Could Iran strategy rerun of Iraq beat down: short war, long sanctions, occupation?

[yurbud]

Since Bush doesn't have the manpower to occupy Iran now, they could just rerun what we've done to Iraq since they invaded to Kuwait: a quick beating from the air followed by sanctions designed to break everything in the country that works, and THEN try to invade when Jenna or George P. is in the White House?

[Old and In the Way]

1. Short war, long sanctions, no occupation.

I think the Bush administration has a 24 hour war window. After that, the full outrage of the American people will be apparent. I really don't understand what basis sanctions can be put on the Iranians, but I'm sure that won't stop this administration from pushing them.

[yurbud]

3. UN already seems to be going along with it

[Old and In the Way]

5. I know...I'm surprised. Moon seems to have a different agenda than Annin

Why are they putting sanctions on Iran when there's no demonstrable proof that they have a real nuclear weapons program that is a threat to anyone right now, is a head scratcher for me. The sanctions will only further isolate Iran and play into the fundie RW power structure in Tehran.

[whistle]

2. Dubya's version of a short war is dropping 100 nuclear bombs into the country

[yurbud]

4. I didn't mean to imply a short war would be more humane

[happyslug]

6. The difference is the world wide oil situation.

During the 1980s and 1990s the world had an oil glut. North sea oil, Oil from the North Slope of Alaska and a huge oil field in Siberia came on line in the late 1970s as the Iraq-Iran war commenced. Both Iran and Iraq needed money to buy weapons so they both sold as much oil as possible. These two factors (The new non-opec oil supplies and the Iran-Iraq cheating on their OPEC set oil exports forced the price of oil to drop from the mid 1980s onward).

When Saddam invaded Kuwait this glut was still in full swing. Saudi Arabia even increased oil production during the Kuwait War period to keep oil prices down. Even with the withdraw of Iraqi Oil after the First Gulf War you still had a glut of oil in the world (With most OPEC countries actually glad for Iraq oil being withdrawn for their could increase their own production at that time). In fact the excess oil was so bad that when you had a drop in oil usage in 1997 (Remember the Asia Flu? When the Asia economy almost collapsed in 1997?) the glut forced the price of oil below a $1 a gallon in the US.

Since that time period we have had several changes in the oil business. The UK is NOT shipping out as much oil as it used to (UK North Sea production seems to have peaked in 1999), the North Slope seems to have peaked about the same time. The Siberian field seems to be stable, for the Russia has been the source of most new oil production in the world since 2000 (Through this increase production may be from other fields in Siberia as opposed to the Giant field first put into production in the mid-1970s).

Remember also that since 2000 as demand for oil IN CEASED, most of that increase was supplied by increased Russian Production (Which is expected to start to drop this year). Mexican oil production is expected to drop this year and it is believed that even Saudi Arabia production will drop (Saudi Arabia peaked in 2004 and has NEVER produced as much oil over the last two years, many people think the House of Saud can NOT increase production for they have reached their production peak, others, Including the House of Saud, says no they can produce, but don't want to. My fear is the former is true for given the present price of oil the House of Saud would increase production to produce excess oil so to push the price down, but have NOT.).

Thus the Iranian are entering a situation where demand for its oil is high and a sudden cut off of that oil can lead to a sudden increase in the price of oil (Arabia no longer has the ability to increase oil production to keep the price of oil down). Simply put Saddam in the 1990s could NOT increase the price of oil by withdrawing his oil from the World, but Iran CAN TODAY. Any Attack on Iran can lead to a disaster in the form of $100 a barrel oil, something Saddam could only dream of in the 1990s.

[yurbud]

7. big oil would not consider that a bad thing

[happyslug]

8. Yes it will, you do NOT understand monopolies.

Monopolies make the most money selling just over what the price should be. This minimize the number of people who stop buying do to the increase price thus maximizing profit. If you increase the price of oil to much, people stop buying and your total profit goes down.

Now, big oil owns a lot os stripper wells, wells that big production was decades ago, but are still producing some oil. The cost to produce this oil is marginal and this has been a huge source of the profit of Big oil, but that oil would be sold no matter the price. Big oil also have larger wells (For Example BP and the North Slope of Alaska), but the vast majority of oil in the world is Government owned and thus NOT a source for profit for big oil.

The real profit for big oil is selling the oil that OPEC and other Oil producing nations is producing. As the price of oil has increased world wide so has the profit to big oil to sell, refine and distribute that oil. This is the real profit of the oil companies and right now a huge bonanza for them. The problem is if the price goes to $100 a barrel, Big oil may NOT be able to sell the oil. Governments will outbid them. People will stop using oil. While the profit margin of each gallon of oil will climb, the total profit do to lost of sales will decline.

Remember Big Oil is a LONG TERM market player, not someone in for a quick buck today. They see no profit in raising oil prices through the roof to maximize profit per gallon, when total profit will drop. Secondary the source of demand with the biggest pockets will be Governments (they have the power to tax, thus minimizing they ability to pay). Governments will demand price with the least profit especially as things get tight. Thus profit margins will sink as the price of oil climbs. You will have local oil dealers and distributors grouching customers, but NOT Big Oil. Big Oil knows it highest profits is to sell the maximize number of gallons and increasing the price of oil will NOT do that.

[yurbud]

9. whose making record profits now? Gas station owners?

With a tight supply, oil companies make more profits with less cost.

The other factor you are leaving out is the monopoly has the power to buy up competing technology, and buy tax and regulatory breaks from the government.

