Wednesday, February 23, 2011

Could 1974-style gas lines and rationing return as a result of falling MidEast dominoes? The dreaded "R" word is still a third rail, but not for long

ABC News has a frightening looking article today “Oil reaches highest since 2008 on fears of Mideast Export Halt,” with several videos, as played on ABC World News Tonight on Wednesday.  The link is here.  

Oil closed at $98.10 today but was over $100 for a while.  In 2008, it hit $140.  There are fears that it could go over $150 or $200 if unrest became destructive in many Middle Eastern countries. 

 Superficially, the ABC article title suggests that all Mid East oil could stop, as in 1973.  But that would require extreme unrest to spread to Saudi Arabia, and perhaps Iraq and Kuwait.

Nevertheless, Khadafy has threatened to destroy his own oil fields out of temper tantrum or spite if he is forced to leave, and in fact some Libyan soldiers refused orders to do so.

All appearances suggest that Khdafay is rapidly losing control of much of his military, which hopefully would mean his departure very soon, possibly even in less than 24 hours. 

It’s not clear that this could happen in Saudi Arabia; but young protestors are finding that despots seem to have weaker holds on their own law enforcement and security apparatus than has been realized. That’s part of the “Facebook Effect” that has been going on for a couple of years.   The social media effect is suddenly playing on a moral double edge, as American consumers have depending on the US keeping despotic but allied regimes in power, and at some balance, for many years.  Ironically, such a foreign policy of the past may not stand up to the availability of modern social media to young adults even in totalitarian countries.  David Fincher’s film “The Social Network” indeed seems ironic now. But history shows that revolutions in printed media in the past have also stirred political changes. (See this week’s issue of Time Magazine.)
The US now has a large strategic petroleum reserve that could make up for loss of Libyan oil for quite some time, but not for collapses in other countries, too.

Could gas lines and even-odd rationing of 1974 return?  I wonder.  In 1974 the Nixon administration had printed up ration coupons that were never used.  Money can’t buy everything sometimes, and that’s the beginning of socialism and loss of freedom.  The 1974 crisis was resolved by April.

So, I bring up the “R” word. Sorry, I told you so.

Wikipedia attribution link for “no gas” picture from 1974. 

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