If Iran blows up, and it will.....

[XM DUDE]

Gas will go well over $6.00 a gallon and you may see alot of car free people riding around, good time to open a bike shop!

[Dahon.Steve]

I don't know about $6.00 dollars a gallon but it really depends on how the price of gas goes up in the summer. If the barrel goes over $100.00 dollars, I doubt the administration will invade because that will create a situation similar to what happened during the Carter years.

[Roody]

I don't know what's going to happen in Iran, but I agree it's a good time to own a bike shop. 20 million bikes sold last year, I would bet for 22 this year.

[Cadd]

Gas will go well over $6.00 a gallon and you may see alot of car free people riding around, good time to open a bike shop!
Wrong. I bet these people will pick up bikes at Walmart or Toys R Us.

[JohnBrooking]

I don't know about $6.00 dollars a gallon but it really depends on how the price of gas goes up in the summer. If the barrel goes over $100.00 dollars, I doubt the administration will invade because that will create a situation similar to what happened during the Carter years.
Yeah, but being cynical, when have any sitting politicians ever learned from history? The current administration is well known for dismissing any data that don't fit their world view, and besides, Carter was a Democrat wimp! ;)

A more likely reason that we (and I use that pronoun reluctantly) won't invade soon is because we have no spare capacity to do so. I think that's why the tough talk has lessened considerably in the last couple of years...

[pricklycommute]

I have a hard time believing anyone will actually invade Iran. Now an airstrike on their nuclear complex, that is a good probability. Probably very similar to the Israeli strike against the Iraqi nuclear facility in 1981. Iran will then throw a fit and posture a bit, but they need the West's money as much as the West needs Iran's oil. However, a temporary embargo may or may not occur, so who knows where the cost/barrel would go for the short term. People will still say that it is Exxon's fault though. ;)

[pedex]

Iran's threat isnt nuclear, its economic.

[Artkansas]

Gas will go well over $6.00 a gallon and you may see alot of car free people riding around, good time to open a bike shop!


I remember the first gas crisis. Know how many of my acquaintances took to the bicycle instead of fighting gas lines?

That's right. Zero.

It will be interesting to see if they've learned.

[TrippinBTM]

Israel is the one most likely to attack. We wouldn't be going it alone if we did, so it wouldn't be quite the same as in Iraq. Still, we have very little capacity left for another war, especially with a powerful country like Iran (lets face it, Iraq was totally crippled from the first gulf war and 12 years of sanctions/bombings).

Either way, I really doubt military action will result with this, but then, who would have thought cartoons would have had the effect they did?

And Artkansas, with peak oil on the horizon (or the doorstep, perhaps), this won't be a brief oil shock like before. I think in the near future, the prices are going to go way up and stay there. Eventually there will hardly be any choice in the matter, and bikes are going to be in huge demand. So, back to the main topic, right now is a hell of a good time to open a bike shop. I only wish I had some money...

[pedex]

I dont think an attack will stop Iran's threat, sanctions will though, or an invasion of khuzestan.

[cerewa]

I think it'll be some time before peak oil hits- if an embargo drives up the price of oil it'll come back down before it goes up again.

I also agree with the person that said, don't get your hopes up about bike shop profits. People will indeed buy wal-mart bikes.

[some_guy282]

If there is an attack on Iran it will be the end of the world as we know it within a matter of months. I'm really doubting there will be any kind of attack on Iran by the US or Israel.

[mtnroads]

Why do you say that?

[some_guy282]

An attack on Iran by Israel would immediately - and correctly - be seen as a joint attack by the US and Israel. For two reasons. First, the US sold Israel many bunker buster bombs a couple of years back. Those types of bombs are useless in their conflict with the palestinians, but they would come in handy against underground nuclear facilities in Iran. Also, in order for Israeli planes to reach Iran, they would have to fly through US controlled air space and/or take off from US airfields. How would the muslim world respond to an attack by Israel and the US on another muslim nation?

If you think things are bad in Iraq now, they would be 10 times worse if Iran were attacked. Iraq's Shia population which has been relatively cooperative would immediately erupt in anti US sentiment. Iran's military, unlike Iraq's prior to the war is very capable. Even if we only hit them with airstrikes, it is likely Iran would declare war on the US and Israel, and attack US forces in Iraq. Iran also has the ability to stop all ships from traveling through the straights of hormuz for some time - effectively preventing all oil from leaving the middle east on tankers.

And if they wanted to be really radical (have you listened to how crazy their new president sounds lately?) they also have the precision missle power to destroy much or all of the oil production capacity in the entire middle east. More likely though, at the very least all they would have to do is cease their own oil production - or reduce it - and they would immediately send global oil prices spiraling upwards by 5 or 10 fold - literally. This would have enormous impacts on the US - and global - economy to say the least.

