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$7 Gas on the Horizon?
September 04, 2008 4:41 PM
ABC News’ Scott Mayerowitz reports: Could we see $7 a gallon gas soon?
Well… like everything else with the economy: sure we could but how likely is it really?
A lot of random reports and studies fly across my desk -- okay, really pop into my e-mail inbox -- each day.
Some are more interesting than others.
Today “What if Israel Strikes Iran Before the End of 2008?” caught my eye.
It is a report by Bernard Baumohl, Chief Global Economist of the Economic Outlook Group and while I can’t speak about how accurate the analysis is or is not, it does raise a few interesting scenarios that I thought I would share.
First Baumohl says there is “a high probability” that Israel will carry out a strike against Iran before the end of 2008 and that it will most likely commence between September and November.
So why then?
American politics, of course.
“No previous American president has been as supportive of Israel than George W. Bush. However his term is coming to an end and many Israeli officials doubt the relationship will be as close with the next Administration,” Baumohl wrote.
And any strike after the election runs the risk that a war would drag into the new term of the next president, something that no new president wants and that could sour U.S.-Israel relations.
So what would the economic impact be? It all depends on the success of the Israeli strike. If it was a quick, successful strike and Iran doesn’t block the Strait of Hormuz -- a key oil route in the Persian Gulf -- Baumohl sees a quick spike in oil prices and then a steady decline. He says that within three days of the strike oil could costs $175 to $225 a barrel. The record of $147.27 a barrel was reached back in July and oil today closed at less than $108.
But within three months the price would fall because Iran’s nuclear weapons program would be destroyed or crippled. Oil would cost $70 to $85 a barrel.
Of course, Baumohl has a more-dire scenario with oil prices between $200 and $300 a barrel. This happens if the strike fails, triggers a bigger war and the flow of oil is disrupted.
In that case, the price of gas in America would climb to $5 to $7 a gallon. And we all know what that means for the U.S. and global economies, let alone our own wallets.
September 4, 2008 | Permalink | User Comments (52)
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Then just to be sure, the Israelis should use nuclear weapons on Iran.
Posted by: Tyrone | Sep 4, 2008 4:55:48 PM
Sick and tired of war.
Posted by: t. swift | Sep 4, 2008 4:56:25 PM
Hope they hit a bulls-eye!
Posted by: DD | Sep 4, 2008 5:01:01 PM
High probability? It's going to happen. No doubt. Israel will bomb Iran. It will be soon. And the price of gas will be about what you have down, $7-8 a gallon. I gaurantee! You can see it coming just as clear as the run-up to the Iraq war.
Posted by: Jim Bob | Sep 4, 2008 5:01:21 PM
Sounds like ABC is part of the speculators network. What if, what if...please just the facts ma'am just the facts!
Posted by: JP | Sep 4, 2008 5:06:05 PM
If we keep pissing on Russia and threatening Iran with violence, we may go past $7/gallon.
Posted by: Ben Straub | Sep 4, 2008 5:07:43 PM
If Obama gets elected that will happen.
Posted by: Obama's Drug Dealer | Sep 4, 2008 5:09:06 PM
If it happens, it will be right after the Jewish holidays
Posted by: Obama's Drug Dealer | Sep 4, 2008 5:12:21 PM
Global War Is Coming.
Many Cities Will Be Glass.
We Have Children For Leaders And Prospects.
Wish More People Had Debated Ron Paul Rather Than Dismissed Him. Debate IS The Distillation Of Reality.
The Complexity Of Corruption Is Vast.
Posted by: PainfullyAware | Sep 4, 2008 5:17:46 PM
I don't care if they nuke most of the middle East as long as I can fill up for under $50. That's why I'm voting for McCain - he'll put gas prices over a few dead Arabs.
Posted by: Dave Mishem | Sep 4, 2008 5:27:06 PM
LOL painfullyaware, Ron Paul had some decent ideas but the man was an idiot. No presentation skills, no debate skills. There's a very good reason every republican candidate practically dismissed him as a joke during the primary debates.
As for Israel, if they want to start a war, let them. But don't let them drag us into it. The way I see it, no sovereign nation should be based upon religion (this is a basic US principle, yet Israel was formed by the US because we wanted more allies in the region). And if you lose control of a region of land for 2000 years, you no longer have any claim to it. You had your chance, and you lost it.
Religion will be the downfall of civilization.
