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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?

Israel_iran_080904_main 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

Well, when you elect idiots and bums to responsible positions, you get what you deserve. Ron Paul is entirely correct in advocating that spending on the military-industrial complex be curtailed, and that America start looking after its own interests. Unfortunately, there aren't enough educated and intelligent people in this lowest-common-denominator land anymore to even understand their own best interests, let alone those of their nation. Instead, they vote for uneducated and unaccomplished bums like themselves. No nation in history has squandered so many resources and advantages as this one has in the past 63 years. And now ... we have an idiot, fruitcake journalism major paired with an immoral imbecile running against a law-school grad and a bland politican - none of the lot having even basic quantitaive skills, and none having accomplished anything other than political self promotion. Congrats, America. You really are striving for the bottom.

Posted by: Bob | Sep 4, 2008 7:57:44 PM

Seven dollar gas? I sure hope so! That would be the nail in the coffin of Big Oil. At this point, nearly everyone has changed driving habits already, so a few pennies less at the pump isn't luring anyone back to driving.

And it's also driven up prices for everything from bread to milk to road repairs.

Seven dollar gas will only hasten our departure from oil and petroleum-based products toward other sources of renewable energy.

Posted by: Quo Politicus | Sep 4, 2008 8:01:35 PM

cwm9: You should move to an Arab country if your heart bleeds so much for them. They have caused nothing but strife for centuries, as have the Jews. That poster has a right to his or her opinion.

Posted by: Lisa Again | Sep 4, 2008 8:04:46 PM

Sure, Israel should use nuclear weapons on Iran...and IRRADIATE THE OIL FOR THE NEXT 1000 YEARS! Idiots!

Israel should just shut up and quit causing trouble secretly in Georgia. It's not so secret.

If the attacked Iran and Iran didn't immediately block the Straights of Hormuz, exactly what would protect all those oil tankers in the future from an air attack, artillery fire from shore, Silkworm or other anti-ship missiles, or small craft at night?

causing trouble with Iran is like smoking a cigarette at a gasoline pump: you're just asking for trouble.

Posted by: De-escalate | Sep 4, 2008 8:08:22 PM

Oil prices based on "oil fears" and supply problems are a falsehood perpetuated by Wall St traders who largely determine the prices on the world oil markets.

There are just as many incidents around the world as before, if not more, when oil prices were rising to their highs around $140/barrel or $4/gallon in the US.

That was spring and not much was going on around the world, maybe a little talk of Israel and Iran, etc, but not much more except the coming summer--US driving season! But the oil companies (Exxon, BP, Shell, etc) kept bumping it up until they broke the bank and people stopped or reduced driving. But by that time the prices were already being passed onto consumers everywhere else and it's caused the economy to tank.

Now the Russian/Georgia war, hurricane season, and continued supply problems from the Nigerian Delta don't cause prices to continue to rise. Market-driven my a$$.

It's political manipulation by Bush/Cheney to talk to their buddies in Big Oil to temporarily lower prices so we won't feel so bad at voting time. They know they can raise prices again after the election and blame it on the oncoming winter and the need for fuel oil.
What total BS!!!

Posted by: Fossil-fueled | Sep 4, 2008 8:23:10 PM

This is irresponsible journalism at its best. Now when oil prices are rightfully decreasing because speculators are moving money away from oil ... another speculation which will enflame the public with more scare tactics. Give it a rest and let's get back to life.

Posted by: Brian | Sep 4, 2008 9:23:36 PM

Could the Israel, just kill the leader of Eran? would it be alot better?

Posted by: koolnews | Sep 4, 2008 11:11:52 PM

Israel was giving arms and weapons to Georgia so Georgia would let Israel and us if needed use their airbases to bomb Iran. NOW YOU SEE.

Posted by: herman | Sep 4, 2008 11:26:03 PM

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.

