Another reason not to Bomb Iran

A clear financial reason not to Bomb Iran, and to w negotiate a peaceful settlement in Syria. DON'T OMB IRAN.

November 8, 2013
As Tensions Fall in Iran, So Do Costs of GasolineBy CLIFFORD KRAUSS
HOUSTON — Gasoline prices are tumbling just in time for the holiday shopping season to begin. 

Consumers can thank the tentative reduction in tensions in the Middle East and swelling supplies of domestic oil for their good fortune, and energy experts say prices could fall further if negotiations between the West and Iran progress. 

The cost of a gallon of regular gasoline has dropped by 6 cents a gallon over the last week alone, in line with a steady swoon through the fall that has brought prices to their lowest levels in three years. 

Seasonal price declines are expected this time of year, but the slide this year is particularly steep. It brings modest relief to consumers at a time when families try to scrape together disposable income for gifts, road trips and entertaining family and friends. 

“From a psychology standpoint, lower prices at the pump are correlated with higher consumer confidence,” said Michael Niemira, chief economist for the International Council of Shopping Centers. “Over the years Walmart has said how deeply dependent their consumers are on gasoline prices and it goes beyond Walmart.” 

The national average price for a gallon of regular gasoline was $3.21 on Friday, 14 cents below a month ago and 25 cents below last year, according to AAA’s daily fuel gauge report.
Drivers in all 50 states are enjoying lower gas prices than a year ago, and Arkansas, Kansas, Missouri, Oklahoma and Texas filling stations are now charging $3 or less a gallon on average. The AAA automobile club predicts that the national average will dip to as low as $3.10 a gallon for regular by the end of the year, and some analysts see even more declines. 

“The majority of the population will be able to find gasoline for less than $3 a gallon between now and New Year’s,” Tom Kloza, chief oil analyst at GasBuddy.com, said. 

The average household consumes 1,200 gallons of gasoline a year, which translates into a $120 annual savings for every dime shaved off the price of gas, energy experts say. 

Economists say over time lower gasoline prices act like a tax cut, or in the case of this year, a partial cushion for the resumption of Social Security payroll taxes that had been temporarily reduced after the financial crisis. 

There was a spike in oil and gasoline prices over the summer after the Egyptian army staged a coup and when the United States appeared poised to take military action in Syria. 

The Brent oil benchmark climbed above $115 a barrel in early September, but began drifting down by more than $10 a barrel after President Obama backed off attacking Syria and the Syrian regime agreed to demobilize its chemical weapons stockpiles. The principal American benchmark, West Texas Intermediate, had climbed to $110 a barrel but is now below $95. 

Oil price spikes have been common since turmoil spread across the Middle East and North Africa three years ago, and as the United States and Europe tightened sanctions on Iran, trying to force the country to modify its nuclear program to exclude nuclear weapons. 

The Western sanctions on Iran have taken as many as a million barrels a day of oil off world markets. A full resumption in Iranian exports, according to a report this week by Bernstein Research, would reduce crude prices by 9 percent — or nearly $9 a barrel — although such a development is unlikely for many months at best. 

“The market fundamentals don’t support $100-a-barrel oil except for the political risk factors, and the biggest one — Iran — appears to be easing,” said Michael Lynch, president of Strategic Energy and Economic Research, a consulting firm. “The suppression of Iranian oil sales seems likely to diminish and therefore the market will become increasingly glutted.”
The rule of thumb of many economists is that every $10 drop in the price of a barrel of oil increases economic growth by 0.2 percent to 0.3 percent, as long as a broad economic slowdown does not shave consumer and business spending. 

There are limitations to how low oil and gasoline prices can go. Saudi Arabia and other Persian Gulf states need high oil prices to pay for social programs that ease political tensions, and they can always cut production to firm up prices. Saudi Arabia, which had been pumping at record levels to compensate for lost Iranian exports, cut back its output slightly in October and may reduce production some more if Iranian oil exports flow again.
Still, developments closer to home are also bringing down oil and gasoline prices. United States domestic oil production has increased by about 40 percent over the last four years, adding 2.5 million barrels a day to the market — an amount that is almost exactly equivalent to the total supply disruptions amounting from the sanctions on Iranian exports and the production and export blockages in Libya, Syria and recently parts of Iraq. 

United States benchmark oil prices have been dropping faster than the international Brent benchmark in recent weeks, as crude inventories built up in the nation’s heartland where the shale oil drilling frenzy is strongest. Some Canadian crude can be bought at prices below $50 a barrel because of surplus supplies in the United States, while Bakken crude from North Dakota is priced at about $80 a barrel, still well below international price 

“Cheaper gas prices are being passed along to American drivers because North American crude prices have become disconnected from world crude prices,” Mr. Kloza of GasBuddy said. 

Inventories at the large Gulf of Mexico refineries have crept up 15 percent since January, and with exports of gasoline and diesel slowing to Mexico and Venezuela, large inventories of petroleum products could continue to build and further depress prices.