Posted by: Steve | Sep 4, 2008 5:34:28 PM
after reading that report who do you think would respond the best way? obama or mccain . ( principal or teachers assistant)!!
Posted by: rob hunt | Sep 4, 2008 5:34:38 PM
Why are we even friends with this phony country.. They are terroist just like the Arabs....
Posted by: zee | Sep 4, 2008 5:51:48 PM
I could spill a quart of oil in my driveway and the oil traders would use that as justification to raise the price to $200 per barrel. What a bunch of non-sense.
Report on something that actually happened. Not some piece of junk spam email thats in your inbox. You're an idiot Scott Mayerowitz.
Posted by: Travis | Sep 4, 2008 6:05:40 PM
Bush likely has something major planned for just before the election. Even Jimmy Carter did. He planned to land troops in Iran in October, but columnist Jack Anderson - who should have been shot for treason - publicized it so that it would have to be scrapped and Reagan would have a better chance of winning.
Posted by: Mickey | Sep 4, 2008 6:06:37 PM
I think Bush and Cheney will bend us over and give it to us one last time up the poop chute before they leave office, high fiving each other and laughing about $ 7 a gallon gas that will fuel their cushy, smug retirement.
Posted by: Fetus and Me | Sep 4, 2008 6:17:08 PM
My oldest son is (19) a LCpl in the USMC and it makes me so disgusted at the waste of lives in the middle east. We should be defending our borders and minding our own business. Okay,just had to say that.
What has happened to real news reporters. All these rumors just help the oil companies out. We become so blinded by them yanking the prices around that we will just accept $7.00 as normal. These executives are living the life year after year at blue collar/normal americans expense. You can bet they are not having to deal with the economic issues like everyone else.
Posted by: usa mom | Sep 4, 2008 6:18:14 PM
Dave Mishem: "That's why I'm voting for McCain - he'll put gas prices over a few dead Arabs." Oh. My. God. Did you seriously just advocate murder in the name of cheap gasoline? Someone needs to whack you upside the head a few hundred times. Sometime in the past your doppelganger probably said, "That's why I'm voting for Hitler - he'll put our society over a few dead Jews."
Posted by: cwm9 | Sep 4, 2008 6:33:25 PM
Even more reason why the people, not the oil industry, of the U.S. should fast track alternative fuels. Israel has a right to defend herself, but in a world in which god creates man (woman) equal, I still don't get the philosophy we can have these weapons to protect ourselves, but you simply can't. Use your brains folks. 9/11 could have been stopped if we simply didn't allow box cutters of all things on airplanes. Now look where we are. What simple fixes do we simply look past?
Posted by: thinktwice | Sep 4, 2008 7:16:10 PM
7$ gallon would be great!! We could finaly get a real energy plan or a new political land scape in DC. T Boon Pickens for President!!
Posted by: bd1173 | Sep 4, 2008 7:16:41 PM
The United States will protect Israel at ANY COST.
Posted by: SB | Sep 4, 2008 7:31:05 PM
Give palestine back . gas $0.05 a gallon. No more middle east problems
Posted by: herman | Sep 4, 2008 7:33:09 PM
Israel will not try a military strike against Iran. There is much more to lose than gain. Plus, unlike Syria and Iraq, Iran can hit back. And hard. Thats why Israel hoped that the U.S. would do their dirty work for them. And in fact, that is still their hope.
Posted by: jeff m | Sep 4, 2008 7:41:36 PM
If Israel strikes Iran, or vice versa, we can expect more than high gas prices, we can expect World War III. Whether Obama or McCain is in office, I'm sure the US will go the aide of Israel, while Russia eagerly backs Iran. ~~ For those people cheering for high oil prices, please keep in mind what sorts of things are impacted when prices get too high - school buses, ambulance, police, fire and other rescue vehicles, farm equipment, airlines, military equipment, home heating, public transportation, charities including donations and meal delivery to the elderly and shut-ins, community services, trucking and shipping industry, food prices ... the list goes on and on. When gas was $4 a gallon, it nearly broke many small municipal budgets as well as family budgets, $7 a gallon would cause the economy to crumble.
Posted by: Mom | Sep 4, 2008 7:44:06 PM
Iran wouldn't be a threat if they hadn't seen the world turn its back on Iraq and the Liberals and the News Media undercut "The War" - THE LIBERATION OF IRAQ - from the beginning. And neither would Russia. This is the world that sick Liberal hypocrisy has created.
Posted by: Neo Politicus | Sep 4, 2008 7:45:53 PM
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