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Thursday, December 21, 2006

Energy Prices Ease, But Keep Your Eye on Iran

Natural gas stockpiles were in line with expectations this week, and the energy complex is flat-to-down right now. But keep your eye on Iran.

See, one reason that energy prices have eased since August is the geopolticial risk premium is going down. People aren't that worried about the Middle East, since Iran has eased off on its war of words.

But now, the New York Times confirms that "The United States and Britain will begin moving additional warships and strike aircraft into the Persian Gulf region in a display of military resolve toward Iran."

Later in the article we read: "Senior American officers said the increase in naval power should not be viewed as preparations for any offensive strike against Iran. But they acknowledged that the ability to hit Iran would be increased and that Iranian leaders might well call the growing presence provocative. One purpose of the deployment, they said, is to make clear that the focus on ground troops in Iraq has not made it impossible for the United States and its allies to maintain a military watch on Iran."

Does our government really think those paranoid mullahs running Iran will see this as anything but a set-up for an attack? Especially when, as blogger Glenn Greenwald points out, "President Bush has given speeches in the recent past in which he spoke of Iran exactly the same way he spoke of Iraq in late 2002 when, in his mind, an attack on Iraq was already a fait accompli."

Greenwald also notes: "Any military conflict with Iran would be so disastrous for the U.S. that it cannot be adequately described." Maybe so. I really hope it doesn't get that far. What I'm thinking is it's likely that we're about to enter a new cycle of escalated rhetoric between the US and Iran. And what do you think such an escalation in the war of words will do to energy prices? I'd say it could light a fire under oil prices.

But we shall see what we shall see. This conflict between Iran and the US is part of what I see as the global war for natural resources, a conflict that could define the 21st Century.

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