Where are your brains ?? OH MY GOD!!!
You are the kind of person who gets the world in a mess I think we should put your family under a nuke and see how you like it and have your rights taken away Grow A BRAIN

Posted by: duffster | Sep 5, 2008 3:11:16 AM

$7 a gallon, you get what you sew. And for liberal environmentalists who won't drill or build a new refiney, pay at the pump and make the average guy pay at the pump. Liberal and media brought this on you. How much a gallon are you willing to pay to protect a polar bear and remain slave to an arab? Yet ABC news trashed Palin, like the tabloid it is. I look forward to your ratings.

Posted by: Nathan Hale | Sep 5, 2008 3:14:11 AM

Steve - Are you calling Ron Paul an idiot? Why? It is easy for you republican thugs to slander him with no reason. History will show that Ron Paul was correct about all sorts of things. This election will be unfriendly to you republican goons because of the last 8 years. Unfortunately, the dems are just as bad. No one advocates real changes in foreign policy, monetary policy, and spending practices except for Paul. So just sit back and enjoy the ride towards financial ruin. Ya baby!

Posted by: Ben Straub | Sep 5, 2008 9:41:55 AM

Iran is currently enriching 6,000 centrifuges of Uranium. After the end of that fuel cycle -- less then 1 year from now -- Iran will be capable of making two nuclear weapons. The Iranian regime has called for Israel to be "wiped off the face of the map", and its leaders believe they have a mandate from God to to launch infidels into war with Muslims, even if it is against the will of most muslims, and even if it means all Iranians will die. One of Iran’s most powerful clerics affirmed that he is willing to turn Iran into “one large martyr, if it means successful Jihad against Israel.” That Cleric sent his son to blow himself up in Lebanon. Credible threat? Is it worth the risk?

Moreover, Israel is surrounded by Iranian proxies (Hezbollah to its north, Hamas to its south, Islamic Jihad and Hamas within its own borders....). If Iran doesnt use a nuclear weapon directly against Israel (it would need 2 to destroy Israel), the alternative is equally as daunting: Iranwill serve as the insurance policy (nuclear insurance policy) of terror organizations throughout the Middle East. Soon you will see Jihadists using Russian "smart" weapons against Israel (a la Iran), and because of the nuclear umbrella Israel will be inhibited from defending itself. Perhaps most frightening is the fact that other unstable, Sunni Islamist regimes who fear Iran have already expressed desires to pursue “peaceful nuclear energy.” A Nuclear Middle East could very well mark the end of the world…..definitely the end of Israel.

So, Israel is facing the following choice (assuming Iran doesn’t end its nuclear program): A) Annihilation, or B) No security, constant terror and a slow death. If you're Israel, the catastrophic effects of an attack on Iran (there will be blood of epic proportions) outweighs the consequences of a nuclear Iran. Rest assured, when oil goes over 200 dollars a barrel and Hezbollah terrorists start blowing themselves up all over the world because Israel decided to defend herself.....the world will blame Israel.

Posted by: Eric G | Sep 5, 2008 11:01:32 AM

OUTLAW WAR OFF PLANET EARTH....Bring Back Corporations that abandoned America for Profit, Force the Auto Industry to give us technology to give us over 200 mpg; In Which They Already Have! Develop an Educational System were by all Americans receive College Degree's, and get the Hitlerism out of our Police Force, and we will be a happy nation!

Blessings to You and Yours
Kachina

Posted by: Kachina | Sep 5, 2008 12:01:42 PM

Of course we can see $7 gas on the way...It's called the O.B.A.M.A Plan.

Posted by: Rochelle | Sep 5, 2008 12:24:20 PM

We now know that fuel rises mainly because of speculators!

Posted by: GuyfromNorthPole | Sep 5, 2008 12:29:08 PM

According to a Dutch newspaper, Dutch intelligence officers who had been working to infiltrate Iranian nuclear facilities were recalled because of an "imminent strike" on Iranian facilities coming sometime, they believed, in the first three weeks of September. This and the fact that there are five US carrier groups in or near the Persian Gulf add to the validity of these reports. These are not "planted stories" that originate from Big Oil, but reports from news sources around the world.

