As the high price of oil gives us the prod we need to get into buses, trains or carpools—or just to walk—it's worth a look at what Hampshire College Professor of Peace and World Security Studies Michael Klare has to say about how the Bush administration's foreign policy helps drive up the price of oil. In "The New Geopolitics of Energy" (The Nation, May 19, 2008), Klare argues that though the soaring cost of oil is rooted in the growing discrepancy between supply and demand, the administration's treatment of Iran has aggravated it.
Klare reminds readers that sanctions against Iran, together with pressure the U.S. has put on its allies to walk away from developing Iranian oil fields, has cut back Iran's oil production to about half its potential.
But more important, says Klare, is that the U.S.'s oft-repeated threats to attack Iran set off a vicious cycle, as counterthreats from Iran to block oil transport through the Strait of Hormuz send speculators—who respond to the prospect of a conflict that would drastically cut supplies—into buying mode.
"It is not surprising, then," Klare writes, "that every threat by Bush/Cheney (or their counterparts in Israel) has triggered a sharp rise in prices. This is where speculators enter the picture. Believing that a U.S.-Iranian clash is at least 50 percent likely, some investors are buying futures in oil at $140, $150 or more per barrel, thinking they'll make a killing if there's an attack and prices zoom over $200."
If the president wants to help consumers, then, he could ramp down oil speculation by stopping the saber rattling. Klare sums it up this way: "… while the hike in prices is due largely to ever increasing demand chasing insufficiently expanding supply, the Bush Administration's energy policies have greatly intensified the problem. By seeking to preserve our oil-based energy system at any cost, and by adding to the 'fear factor' in international speculation through its bungled invasion of Iraq and bellicose statements on Iran, it has made a bad problem much worse."
