New Eyes on an Old Industry
By Hilton Price
Growing up an only child, I missed out on some of the unique elements of living in a sibling-filled household. Luckily, thanks to Iran, I still get to experience the petty and often meaningless tirades of a selfish child on a regular basis. The country has long been home for random acts of foolishness broadcast to the world, but in recent weeks the petulance, selfishness, and downright silliness have gotten out of hand. For these new eyes on an old industry, itÃ¢ÂÂs clear. The naughty children need to spend more time in time-out.
IranÃ¢ÂÂs decision to halt oil exports to EU nations in lieu of the upcoming EU oil embargo is as classically juvenile as a tactic can get. ItÃ¢ÂÂs the world stage equivalent of Ã¢ÂÂYou donÃ¢ÂÂt want it? Well, I wasnÃ¢ÂÂt going to give it to you, anyway!Ã¢ÂÂ Does the line sound familiar? It should, you probably said it yourselfÃ¢Â¦ when you were 9.
Like many of the impromptu and heated words of children, reality often steps in with other plans. Sure enough, after Iran refused to sell some of its oil, the country was left with unsold oil. That seems a poor choice of endgame for an oil-exporting country. Last I read, some of that unsold oil had been sold, but the clock remains ticking to unload the bulk of it or risk it sitting idle on tankers in the open sea. That possibility, and the resulting unpredictability in the oil-trading markets, has led my new eyes to realize something else about this old industry. Supply and demand is useless here, and that is the cornerstone of IranÃ¢ÂÂs power in this struggle.
When thereÃ¢ÂÂs a potential oil shortage, the price at the pump goes up. When thereÃ¢ÂÂs uncertainty in reserves, the price at the pump goes up. When thereÃ¢ÂÂs potential that a bunch of unsold oil will be sitting around in tankers on the open seaÃ¢Â¦, the price goes up? WaitÃ¢Â¦what? IÃ¢ÂÂve come to realize the markets donÃ¢ÂÂt seem to reflect the actions of the world in any way similar to business basics. ItÃ¢ÂÂs all because of Ã¢ÂÂspeculation,Ã¢ÂÂ a word that seems to give far too much power to analysts. However, IÃ¢ÂÂm new here and still learning how it works. IÃ¢ÂÂll try to reign in the urge to go running down the street screaming, Ã¢ÂÂThe whole thing is fixed! The game is rigged! WeÃ¢ÂÂll never win!Ã¢ÂÂ without at least a little more time in the trenches.
ItÃ¢ÂÂs this negative effect on the markets that Iran clearly hopes will drive EU countries back to its oil. The problem is, outside of the markets, Iran has almost no power. The country traditionally exports 2.2 million barrels each day. That seems like a lot, until you consider the typical world consumption of 89 million barrels each day. Then, it quickly becomes a drop in a pretty big bucket. WhoÃ¢ÂÂs providing the other 86.8 million? Are any of those countries causing trouble? Norway produces almost as much oil as Iran. When was the last time Norway threatened to close any shipping straits? How much Ã¢ÂÂnot for weapons (we swear)Ã¢ÂÂ yellow cake are the Norwegians going after? IÃ¢ÂÂm pretty sure the country hasnÃ¢ÂÂt done either of those things. Okay, maybe the yellow cake, but itÃ¢ÂÂs probably just moist, delicious, yellow cake. And who doesnÃ¢ÂÂt love cake?
I canÃ¢ÂÂt answer that, but I can tell you who doesnÃ¢ÂÂt Ã¢ÂÂgetÃ¢ÂÂ any cake; Naughty children. Even as I bring this blog to a close, IÃ¢ÂÂm reading how Iran is refusing to allow nuclear inspectors onto its military bases, even though itÃ¢ÂÂs believed that is where the country is storing nuclear-related items, possibly even potential weapons. This half-assed approach to openness is another childish maneuver. ItÃ¢ÂÂs the world-stage equivalent of Ã¢ÂÂIÃ¢ÂÂll show you how I cleaned my room, but youÃ¢ÂÂre not allowed to look in my closet.Ã¢ÂÂ
Enough is enough. I donÃ¢ÂÂt allow this nonsense in my home, and it shouldnÃ¢ÂÂt be allowed in the interactions between nations. ItÃ¢ÂÂs time to put the naughty children in time-out. They clearly need to spend some more time thinking about what they did.