowhere with Iran despite his Maximum Pressure approach, other than bringing us to the brink of war, as well as a pressure war against our allies, who knows what will happen.

The people that Trump must be hearing from is not only Saudi Crown Prince Mohammed bin Salman, but Netanyahu, his own daughter Ivanka, his Middle East advisor and son-in-law Jared Kushner, his hawkish Secretary of State Mike Pompeo, Senator Lindsey Graham, and his brand new National Security Advisor Robert O’Brien, who will have one day learning on the job before deciding whether to launch a new war.  There is no account of Trump’s consulting and receiving authorization by the Senate or Congress for any action, nor any statement of his intention to do so.

At the same time that we are worried about world oil availability, Trump is acting to force California and thirteen other states, and Canada, and D.C., and 4 major auto companies, to continue to make and sell gas guzzlers according to Trump’s freeze on improving auto fuel economy standards.  It’s odd that he chose to do this during his visit to California, and during a week that 250 media are highlighting the climate crises, the UN is meeting at the climate summit, and students are organizing climate crises strikes.

About Dennis SILVERMAN

I am a retired Professor of Physics and Astronomy at U C Irvine. For a decade I have been active in learning about energy and the environment, and in lecturing and attending classes at the Osher Lifelong Learning Institute (OLLI) at UC Irvine.
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