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Experts Say Attack On Iran Could Mean $6 Per Gallon Gasoline

Experts Say Attack On Iran Could Mean $6 Per Gallon Gasoline

 

Written by Ben Armbruster and Ali Gharib

GOP presidential candidate Newt Gingrich has promised that if he wins the White House gasoline price will drop to $2.50 or even $2 per gallon. The former House Speaker also said that as president, he’d support (and join) an Israeli military attack on Iran’s nuclear facilities. Indeed, Gingrich said recently that “the red line is now,” referring to the point at which Iran’s nuclear program has progressed far enough to warrant military strikes.

Price economists have said that a promise to bring down gas prices to that level would be nearly impossible. But aside from that reality, the Hill newspaper reports that oil experts say that an Israeli attack would probably cause gas prices to rise significantly:

An Israeli military strike against Iranian nuclear enrichment sites would spike gas prices to between $5 and $6 per gallon, according to market analysts. [...]

I think you will see $5 and $6 dollar a gallon gas,” said Andrew Lipow, president of Lipow Oil Associates.

Other analysts agreed that airstrikes would cause a spike in global crude oil prices, and a corresponding jump in U.S. gasoline prices that are currently averaging $3.82-per-gallon. But some declined to predict how large that spike would be.

Indeed, the Council on Foreign Relations released a brief last month (PDF) by oil market analyst Robert McNally of the Rapidan Group looking at how rising tensions with Iran — including a possible military strike — could affect global oil markets. McNally writes:

A military attack by Israel or the United States on Iran’s nuclear facilities would likely lead to a sudden price shock (about $23 per barrel in the first days should Israel strike according to a Rapidan Group survey of market participants) as traders priced in risk of a wider conflict.

If Iran’s energy export infrastructure remains in tact and disruption of the crucial oil transit point at the Strait of Hormuz (which Iran has already threatened to shut in the face of sanctions) is minimal, the price spike would be up about $11 per barrel after 30 days. Were there a prolonged disruption where the International Energy Agency countries opened up their reserves, prices would settle at a $39 per barrel bump after a month. If those reserves remained off the market, a $61 bump can be expected, with at least one of the market participants surveyed responding that the spike could nearly triple the price of a barrel.

President Obama has warned about the dangers of Iran acquiring nuclear weapons, including undermining the nonproliferation regime, endangering regional security and risking a bomb falling into the hands of terrorists. But he also stressed just last weekend that “an opportunity still remains for diplomacy — backed by pressure — to succeed.”

This post was originally published by ThinkProgress.

 

Related Stories:

5 Things That Actually Determine the Price of Gasoline

The Conservative Who Loves Iran Diplomacy to Death

Assuming the Worst About Iran Leaves No Peaceful Way Out

 

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79 comments

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1:39PM PDT on Mar 25, 2012

This is INSANE, NOBODY should have to pay this much for gas. And don't forget, there a thousands of people still unemployed. Israel and the US, needs to stay out of Iran, we DON'T need another war. ENOUGH IS ENOUGH!!!!!!!!!!!!!

8:34AM PDT on Mar 23, 2012

Maybe the high prices would be a good thing in a way. It would force people to seek other substitutes, like eco-friendly electric car? It would force the car manufacturers to come up with something better that doesn't use oil.

11:55AM PDT on Mar 21, 2012

This is all just crap. I am still baffled as to how we have not invested more in alternative energy, especially with the increases in efficiency... then again, the people running the show appear to be total morons so I shouldn't be surprised at all!

9:35PM PDT on Mar 20, 2012

And that is how America continues to be raped repeatedly for petroleum. The very essence of death itself. They don't think there is anything else, so they refuse to look at anything else.

6:14PM PDT on Mar 20, 2012

Republicans have got to be crazy or just plain dumb to think war is the answer. But, anything for the support of evangelicals and tea Partyers. They are screwing themselves in the long run.

12:28PM PDT on Mar 20, 2012

No matter how much it is raised, someone will always pay that much for it.

Not me, though. I walk, bike, or take the bus.

7:56AM PDT on Mar 20, 2012

We NEED $6 / gallon gas prices to force conservation and efficiency improvements. We NEED such high prices PERMANENTLY to force conservation and efficiency.

6:09PM PDT on Mar 19, 2012

Obviously, if we have war, oil prices will soar. Some of that will be because of Iran, but most of it will be because of speculators.There should be more restrictions on speculators who don't need the oil for businesses such as airlines, trucking industry, or even farmers. It is obvious why these people buy their oil early, but speculators are doing it for money, and we pay for their wealth by increased prices and more inflation.

5:00PM PDT on Mar 19, 2012

Is anybody wondering about Bio-Fuel? Germany, and Switzerland are almost completely self sufficient because of it. Their people said, yes we want to go green, and their government listened. Ours just asked if they could screw us to the wall a little longer and find ways to take away our rights.

3:32PM PDT on Mar 19, 2012

fortunately, there is no way that Iran can build a massive arsenal of nuclear weapons, to build a site capable of launching an attack on America, would take a complex that could easily be detected, and destroyed.
Wouldn't it just suck if one of their own bombs went off accidentally on their own home land??....Not really. I hope they are building it close to their capital, or by some big Mecca thing. They may be meeting Allah a little sooner than they wanted to.

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