Tuesday, August 05, 2008

How General Petraeus Saved the U.S. Economy

While I am naturally suspicious of USNews, This is an excellent analysis! Not sure what happened over there that they are printing honest, non-biased reports, but I am happy to see it.

Thank the Lord and President Bush for giving us General Petraeus!

How General Petraeus Saved the U.S. Economy - Capital Commerce (usnews.com): "With oil prices continuing to plunge—and they may have a lot further to go—I've started wondering about this "what if" scenario: Where would oil prices be today had we abandoned Iraq to civil war and al Qaeda? What if President Bush had announced on Jan. 10, 2007, that instead of surging U.S. troops under the command of General Patraeus, he was ordering their withdrawal? Imagine if Iraq had descended in complete chaos and terror and genocide. Somalia or Rwanda on the Tigris and Euphrates, I guess.

Right now, Iraq is pumping out some 2.4 million barrels of petroleum a day. (That's about what the country was producing before the war and double the level of production at its post-liberation low point.) But given tight global oil markets, what would the price of oil be—and what would the state of the U.S. economy be—with perhaps all of those 2.4 million barrels off the market? Actually, we don't have to imagine very hard at all. Hurricane Katrina took about 2.4 million barrels off the market (because of refining shutdown and a halt to foreign oil deliveries), and oil prices spiked. And then layer on top of all that a possible regional war. Saudi Arabia and Iran might well have intervened on the side of the Sunni and Shiite. Wouldn't we all be screaming about $200-a-barrel oil—or maybe twice that?"

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