Moneybox: War for No Oil

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Moneybox War for No Oil Stop blaming oil speculators and start listening to them: A war with Iran would devastate the economy. By Matthew Yglesias Posted Wednesday, Mar 07, 2012, at 07:26 PM ET Responding to questions from reporters yesterday, Barack Obama promised to restart a gimmicky Justice Department inquiry into whether speculators have unlawfully inflated oil prices. This task force was announced with great fanfare the last time gas prices were a big political issue, but it rarely met and didn't accomplish much of anything. In other news yesterday, the price of Brent crude oil tumbled in response to both bad economic news from Europe and good diplomatic news from Iran. The juxtaposition should serve as a reminder that the idea of a rigorous separation between supply, demand, and "speculation" is nonsense. Speculators are speculating on, among other things, the likely outlook for supply and demand. Under the circumstances, it's ironic that the Obama administration is often attacked politically for its alleged softness on Iran. In the grand scheme of things, if the Iranian nuclear program really is a dire threat to American security, maybe something as petty as the fate of the economy doesn't matter. But make no mistake, a war with Iran would have enormous consequences on the global price of oil, and it's perfectly reasonable for speculators to take to the futures markets to try to bet on it. How big of an impact on oil prices are we talking about? In January, UC-San Diego energy economist James Hamilton looked at four previous supply disruptions: the 1973 OPEC embargo, the Iranian Revolution of 1978, the 1980 Iran-Iraq War, and the 1990 Persian Gulf War. Hamilton found ... To continue reading, click here. Join the Fray: our reader discussion forum What did you think of this article? POST A MESSAGE | READ MESSAGES Also In Slate Saletan: What Happens to Students' Sex Habits When Colleges Stop Subsidizing Birth Control The Hidden Downside of the Super-Speedy New iPad How Would a "Contested Convention" Really Work?	Advertisement
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