Iadvised subscribers to cover their
2012 fuel needs in January before
prices surged as it had become difficult
to see any path but one toward conflict with
Sanctions imposed on Iran are working
relative to the desired pain intended to be inflicted
upon them. Yet Iran may never respond
to sanctions relative to ending their
nuclear program voluntarily.
They are paying a high price to develop a
nuclear weapon. Awash in oil and gas reserves,
Iran has no practical need whatsoever
for nuclear power. Given almost free natural
gas, a nuclear power plant is extremely
cost ineffective in Iran.
There is no reason other than development
of nuclear weapons for them to mess at all
with nuclear development.
As these people are cut from the same
cloth as those that flew airplanes into the
Twin Towers, the possession of nuclear
weapons by irrational religious leaders contains
a high degree of risk.
The Chairman of the Joint Chiefs recently
said that he believed that Iranian leaders were
rational and therein lies the debate about how
alarmed that we should be over Iranian possession
of nuclear capability and what we
should do about it.
After all, the Soviet Union once had
30,000 nuclear warheads targeted at us and
they were rational enough not to commit suicide.
Israel understandably has a lower pain
threshold than do we as to the degree of risk
they will tolerate. If the sanctions don’t stop
Iran, I would expect that they will and we
will help them.
A month ago the Pentagon didn’t favor
taking military action against Iran and advised
Israel not to do so either. I think they
have evaluated whether they could achieve
the objective of taking down Iran’s nuclear
infrastructure with air-strikes at what cost in
collateral damage of all kinds, including the
Iranian response, and decided that they cannot
guarantee the outcome desired.
The Obama administration has coordinated
an almost unprecedented amount of global
cooperation on sanctions on Iran. The EU
banned buying oil from Iran before Iran
blocked sales to Britain and France.
The only oil customers that Iran has left to
sell to either are really poor at paying, like India,
or will take a huge discount in price like
China to buy their oil.
The Iranian Regime depends on oil revenue
to support itself and it is hurting in
every way. Iranian inflation is soaring and
the government is not able to continue to sustain
food subsides, creating social unrest in
Iran. Iranians are not isolated enough not to
know that their government is responsible.
The Saudis are aligned with us as partners
against Iran. They boosted oil exports 20
percent to backfill any demand unmet due to
the loss of Iranian crude despite direct threats
from Iran not to do so.
The IEA said that the EU can cope with a
complete cut off of Iranian oil. Iran squeezes
its own revenue every time it cuts off a customer,
economic pain. Despite all
of that, everyone is afraid
of the impact of the potential
loss of Iranian oil in a
conflict on the oil markets.
A significant amount of
oil passes through the
Strait of Hormuz daily so it
would be the focal point of
a military clash as well as
attacks on Gulf State oil refineries
And as the tension
builds, everyone wants to own an inventory.
Petroleum companies are not letting the crisis
go to waste raising prices at the pump
even as consumer demand wanes.
The cost of subsidizing protection of foreign
oil imports is going up. While we are
winding down a couple wars, the Pentagon
asked Congress, on Feb. 7, for $100 million
to cover new expenses related to getting
ready to confront Iran. It Congress it needed
the money urgently.
These new funds were on top of $200
million approved primarily to get ready to
confront Iran last summer.
If it were not for oil we would have no
fleet in the Persian Gulf with a second battle
group nearby. What we spent on ethanol subsidies
was pitifully puny compared to what
we spend militarily protecting our foreign oil
supply for which our oil companies pay nothing
At the same time they are removing the
Des Moines’s Air Force F-16 fighter wing
because it is not needed.
Get the point? They don’t have to fly
fighter plane sky-caps over Midwest ethanol
plants to protect them. We have a glut of
ethanol today overflowing storage tanks
pressuring ethanol prices, while gas prices at
the pump are soaring because we have hit the
E-10 blending cap and the government bureaucracy
has moved too slowly and ineffectively
to bring higher ethanol blends into the
market to consumers.
Ethanol plants have negative margins and
some are slowing the grind reducing ethanol
output because they don’t have market access
for it and their storage tanks are full.
When the President says that there is nothing
he can do about rising gas prices, that is
baloney. The ethanol industry stands ready to
do more to meet the nation’s fuel demand so
the Saudis don’t have to.
More ethanol could take 12 to 15
cents/gallon off gas prices very quickly with
an emergency waiver to allow E-15 and
funding for the USDA blenders pump program
now in place.
If they are actually considering going to
war without doing these things, then the Pentagon
should study if our leaders in Washington
David Kruse is president of CommStock Investments
Inc., author and producer of The
CommStock Report, an ag commentary and market
analysis available daily by radio and by subscription
on DTN/FarmDayta and the Internet.
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