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Oil and the nuclear charade

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Map of Iran
With oil prices at record levels, and therefore anything else that is remotely connected to it getting expensive fast, I recently began to wonder about the reasons behind the meteoric rise. Geopolitical issues are certainly at the top of the list of culprits, and zooming in on those, the Iranian nuclear ambitions tops the rationale behind the madness that has gripped oil prices.

As the general view goes, the more risky and unstable the circumstances surrounding a commodity, such as oil, the more it fuels the fire of the speculators who foresee tight supplies, and drive up the prices of the futures and thus lifting the spot (current) price of that commodity by default.

True that Iran has had the nuclear ambition for many years, and true that they have enlisted the cooperation of Russia and China in building their reactors, but common belief was that they were years away from the capability of enriching nuclear elements to the point that they can be utilized as weapons. Suddenly all that changed when a few days ago the Iranian president proclaimed reaching a milestone in enriching Uranium. The veracity of this claim remains to be substantiated, but imagine for a moment that it is just an empty bluff. Who is to benefit from it?

For one thing the Iranian government with the rest of the oil and gas-exporting countries including many in the Arab word would be the beneficiaries. Russia, Venezuela, and Nigeria would also get a substantial income boost from the current high prices. Russia and China would suddenly be thrust into prestigious positions on the world scene by trying to quell tensions using their diplomatic muscles. Iraq would also receive much needed extra cash from whatever amount of oil it can export. That could help stabilize the country by creating a better economic landscape and that also benefits many foreign companies engaged in rebuilding the country.

In the US and Western Europe, oil and other energy companies will see their bottom lines continue to rise as they report record profits quarter over quarter. That in turn benefits their constituents and shareholders, many of which are in the current US administration (think Dick Cheney and Halliburton).

So while you and I and the average Joe squirm every time we stick a nozzle into our gas tanks, a bunch of rich people get richer, be it here or abroad. In some sense the fallout from the Iranian nuclear program couldn't have possibly worked out better for them. the Iran's nuclear claim could be nothing more than a calculated maneuver. If Iran was an American corporation making fraudulent claims, it could eventually find itself in court, Enron style. Who needs corporate malfeasance to drum up profits when you have a corrupt government taking care of it for you? Like we're ever going to see Ahmadinejad facing a judge for falsifying records.

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