Higher gasoline prices vs. fewer nukes?

If you had to make a choice, which would you choose: Iran with nuclear weapons and us with lower gasoline prices or higher gasoline prices and a disarmed Iran?

The U.S. and other nations have chosen an economic sanctions route in their effort to convince Iran to dismantle its nuclear program. And overnight, Iran responded by cutting off oil shipments to some Western countries.

Overnight in the Twin Cities, gasoline prices jumped about 20 cents a gallon — to $3.55 — and it’s not because of Iran’s action. It’s an increase that’s been in the pipeline since the price of a barrel of oil began rising several weeks ago, partly because oil investors are worried about the flow of oil from Iran drying up.

But Britain and France aren’t big buyers of oil from Iran, and the U.S. doesn’t import any Iranian oil so why does Iran’s threats mean we pay higher gasoline prices?

Marketplace tackled that question this morning:

The news is pushing up prices partly because the market is concerned that what could follow next would be a further cutoff of supplies elsewhere in the region, including to major European buyers like Italy and Spain and so on. But also fears that as Saudi Arabia increases production to meet the shortfall in demand, that global spare capacity of oil production is starting to fall. And so, in the event of any unforeseen disruption to oil supplies elsewhere, the world may not have enough spare capacity to meet the incremental demand.

Already today, the price of a barrel of oil is up $1.70 — to $105.30.

What does that mean for the driver? Almost a year ago we tracked the relationship between the price of a barrel of oil vs. the price of gasoline. It’s a completely unscientific survey but a year ago the price of a barrel of oil was — wait for it — $105 a barrel — what it is today. And the price of a gallon of gasoline was… $3.55 — exactly what it is today.

Of course, the price of gasoline trails the price of oil. But it’s clear that when a barrel gets to be about $119-$120 a gallon, we’ll be paying about $4 for gasoline.

There’s one proven method for reversing that trend: Use less oil.

  • matt

    In the history of the world there has been only one nation that has actually used a nuclear weapon. That nation has proven to be far more belligerent than any other nation and is becoming more and more politically unstable. I think all efforts should be directed towards disarming that nation instead of fussing over Iran. And, maybe, just maybe, if we set our eyes on projects other than killing humans we would have the resources needed to remove oil from the equation all together.

  • davidz

    I don’t understand how we, the country that has developed more and varied nuclear weapons than anyone else (although perhaps we were outproduced by the USSR) has any right or standing to tell another country that they cannot develop the technology to create such a device.

    We can call them out on their (possible) violations of the Non-Proliferation Treaty that they signed (and we did as well, although we haven’t followed all of its requirements upon us if I recall correctly). We can call them out on their use of scarce resources for war-making rather than helping out their own citizens. But we’re not the shining example of purity and innocence, so there would be a certain level of hypocrisy in calling them out in this fashion.

    We can recognize that we have been furiously anti-regime in Iran since 1979, and that there is no good reason for the people of Iran to think kindly upon the US (coup in 1953 against an elected government, support of the tyrannical Shah for 25+ years, and then we supported Iraq against Iran in their long war). We’ve taken down two regimes in neighboring countries, and we keep stating that it is unreasonable for Iran to have the bomb and that we will not allow it to happen.

    What gives us this right to make such statements? To the point where our leaders say “nothing is off the table”, which in this context is a pretty credible threat of the possible use of nuclear weapons to prevent another country from obtaining the same.

    Acting as the world’s police force is only credible when the police force has the respect of those whom it polices. Without that respect, it’s not a police force, it’s a force of terror and occupation. We clearly do not have the respect of the Iranian regime. We may have offered a means to talk, but we’ve been refused. This does not give us a right to then declare that it is unconscionable for Iran to possess nuclear weapon, and then threaten various means to prevent this from happening.

    What would we think of some other country telling us that we cannot violate international norms (such as then invasion of another country, not in self-defense)? Oh, right, we’ve done that, and we’ve ignored those countries that told us that we were wrong for doing this. I guess the U.S. gets away with this sort of activity because we can. This doesn’t sound rational, it sounds like international bullying, and we, I hate to say, are the bully.

    So right now we’re roiling the waters, drumming up the causes for war, provoking the Iranians into making rash acts. We’re nearly telling the Israelis that we won’t mind if they do the dirty work for us (and we’re arming them with weapons that have little other use than attacking the sorts of installations that Iran has built).

    And then people are surprised that the price of oil is rising? Sheesh. The demand is not driving the prices, it’s the expectations that bad stuff is going to happen and the desire to make as much money as possible on the (hopefully inflated) threats of war.

    There are two ways that Iran doesn’t get the bomb. The first is if we prevent it. That’s not a good scenario. Technology is advancing such that it’s easier than ever to produce a nuclear-industrial establishment. It’s only going to be getting easier. So we’re going to have to bomb them into the Stone Age to prevent them from developing a bomb.

    The second is if they choose to not build one. We’ve got some precedent for that – South Africa had developed weapons and then came to the conclusion that it didn’t make sense for them, so they dismantled their establishment and declared this to the world. South Africa was a pariah nation, and so is Iran. Dismantling their nuclear program was one step towards becoming a valued member of the community of nations, and they’re doing better because of this acceptance.

    We should be promoting a path for Iran to not feel so threatened that their only response is a nuclear bomb.

    We felt existentially threatened by the USSR, and yet we didn’t take them out or otherwise attempt to deny them the bomb. Why can’t we do the same with Iran? We can and should try to find a way to co-exist with Iran, no matter what their regime is and how it is armed.

    We’ll be better off for it, in financial terms as well, when the price of future war isn’t being paid with every barrel of oil and gallon of gas.

  • jon

    lets have both.

    High gas prices invariable reduces demand, and decreases dependancy on foreign oil.

    A nuclear Iran would quickly lead to a (or announcement that they already are) nuclear Israel, which could lead to an uncomfortable mutually assured destruction kind of security in the region.

    Tell Iran they can enrich uranium for peaceful uses, (since they are probably looking for independence from domestic oil, as they know they are well past peak oil by now.) if they end up with a bomb (despite international oversight which has been in and out of the country during this whole stand off) then so be it, the rest of the world goes back into cold war mode, and stability is achieved.

  • Jim Shapiro

    Matt- ‎”The compulsion to do good is an innate American trait. Only North Americans seem to believe that they always should, may, and actually can choose somebody with whom to share their blessings. Ultimately this attitude leads to bombing people into the acceptance of gifts.”

    ~Ivan Illich

  • Jim Shapiro

    Wise, well-articulated comments all, and all that I could come up with was an obscure quote. I’m just happy you let me in to this classy joint.

  • Xopher

    Don’t tell me what kind of car to drive, socialist hippie.

    It’s obviously way cheaper to go to war unprovoked and use up all the oil in the world as fast as possible, and THEN worry about what we’re going to do for an energy source. Let the oil companies create more jobs!

  • kennedy

    Sorry, but I disagree with the general apologist sentiments expressed above. Sure, US foreign policy had included some colossal disasters. I don’t think that justifies isolationism. It is a global risk to allow unfettered access to weapons of mass destruction (a loaded, but appropriate term).

    With nuclear war in the balance, who do you think are more likely to pull the trigger? JFK and Krushchev, or Netanyahu and Ahmadinejad?

    I do agree with Jon that the two choices are not mutually exclusive. Higher prices (oil tax) would reduce US demand for oil. This would reduce the flow of money to oil suppliers, limiting the resources they can spend on war machines.