Peace with Iran

My sentiments exactly.

New York Times  

November 3, 2013
Talk to Iran, It Works
By RYAN C. CROCKER
There were high expectations after President Obama and Iran’s president, Hassan Rouhani, talked on the phone in late September. Those hoping for a diplomatic resolution to the nuclear standoff were excited that a breakthrough was imminent; meanwhile, some American allies, like Israel and Saudi Arabia, expressed deep skepticism over a potential American rapprochement with Iran. 

No breakthrough was achieved when American and Iranian officials met for negotiations last month, but few observers expected one. Later this week, another round of talks is scheduled to begin in Geneva. 

The window for achieving a diplomatic solution to the nuclear crisis is not open-ended. Both Mr. Obama and Mr. Rouhani face domestic pressures — from skeptical members of Congress in Washington and anti-American hard-liners in Tehran.
Nevertheless, despite three decades of frosty relations and although most Americans may be unaware of it, talks with Iran have succeeded in the past — and they can succeed again. 

Immediately after 9/11, while serving in the State Department, I sat down with Iranian diplomats to discuss next steps in Afghanistan. Back then, we had a common enemy, the Taliban and its Al Qaeda associates, and both governments thought it was worth exploring whether we could cooperate. 

The Iranians were constructive, pragmatic and focused, at one point they even produced an extremely valuable map showing the Taliban’s order of battle just before American military action began. 

They were also strong proponents of taking action in Afghanistan. We met through the remaining months of 2001 in different locations, and Iranian-American agreement at the Bonn Conference on Afghanistan was central to establishing the Afghan Interim Authority, headed by Hamid Karzai, now the president of Afghanistan. 

I continued to hold talks with the Iranians in Kabul when I was sent to reopen the United States Embassy there. We forged agreements on various security issues and coordinated approaches to reconstruction. And then, suddenly, it all came to an end when President George W. Bush gave his famous “Axis of Evil” speech in early 2002. The Iranian leadership concluded that in spite of their cooperation with the American war effort, the United States remained implacably hostile to the Islamic Republic. 

Real cooperation effectively ceased after the speech and the costs were immediate. At the time, we were in the process of negotiating the transfer of the notorious Afghan warlord, Gulbuddin Hekmatyar, from Iranian house arrest to Afghan custody and ultimately to American control. Instead, the Iranians facilitated his covert entry into Afghanistan where he remains at large, launching attacks on coalition and Afghan targets. 

I had another set of negotiations with Iranian diplomats when I was ambassador to Iraq in 2007. The goal was to persuade Iran to cease supporting groups like Moqtada al-Sadr’s Mahdi army, a Shiite militia that was targeting the Iraqi government and coalition forces. Unlike the Afghan negotiations, these talks took place in the full glare of the media, rendering the give-and-take of effective diplomacy impossible. While the negotiations accomplished nothing, they may have convinced Iraqi Prime Minister Nuri Kamal al-Maliki that his only option for dealing with the militias was military force. He launched a military operation against them in April 2008. In fighting that extended from Baghdad to Basra, the government eventually prevailed, with substantial coalition support. 

The Afghan experience demonstrates that diplomatic progress between the United States and Iran is possible. It is certainly not guaranteed, but a solid diplomatic solution is always better than the alternatives. 

The government of the Islamic Republic is clearly an adversary, but it is also a rational actor. And, like all governments, it is capable of being pragmatic and flexible when it is in its interest to do so. There is a chance that the Obama administration can replicate past successes if it applies four lessons from the 2001 talks. 

First, American negotiators must understand that serious progress is likely to come only in direct talks between the United States and Iran. The involvement of the permanent members of the United Nations Security Council and Germany should continue, but the heavy lifting will have to be done by the two central actors. 

Second, the substance of the talks must be closely held. Revealing the details too soon will give ammunition to those who oppose the talks and limit the flexibility of the negotiators.
Third, America should be ready to introduce other issues beyond the nuclear file. Progress in one area can build confidence and facilitate progress in others. I mentioned this in a discussion with Iranian leaders in New York last month and they seemed receptive, mentioning Afghanistan and Syria as possibilities. 

Finally, the United States must make clear that we do not seek to overthrow the Iranian regime. Iranian paranoia on this issue is virtually limitless and understandably so. In 1953, the American and British intelligence services ousted a democratically elected Iranian prime minister, an episode that very few Americans remember and no Iranian will ever forget. 

The outlines of a deal are already clear. Iran wants sanctions lifted and an end to its isolation while the international community wants clear, continuous and unambiguous verification that Iran’s nuclear energy program will never be weaponized. The Iranian leaders I met in New York argued that a nuclear weapon would actually degrade Iran’s security because it would spark a destabilizing cascade of proliferation among its Arab neighbors. They insisted that Iran wants security and stability in the region, not a nuclear arms race.
That is encouraging talk, but the Iranians will have to move first. There can be no question of easing American sanctions until Iran has demonstrated its seriousness in confining any nuclear program to peaceful purposes. 