In theory, you should be right. I thought the psychological breaking point where people would seriously turn away from oil would be about $3 a gallon. Maybe $6-7.

[happyslug]

10. Mostly the producer of the oil OPEC and Russia

High prices go to the OWNER of the Oil, and since the 1970s that has NOT been Big oil. Big oil do own some wells, for example oil wells in the US (Mostly stripper wells today, but even in the US most oil is owned by people OTHER than big oil, the investors in the old wildcatter oil drillers etc). As to the really huge wells, most are overseas and the movement of the 1930s through the 1970s was for host countries to take over their oil wells. This Government ownership of oil is still the rule in most of the world, even Iraq, through technically that is suppose to change (I Doubt it will change, but Breamer when he wrote the Constitution of Iraq put in it a divesting of oil rights, something that both the Sunni and Shiites agree will NOT happen).

Yes, the House of Saud is getting a huge bonanza out of these high prices as is the rest of OPEC and Russia, but if the prices go much higher you will see a huge decline in demand and with it profits. A huge drop in usage has been OPEC's biggest fear since the 1980s when do to the High oil prices of the 1970s alternative sources came on line AND demand dropped so that you ended up with the oil glut of the 1980s. OPEC does NOT want to return to the 1980s thus do NOT want the price to high. The big question is does OPEC, Russia or anyone else has the production capability to increase the supply of oil to meet demand? Growing evidence is no one does and if that occurs prices will go through the roof.

As I said Big Oil will make some money for Big oil owns a lot of smaller wells in the US, but the huge profits will be in those countries with huge deposits of oil.

AS to what price, I have always looked at $5 a gallon. At that point a person with Minimum wage, living in Public Housing can NOT buy the Gasoline he needs to get to work. THE calculation goes as follows:

1. Minimum wage per year is $5 a hour for 2000 hours (There is 2080 hours a five day a week, 40 hour per week work year, the extra 80 represent a two week vacation so 2000 hours er work year is a good starting point). Thus a minimum wage worker earns $10,000 a year (2000 times 5 = 10,000).

2. By Law .3 of one's income must go to rent if you are in public housing. On a per year basis that is $3000 (Roughly $250 per month) that included heat and electricity.

3. Minimum wage earners pay taxes, Social Security taxes of 7%, and in my home state of Pennsylvania local taxes of 2% and State income taxes of over 2 % (For ease of calculation I will assume 10% for all three), That is another $1000 out of the pocket of the minimum wage earner.

4. Then we come to food. If we assume $2 a meal, 3 meals a day, 365 days a year, that comes to $2190 per year on food (and I doubt people can live off of $2 a meal, but I want to keep the number low but "realistic").

Thus before we even get into how much money is available for gasoline, the $10,000 of the Minimum wage earner is $3910 before we even look at what the worker is spending on Gasoline.

5. The Average car gets 20 miles to the Gallon. Most minimum wage owners buy older cars thus barely get more than 20 mpg. The average Driver drives about 15,000 miles per year. Thus the average person uses 750 gallons of gasoline per year (15,000/20=750). The 15,000 is from insurance companies estimates based. Now some people consider this high for if you take 50 work weeks x 5 day per week = 250 work days. 15,000/250 = 60 miles per day (30 miles each way). That seems high, but look at your mileage this year, it often exceeds 15,000 miles per year for you have to add trips to the store, Schools etc. Minimum wage earners are no different, in fact often have very long commutes do to having to hold two part time jobs.

6. Thus the average American uses 750 gallons per year. At $3 a gallon that comes to $2250 per year which leaves a minimum age earner $1660 for things like clothing, car payments, Car Insurance and car maintenance. Thus it is possible for minimum wage earners to continue to operate their cars at $3 a gallon.

7. At $5 a gallon those 750 Gallon come to $3750, which leaves a minimum age earner just $160 for things like clothing, car payments, Car Insurance and car maintenance (And if the person has children food and clothing for the children). Thus it is still possible for minimum wage earners to continue to operate their cars at $5 a gallon, but it is very MARGINAL (Remember the $160 is per YEAR, NOT per month).

Now, most people live with someone else and earn more than minimum wage (and minimum wage is going up, increasing the above numbers) but a sizable segment of the population earn less than $10,000 a year and at $5 a gallon there is NO WAY this group can continue to buy gasoline to go to and back from work.

Basically, the magic number seems to be when gasoline equals minium wage. At that point people just stop buying gasoline for they can no longer do so. This becomes a check on price going up further, i.e. you have a huge DROP in demand as people quit their jobs for they can no longer drive to work. This seems to hold true for income, as gasoline comes close to one's hourly income rate, that person tend to stop buying gasoline. This is less true as price climbs (Do mostly to the fact that the amount of money spent on food tend to be stable over income for you can only eat so much food, thus as income goes up, percentage of one's income spent on food goes down leaving more money for gasoline).

This connection between hourly wages and gasoline prices seems to be confirmed by what is happening in Africa and the rest of the non-industrialized third world), oil consumption has dropped do to the increase in price in price, with drastic drops whenever oil equal the prevailing minium wage of an country (Thus no affect yet on China, India, Korea and the "Asian Tigers" but drastic drops in affect in Africa which has seen little if any industry).

[Leopolds Ghost]

11. Long air war, long guerrilla action in Iraq, bombardment of Gulf shipping, occupation of Khuz only.

The "beating" would continue until morale improves.