Americans need to tune into foreign and alternative news sources and stop watching the mainline media in the US and taking everything they say as gospel truth. You only hear what they want you to know. The proof of this is in the fact that you can read opposite sides of any one story at the same news source, and they claim that both are factual. "Employment Holding Steady!" "New Jobs Data Shows Rising Unemployment Rate!" "No Recession in Sight!" Signs of Recession Say Chief Ecoconmists!" And on and on with the spin of the day.

American "news" is hoopla to use a nice word. Start reading online news from reputable new sources around the world, and you will discover lots of new information not heard of in the US.

Posted by: Karen R | Sep 5, 2008 12:39:19 PM

If gas goes to $7.00, or up, a gallon; then the world should get together a build a practical, affordable electric/gas-electric car whose batteries are recharged by wind turbines. We can and should manufacture wind turbines the way we mass produced ships, tanks, and planes in WWII.

If Israel and Iran start throwing nukes around, see the 1984 BBC movie "Threads" and pray; because we will either be killed outright from the nuclear exchange, or die slowly from "nuclear winter" and the effects on the human race.

Posted by: Benst1 | Sep 5, 2008 3:42:36 PM

Why even discuss it? Just go and take over Iran. Who is going to stop Israel? Can Iran be putting out enough oil as to affect the world markets? Check the facts. Russia will be there to hold their hand and swat back the rest. It will end up being their problem.

Posted by: goof | Sep 5, 2008 4:29:07 PM

Of course gas will hit $7.00 a gal. Maybe not this year but in a year or two it may. We seem to have hit peak oil and nothing is on line to replace it soon. So unless demand continues to drop, we will see $7.00. If you think alternatives will answer American's insatiable appetite for energy you need to read the research. It isn't nearly as rosy as the cheerleaders in the hate-carbon, enviro movement want you to think. Most of it is pure pipe dreams, including wind and solar- and I don't care what Pickens says. His billions doen't impress me at all.

Posted by: Woolfthefirst | Sep 5, 2008 5:10:43 PM

Don't blame me! I didn't vote for George Bush #1 or #2 twice! And I ain't voten' for this Dem Nut Job either! "DRILL BABY DRILL"

Posted by: Not Fooled | Sep 5, 2008 10:25:46 PM

You guys are missing the big picture. You're simple minded people are worrying about 7 dollar gas, when you should be worried about Iran getting nukes and directing them towards the USA. Even Nostradamus predicted that a middle eastern tyrant would eventually do just that. Remember the Islamic bomb backed by religion against the infidel is real in IRAN. Any attack would from Iran would cost more then a 7 dollar a gallon of gas.

Posted by: gregg | Sep 6, 2008 6:13:28 PM

gregg - This was the same Rhetoric Bush used to attack Iraq but he forgot to tell you that he also bought Halliburton Stocks for $8 just before the Iraq war... and in the last eight years since Bush family's investment in Halliburton, the stock's split 2 times and has given a return of more 200 %...Wars are not fought because Nostradamus predicted something ..its because someone powerful has a vested intrest in it.

Posted by: Jack | Sep 7, 2008 12:18:55 PM

gregg - I must agree with Jack. I am also not that worried about Iran. I am more worried about our monetary and foreign policies leading us to financial ruin.

Posted by: Ben Straub | Sep 7, 2008 7:33:16 PM

The US should mind its own business, build its infrastructure back up. Protect its own borders, kick out ALL the illegals. And any person that wraps a foreign flag around themselves at a demonstration seeking civil rights, should be given a plan ticket and sent back to that country. let them demonstrate there.

Posted by: osia | Sep 8, 2008 3:52:04 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? "

What do you expect from foaming at the mouth right wing extremist Bush/MaCain supporters? If everyone saw "Iraq for Sale" Bush/Cheney & their enablers would be indicted for treason.

Posted by: Geos | Sep 8, 2008 9:09:58 PM

I hear that even at current fuel prices U.S. companies abroad are beginning to come back to the states to save money of shipping costs. Could this be a silver lining?

Posted by: Frank | Sep 12, 2008 7:37:50 AM

I hear that even at current fuel prices U.S. companies abroad are beginning to come back to the states to save money of shipping costs. Could this be a silver lining?

Posted by: Frank | Sep 12, 2008 7:38:00 AM

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