Iran has a strategic defense pact with Syria, so any attack on Iran would bring Syria into the military conflict as well. In recent days Venezuelan leader Hugo Chavez has also been saying that he might cease oil exports to the US in the event of an attack on Iran. Venezuela is the #3 country the US imports oil from (Canada and Mexico are #'s 1 and 2).

They would also certainly set hezbollah loose to perform all sorts of acts of terrorism in Israel.

In addition to that, you have to look at how the rest of the world would view this. Sure they were upset about Iraq, but life went on. As it stands right now, the rest of the world cannot do without Iranian oil. Europe and Asia need it badly. Last year Japan signed a big deal with Iran for some of their oil exports for years to come against the wishes of the US. Russia has been siding with Iran, providing them with equipment for their nuclear power program, as well as selling them much of the advanced weaponry that makes Iran such a stronger target than Iraq was. If we attacked Iran and prevented the rest of the world from getting their oil, Europe and Asia would be really, really, REALLY pist off. China and Japan alone both have the power right now to single handedly crash the value of the dollar and plunge the US into a huge recession by dumping their dollar reserves. Of course now they wont because the US public are the ones buying all their products, so it's mutually beneficial. But if we attacked Iran and $%^&ed up the world economy, who's to say that wont change the equation and some of the nations with large dollar holdings wouldn't engage in a little economic warfare on the US?

For Americans like us, it would mean a very quick drop in our standard of living. People would have wet dreams about the days when gasoline was only $3 a gallon. And it would almost certainly mean a very quick return of the draft. After all, defeat isn't an option, right? With an insurgancy on steroids in Iraq, and Iran + Syria waging open war against our forces in Iraq, we'd need to increase the size of the army considerably. Which might be a bonus, because it would give all the people who just lost their jobs something to do.

So yeah, for all those reasons I think the world as we know it would quickly come to an end if Iran were to be attacked. All the rhetoric by politicians is just that - rhetoric. If we had never attacked Iraq things would be different and an attack on Iran would be possible, but we picked our target and going after Iran now would be biting off way more than we could chew. If they actually went through with it, god help us.

[mtnroads]

Good analysis - thanks. I agree that we wasted our shot in Iraq - no doubt. I think a precision strike vs. invasion could still be accomplished in Iran but the timing has to be right and other members of Sec Council have to buy in. I believe that a nuclear Iran is not an option, and I was fully and vocally against the Iraq invasion. Our way of life has to change soon anyway, but armed conflict is a such a wasteful way to do it, instead of cooperatively, with investment into new technologies and infrastructure. Then again, if you read history it is nothing new. Just think what the $350B we have spent to date on the "war on terror" could have been used for. It is mind-boggling the damage that has been done by this administration.

[pedex]

Dont forget, Iranian oil bourse opens in about a month, hence the sudden full court press by the US for sanctions. On top of that, John Bolton is the acting president of the UN security council for this month. Iran is years, many years away from a nuclear bomb of anykind. Nukes are defensive weapons, not offensive ones. Iran may publicy state they want Israel gone, but doing so means Iran is gone too.

[some_guy282]

Yeah, the oil bourse is the real motivation behind all of this. It wont cause the US dollar to crash over night, but it's going to be another factor eroding at the value of the dollar over time...

[CTAC]

The U.S. army is stuck in Iraq and there is no extra troops they can send to Iran until Iraq problem is resolved. They can order airstrikes, but Iran can start helping Iraq resistance in respond. Also they recently purchaised lots of antiaircraft weaponry from Russia; US administration was pissed off, but they could do nothing about that. Well, maybe they could, S-300 purchaise is still being negotiated and there is no apparent progress there. Yet. S-300 systems would allow Iran to build relaible antiaircraft system and as the result their army (that can count up to 5 million troops, if needed) would wipe out american presence in the region. Russia is doing multibillion business with Iran and would not be very happy if US or Israel suddenly attacks Iran without negotiating with Putin first.

Although, with the current US administration I would expect anything to happen.

[wsexson]

what's "the bourse" ?
"Bourse" is the French word for "exchange" as in "stock exchange" or "commodities exchange". What they are referring to is the fact that currently there are two petroleum exchanges or bourses, both of which are currently operated in US dollars. Iran is planning to open a new petroleum bourse operated in euros in 2006. Conventional wisdom is that this could have a dramatically negative effect on the value of the US dollar. Every country in the world (and every large corporation) has to hold US dollar reserves to buy or sell oil. If everyone could buy and sell oil in either US dollars or euros the worldwide demand for dollars would decline, and thus the value of the dollar would be dramatically reduced. Many people speculate that the primary reason for US "sabre rattling" about the Iranian nuclear energy and/or weapon program is really because of the bourse issue, not the nuclear issue.