Ryan C. Crocker, a former United States ambassador to Afghanistan and Iraq, is dean of the Bush School of Government and Public Service at Texas A & M.

[Emphasis added]

A new wrinkle in exporting Iran's Pars gas fied

Iran's Pars natural gas field is the largest in the world.


International sanctions and the U.S. Fifth Fleet, stationed in the Persian Gulf  has blocked export of gas from the Pars field.

Iran and Pakistan signed a accord for a pipeline through Pakistan through which to sell the gas.  The pipeline could reach Indian markets and even China.

Wikipedia, Chinese Guandar Port in Pakistan.

The U.S. has threatened sanctions agains Pakistan if it participates in the pipeline  and conflicting stories appear in Pakistani and Iranian news papers about the progress of the pipeline.  It's future seems in doubt.

Todays's news account in Fars, an Iranian news outlet, describes an alternate way for Iran to get it's gas out.

We'll see how this one develops.

Sat Nov 02, 2013 3:33

Iran, Oman in Talks over Gas Deal

TEHRAN (FNA)- Iranian and Omani experts are discussing the contents of a deal on the supply of Iran’s gas to Oman, an official announced on Saturday, stressing that Tehran is already prepared to ink the final contract. 

“Exporting gas to Oman is being pursued seriously and experts of the two sides are discussing contents of the deal,” Managing-Director of the National Iranian Gas Company (NIGC) Hamid Reza Araqi told FNA. 

“Yet, we are right now ready to sign the contract," he said, and added, "As prescribed by the Iranian oil minister, the deal will be endorsed by the Iranian and Omani oil ministers, and we hope this to happen soon.” 

Araqi explained that once the deal is signed, Tehran and Masqat will need 2.5 to 3 years to build the infrastructures needed for the supply of Iran’s gas to Oman. 

In relevant remarks in September, Araqi said that the preliminary studies are underway to finalize a gas contract with Oman. 

He said that the NIGC was studying different aspects of the issue, including economic assessment of the contract and a report on the possible routes. 

He stated implementation of gas contracts requires preliminary expert studies which takes time. 

After several years, reaching agreement on gas price is a breakthrough, NIGC managing director said, adding the two countries have many common grounds for boosting cooperation, including feeding Oman’s LNG units with gas.  

Iran’s Oil Minister Bijan Namdar Zanganeh and his Omani counterpart signed a Memorandum of Understanding (MoU) in August to accelerate finalizing a gas contract between the two sides. 

The Islamic Republic of Iran as the largest owner of gas reserves in the world is the most secure and most economic source of gas exports to the neighboring countries.

For a report from Port Technology International on Oman's ports, see

$645 million Omani port expansions making progress
09 Mar 2011 - Port Planning

The Port of Salalah is to be developed within the $645 million expansion plan Omani ports.
US$645 million Omani port expansion projects progressing
Ports of Salalah, Sohar and Sultanate of Oman under development 

Omani port expansions are seeing significant progress, as multi-billion dollar investment in port operations across the Middle East continue to highlight the key role of the shipping industry for regional trade. 

The US$645 million invested in Oman's port expansion projects include the strategically positioned Sultanate of Oman, and the Ports of Salalah and Sohar

“The billion-dollar expansion plan for Oman’s seaports, particularly in Salalah and Sohar, is continuing unabated as part of its strategy to further develop a competitive and efficient industrial sector and also ensure the security of its essential food commodities,” said Chris Hayman, Chairman of Seatrade.
Up to a billion dollars has been committed to the development of Oman’s new maritime ports and the expansion of existing gateways. 

Construction work on the Port of Salalah is expected to begin by the end of March, with the first phase of the project estimated to cost around $196 million, part of the overall $645-million expansion plan. This will increase its capacity to 40 million tonnes of dry-bulk commodities and five million tonnes of liquid products each year. 

Expansion work on the Port of Sohar is also progressing, with two key projects including the development of a major deepwater jetty and a dry bulk terminal. 

Construction of the new $250-million jetty is already well underway, with completion set for the second half of 2011. Once finished, Sohar will be one of just a handful of ports worldwide with such deepwater capability, allowing for the docking of new generation super-scale ore carriers. 

The second project, the new dry bulk and aggregates terminal, is scheduled for completion in the first quarter of 2012. It is expected to encourage the growth of quarrying and mining activities in Oman’s Batinah region, further opening it up as a platform for foreign commodities traders to access the markets of the Gulf and wider Middle East. 

An upgrade project is also underway for Oman’s Duqm Port, with new smaller-scale ports planned for Shinas in the north and Hallaniyat Islands in the south.

For an Indian view of Oman's ports, see here.

Omaan's deep wager ports: