Friday 30 December 2011

All eyes on the Straits of Hormuz

If Iran Moves, the USA Has No Plan for an Oil Interruption

28 December,2011

It will come as a shock to most Americans, but no presidential candidate -- nor any candidate, nor any local, state or federal government -- has developed a contingency plan in the event of a protracted oil cut-off. It is not even being discussed. Government has prepared for hurricanes, anthrax, terrorism, and every other disaster, but not the one threatened daily -- a protracted oil stoppage, whether caused by terrorism or Iranian intervention in the Persian Gulf.

It is like seeing a hurricane developing without a disaster plan or evacuation route. Our allies have oil shortage interruption contingency plans, but America does not.

The crude realities: America uses approximately 19 to 20 million barrels of oil per day, almost 70 percent of which is imported. If we lose just 1 million barrels per day, or suffer the type of damage sustained from Hurricane Katrina, the government will open the Strategic Petroleum Reserve, which offers a mere 6 to 8 week supply of unrefined crude oil. If we lose 1.5 million barrels per day, or approximately 7.5 percent, we will ask our allies in the 28-member International Energy Agency to open their SPRs and otherwise assist. If we lose 2 million barrels per day, or ten percent for a protracted period of time, government crisis monitors say the chaos will be so catastrophic they cannot even model it. One government oil crisis source told me hours ago, "We cannot put a price tag on it. If it happens, just cash in your 401k."

Exactly how could America be subjected to a protracted oil interruption, that is, a 10 percent shortfall lasting longer than several weeks? It will not come from hurricane action in the Gulf of Mexico, or even major refinery accidents or other oil infrastructure damage. Such damage would be repaired within days and the temporary losses absorbed by the small half million barrel per day global cushion available.

However, if one, two, or all of three of these vital chokepoints are hit by terrorists flying hijacked jumbo jets or shut down by Iranian military action -- the Abqaiq processing plant in eastern Saudi Arabia, the Ras Tanura terminal on Saudi Arabian coast, or the two-mile per sea lane Strait of Hormuz -- as much as 40 percent of all seaborne oil will be stopped, as much as 18 percent of all global supply will be interrupted, and as much as 20 percent of the U.S. supply will be cut off. Estimates on the U.S. shortfall could be even higher. Repeat attacks could prolong the crisis for many months, which is exactly what Al Qaeda and the Iranian regime have promised. Yet there is no government plan.

The best experts predict that if we suffer as much as a ten percent shortfall for any period of time, let alone twenty percent, it will be a neighbor-against-neighbor "Mad Max scenario" as food shortages swell and a storm of economic collapse surges across the country. Indeed, experts have been warning about this looming calamity for years. But the government and presidential candidates refuse to even consider the possibility or develop a contingency plan. Even if a secret plan exists, who would execute such a monumental undertaking?

Yet American allies have developed oil contingency legislation and other administrative plans that will permit their nations to survive a stoppage. These measures include severe vehicle traffic reductions, enabling fast alternative fuel production, mass vehicle fuel retrofitting, as well as rush public transit enhancement and mandated changes in driving habits. Unquestionably, for America to survive such a catastrophe will require a very painful, multi-layered program of immediate-term, short-term, mid-term and long-term fixes that will change our society and transform it off oil. The nation has no real alternative fuel delivery or retrofitting infrastructure. Lawmakers, mayors, governors and candidates have not developed such a plan during the half decade the interruption has been looming.

The notion that Saudi Arabia can make up the shortfall from an Iranian disruption is impossible. Saudi oil disembarks from Ras Tanura and it, too, must pass through the narrow two-mile wide sea lanes of the Strait. For America to have prepared intelligently for a Persian Gulf oil interruption would have required a decade of planning. To absorb the hit from a sudden oil stoppage as is now once again threatened, will be very painful indeed.

Strait of Hormuz standoff continues as Iran films US aircraft carrier
Iran claimed to have successfully taken surveillance footage of a US aircraft carrier near the Strait of Hormuz today as both countries raised the stakes in their standoff over the critical oil route.

30 December, 2011

The commander of Iran's navy said the reconnaissance mission was proof that his fleet had "control over the moves by foreign forces" but it was unclear what intelligence could be derived from the grainy video, which was played triumphantly on state television.

Admiral Habibollah Sayyari's statement came as Iranian ships, helicopters and submarines continued a 10-day war game exercise designed to give credibility to the country's threat to close the Strait and choke off the world's oil supplies if the West moves ahead with sanctions.

The drill is underway in international waters near the Strait and only a few hundred miles from America's Bahrain-based Fifth Fleet. The US Navy has vowed to prevent any closure of the channel, through which 15 million barrels of oil pass every day.

A Navy spokeswoman would not comment on the footage but confirmed that the USS John C Stennis, one of the fleet's largest carriers, was on a "routine transit" through the Strait to provide support to Nato forces in Afghanistan.

Despite the Fifth Fleet's advantage in firepower, a senior Revolutionary Guard commander vowed yesterday that "Any threat will be responded [to] by threat."

"We will not relinquish our strategic moves if Iran's vital interests are undermined by any means," General Hossein Salami told Press TV.

This afternoon, the US also announced it was selling more than 80 F-15 strike aircraft to Saudi Arabia, an American ally and Iran's main rival for military dominance in the Middle East. Without specifically naming Iran, the State Department said the sale was intended as "a strong message to countries in the region that the United States is committed to stability in the Gulf and broader Middle East."

Barry Pavel, Director of the Brent Scowcroft Centre on International Security at the Atlantic Council, said that Iran's navy was potentially capable of closing the Strait but would be unlikely to do so because of the country's dependence on revenues from oil exports. "It would have to be a very extreme situation for Iran to basically shut down its own economy," he said.

The Iranian threat to close the narrow shipping lane was made after the EU, backed by the US, announced it was tightening sanctions on Iran for pressing ahead with its nuclear programme. Europe buys around 20 per cent of all Iranian oil exports and a full embargo would cause serious damage to Iran's economy.

China urges stability in Strait of Hormuz
China urged peace and stability on Thursday after Tehran threatened to punish proposed Western sanctions by choking off oil flows through the Strait of Hormuz, but declined to make any other comment about the crisis.

30 December, 2011

The foreign ministry's terse, one sentence public response to Tehran's threats over the world's most important oil route reflects China's sensitivities about its close business links with Iran
"China hopes that peace and stability can be maintained in the strait," ministry spokesman Hong Lei told a briefing in answer to a question about escalating tensions that have pushed up oil prices.

He did not answer a question about whether China had had any contact with Tehran or other governments about the threat.

China's official Xinhua news agency said in a commentary speculation about war with Iran over the past few years had ended up simply amounting to "crying wolf."

"To avoid the real arrival of the wolf, all sides should show greater sincerity and flexibility," it wrote.

For article GO HERE

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