Can Bush Attack Iran With Oil at $140 per Barrel?

If U.S. President George W. Bush wants to boost Republican chances of holding on to the White House and keeping Democratic gains in Congress to a minimum in the November elections, he might consider taking an attack on Iran before the end of his administration "off the table."

Of course, that's probably the last thing Bush -- and his particularly belligerent vice president, Dick Cheney -- will do.

But there's little doubt that forswearing military action against Tehran should ease the upwards pressure on world oil prices -- which hit a historic high Monday of more than 143 dollars per barrel before falling back to 140 dollars -- and thus offer at least some reprieve to the U.S. consumer at a time when record gasoline prices appear to be driving widespread popular dismay with the state of the U.S. economy.

"(I)f this administration truly wanted to spare Americans further pain at the pump, there is one thing it could do that would have an immediate effect," wrote Michael Klare in this week's Nation magazine and author of a new book, "Rising Power, Shrinking Planet: The New Geopolitics of Energy". "(D)eclare that military force is not an acceptable option in the struggle with Iran."

While oil analysts say that prospects of a continuing decline in the dollar no doubt played an important role in recent price jumps, they also pointed to last week's pointed reaction by the commander of Iran's Islamic Revolutionary Guard Corps, Gen. Mohammed Ali Jafari, to recent U.S. and Israeli threats to attack Tehran's nuclear facilities, as well as his assessment that those threats should be taken seriously, as a major factor.

In addition to retaliating against any regional powers, presumably including Israel, which take part in such an attack, Jafari warned that Tehran would "definitely act to impose control on the Persian Gulf and Strait of Hormuz," after which, he added, "the oil price will rise very considerably, and this is among the factors deterring the enemies."

Indeed, even without an attack, continuing tension involving Iran's nuclear program will almost certainly contribute to a continued rise in oil prices to as high as 170 dollars a barrel in the coming weeks and months, OPEC's president, Chakib Khelil, said during a conference in Madrid.

World oil prices have risen by nearly 50 percent since the beginning of 2008 and nearly doubled over the past year. Analysts have argued over how much of that increase is due to structural factors in the world economy -- such as growing demand in middle-income countries and the depreciating dollar that would tend to make the price increase permanent -- and how much is related to worries about possible supply disruptions arising from the kind of conflict that has plagued the Niger Delta region in Nigeria, terrorist attacks by al Qaeda in the Gulf, economic or other sanctions against key oil-producers, or war.

The latter risk factors, according to some analysts here, could account for as much as 50 dollars of the total current price, although most believe that the figure is about half that.

How much is due to the uncertainty about Iran is also a matter of considerable debate. Many point to the unprecedented 11-dollar one-day spike in oil prices -- from 128 dollars to 139 dollars a barrel -- that took place Jun. 6 after Israel's Deputy Prime Minister Shaul Mofaz warned that an Israeli attack on Tehran's nuclear facilities was "unavoidable" if international pressure did not succeed in persuading it to freeze its uranium enrichment program.

While that incident offered the most spectacular suggestion of a relationship between threats against Iran and the price of oil, most analysts believe the effect is somewhat more modest, albeit still quite real.