The New York Times reports that gasoline prices are tumbling just in time for the holiday shopping season to begin.
“Consumers can thank the tentative reduction in tensions in the Middle East and swelling supplies of domestic oil for their good fortune, and energy experts say prices could fall further if negotiations between the West and Iran progress.”
It’s curious to think we may have to thank Iranian President Hassan Rouhani, and the Supreme Leader, Ayatollah Ali Khamenei for low gas prices this holiday season. The former Iranian president, Mahmoud Ahmadinejad could talk prices up but recent negotiations in Europe over Iran’s nuclear developments are bringing them down. The actions, or lack of actions, of the United States in the middle East could help grow our economy and make the holiday season more cheerful.
There was a spike in oil and gasoline prices over the summer after the Egyptian army staged a coup and when the United States appeared poised to take military action in Syria.
The Brent oil benchmark climbed above $115 a barrel in early September, but began drifting down by more than $10 a barrel after President Obama backed off attacking Syria and the Syrian regime agreed to demobilize its chemical weapons stockpiles. The principal American benchmark, West Texas Intermediate, had climbed to $110 a barrel but is now below $95.
Our sanctions against Iran have taken a million barrels a day of oil off the world markets. Allowing Iranian oil to flow again could reduce crude prices by 9 percent — almost $9 a barrel, and would roughly increase our economic growth by 0.25 per cent.
“The market fundamentals don’t support $100-a-barrel oil except for the political risk factors, and the biggest one — Iran — appears to be easing,” said Michael Lynch, president of Strategic Energy and Economic Research, a consulting firm. “The suppression of Iranian oil sales seems likely to diminish and therefore the market will become increasingly glutted.”
As somebody is reported to have said over lunch a few years before the Suez crisis.
“It is better to jaw-jaw than to war-war.”
- As Tensions Fall in Iran, So Do Costs of Gasoline (nytimes.com)
- Would A Nuclear Deal Help Or Hurt Human Rights? (rferl.org)
- The Real Reason Saudi Arabia Doesn’t Want Friendlier U.S.-Iran Relations (theatlantic.com)