[catatonic]

I say either some proof that it's being used for weapons comes up, or stay out of it.

It's not an Iraq of Afghaniztan, plus our troops are too spread out to be very effective. Israel would probably end up on the receiving end of a massive missile strike if they did anything as well.

Iraq never really had a decent military to begin with for one reason...constantly screwing with Iran, and getting their butts kicked back to the borders during the 80s. Something tells me that was the real reason they invaded Kuwait is most likely that was the only thing he could invade.

I say diplomacy should be the option here...but it seems nobody wants to budge. Iran was willing for a while, but now that they got reported to the secuity council, I think diplomacy is about to no longer be an option. After all, if you are under sanctions, the side imposing sanctions will not be willing to compromise, so why not just do whatever you intended? It's the whole "If I'm already getting punished for it, I might as well do it" train of thought.

[some_guy282]

"Bourse" is the French word for "exchange" as in "stock exchange" or "commodities exchange". What they are referring to is the fact that currently there are two petroleum exchanges or bourses, both of which are currently operated in US dollars. Iran is planning to open a new petroleum bourse operated in euros in 2006. Conventional wisdom is that this could have a dramatically negative effect on the value of the US dollar. Every country in the world (and every large corporation) has to hold US dollar reserves to buy or sell oil. If everyone could buy and sell oil in either US dollars or euros the worldwide demand for dollars would decline, and thus the value of the dollar would be dramatically reduced. Many people speculate that the primary reason for US "sabre rattling" about the Iranian nuclear energy and/or weapon program is really because of the bourse issue, not the nuclear issue.

Couldn't have said it better myself.

Back in Octoboer/November Israel was releasing intelligence estimates that Iran would reach the "point of no return" in being able to construct a nuclear weapon. By mere coincidence, the timeline put the point of no return in the same ballpark as the opening of the new commodities exchange. It opens on March 20th I believe.

Another thing to keep in mind is that Saddam did the same thing in Iraq in 1999. He switced the currency Iraqi oil was sold in from dollars to Euros. At the time everyone laughed at him and thought it was a stupid idea, that he would lose a lot of money because of it. Just the opposite happened. The value of the dollar started to slip, and the euro increased. Because of that Iraqi oil profits increased by something like 33% just because of the currency it was sold in. No increase in production, but increased profits. Other countries in the middle east saw what was happening with Iraq, and they wanted to get into the action. Prior to the US invasion of Iraq, some OPEC member nations were openly discussing switching to the Euro. That died down after the war started. Once the US had control of Iraq, one of the first orders of business was to switch oil sales back to dollars, which didn't make sense for the Iraqi people at the time (because the war is all about their freedom, right?) because the Euro was worth more than the dollar.

[wsexson]

He switced the currency Iraqi oil was sold in from dollars to Euros.
Call me paranoid, but I have always thought this was the primary reason that the United States invaded Iraq. Thanks for mentioning it.

[some_guy282]

Call me paranoid, but I have always thought this was the primary reason that the United States invaded Iraq. Thanks for mentioning it.

In my opinion it certainly was the single largest immediate goal of the invasion. We immediately got Iraq off the euro which helped the dollar, and it sent a message to other countries considering the same. There's a great book on the subject. It's called Petrodollar Warfare. I've already bought it but still havn't gotten around to reading it yet. I've got a bunch of Peak Oil related books still on my reading list....

You can listen to an interview with the author here.


http://www.financialsense.com/Experts/2006/Clark.html

[pur1138]

Speaking on the original topic....

And who's going to fine tune and fix all those Walmart bikes, should it go down as the OP speculates?
I've been thinking along these lines for a while. I'm a pretty fair bicycle wrench. I enjoy working on bikes. I'm also known at work to be a cyclist. I'm already making a little $ on the side working on co-worker's bikes.
If things get bad, you're likely to see all kinds of old and new bikes come out of attics and the backs of garages needing flats fixed, cables replaced, wheel trueing, brake pads and derailer adjustments. All from people who don't know doodle squat about bikes. It's not rocket science, but it does take some special TOOLS and knowledge.
A guy might be in a pretty good position if he was set up with those tools and maybe some small inventory of parts. Heck, you can get a nice little cable/brake pad replacement kit at Walmart for about $5. Cheap chains too.
These people aren't going to be enthusiasts, they're just going to need someone to fix their bike so they can use it.
Maybe no need for a full fledged bike shop to be ready to make a little extra $.

Kevin

[some_guy282]

Yeah, I saw a little bit of that during the NYC transit strike back in December. There were all sorts of new commuters on the streets for a few days...