Is the price of oil going up because of the war in Iraq?

Question

Do you think it's worth it?

Answer 1

There is a whole slew of factors that's effecting the price of oil, but can categorized as followed: (1) supply and demand; and (2) risk. The supply and demand picture revolves around the amount of new oil discoveries being made is not keeping pace with the demand for oil globally. As nations like India and China grow their economies, more of these folks will have money to want things like, cars, homes, electronics, and etc., all of which require some form of hydrocarbon (a.k.a. oil). As these large nations bid on the existing global supply of oil, the price will go up.

Secondly is the risk premium associated with oil due the political instability of the top oil exporting nations from Iraq and Iran to Nigeria and Venezuela. The war in Iraq caused oil price to jump up and stay up. The Bush Administration and Senate approval of "saber-rattling" against Iran has driven the price of oil up globally.

The ironic thing about warring in the middle east is that this action drives up the price oil which increases the revenues for the oil-exporting nations like Iran. Even though America doesn't buy oil directly from Iran, Iran sells oil to China who turns it into products that get sold in America. So Americans are financing Iran through countries like China. GO FIGURE!

Answer 2

Partly; political instabilities in Iraq, Iran, Nigeria, and Venezuela do drive spot prices and long term, forward contract prices, by as much as USD $20 per barrel. Speculation by energy traders also can add USD $5-10 per barrel, also heavy demand from India and China is driving prices up.
The main reason, however, is that there's a serious bottleneck in the supply chain relating to oil refineries, where gasoline, kerosene, etc are produced. We haven't built a new refinery in the US in nearly 20 years - oil companies remember well the nineties, when oil was as low as $10 per barrel.
They wouldn't want to spend millions on a new refinery when there could be a huge discovery tommorrow, an overnight regime change or a peace accord that could send oil prices plummeting. To some extent, they have every incentive to NOT add on to refinery capacity - also environmental reg and zoning concerns make building a new refinery not worth the hassle.
A lot of the companies that drill and explore also run or own refineries (and also gas stations). These "integrated" oil companies are almost all descendants of Rockefeller's Standard Oil company. Exxon, Mobil, Chevron, Sunoco, Texaco, and several others were all at one time part of the Standard Oil "trust." (BP, Royal Dutch Shell, Valero, and a few others were sponsored by national governments.)
They're still, in many ways, a monopoly - certainly they're an oligopoly - and this is sometimes (not always) bad news for oil consumers.
Historically, oil prices reach dizzying heights and then plummet in short order. Remember that if you're tempted to invest in energy stocks - the best days for these companies may be ending.
Oil prices can turn on a dime, wiping out smaller companies, shaky companies, investors, explorers, and investors virtually overnight.
Given current rates of oil consumption and oil growth (and assuming no efficiency gains, which isn't likely) we have over 70 years of proven oil reserves.
But politics, war, monoploy supply, and supply chain problems are costing oil consumers (ie, eveyone worldwide) a lot of money right now.
Worth it? Oil's demand is pretty inelastic - oil runs our farms and factories and virtually all of our transport. It's only worth the price because so far we have little alternative but to pay the going rate!

Answer 3

The US never got oil from Iraq; our primary sources are Canada and Mexico. We've got a 30-year supply sitting in Alaska.

The problem is the world market -- strictly supply and demand, with government regulation and independent speculators thrown in for good measure. Competition from China and India will keep prices high. Time for me to dump my old gas hog Benz...

I'd give the 10 points to George C. He's got the facts in order.

Answer 4

Iraq has NOTHING to do with it. OPEC decides the price per barrel and the oil companies (along with the taxes for the government) decides what the price of the gas is at the pumps. Iraq is still selling their oil to OPEC in Saudi via pipe line.

Answer 5

Oil goes up for a couple of reasons. When OPEC yawns, it goes up, if one of their countries reduces output, it goes up, if demand increases. like it has with China sucking up every barrel they can buy, the price goes up.

Many things make oil prices go up but the sad part is, if the USA would allow drilling off both east and west coasts, say go out 50 miles or so, we would have more oil and gas and would have less dependence on foreign oil.

Answer 6

No the experts are saying oil is going up because of this new Iran threat and Bush saying things like World War III.
The oil rich nations get very nervous at times like this.
Also this situation is coupled with the very researched and scientific data that the world peaked in oil production in 2005. We haven't seen much relief since then. The reason we are in Iraq is because of the oil but not why it's going up. We are fighting for what there is remaining. Do some research on Peak Oil and you will have a greater understanding of whats really going on.
Welcome to the oil wars.

Oh sure give me thumbs down all you want to it doesn't hurt my feelings but when your gas is costing $6.00 a gallon you can get back to me on that.
http://www.oilempire.us/

Seriously can you believe that we are holding out building new refineries even with all their billions because a huge new discovery is just around the corner. Thats a convenient excuse and another way to deter gas usage. Mexico has also declared they have already run out of oil and they have maybe 3 more years left. Saudi Arabia are using saline solution to prime the oil because it has become too expensive to do it the old way with more oil because it's become too hard to reach. Are you starting to get the picture? I'll give you another good excuse they are using is Global Warming is manmade. Yep better cut back on those Co2 emissions. Start riding bikes. You see how it all ties to the same thing? Oh yeah all those oil reserves that are supposedly sitting off the coast of the US hmmm why don't they just drill for it and walk over environmentalists like they do everybody else. Because oil researchers already know there IS NO oil there. There might be a big deposit at the Artic North Pole why do you think Russia is staking claim to it.
http://www.energybulletin.net/23816.html

Answer 7

No. It is going up because yet again our government is banging the war drums in Iran's direction. It is not a war in Iraq but an occupation.

Answer 8

Last week, it was because there's too much, and it costs $ to store it . This week it's supposed to be because of the storms in the Gulf of Mexico ( that aren't even there yet . =)))) . The real answer is " because they can." Because of increasing demand in China,India & S. Korea( & much of the rest of Asia) , the overall trend is upward . Everything else is excuses of the moment . That's the way it's going to stay, unless demand is reduced .

Answer 9

I think we should have just let Saddam have Kuwait thats what I think. Forget about Iraq, forget about the different ethnic groups in Iraq, just give me my $1 gallon of gas! I have a huge car man and I love to drive it fast, I get so many tickets, I don't care!

Answer 10

no it rise because of civilization increasing and increasing of factories in all nations increasing of peoples and it is need of oil in every thing of life