Fill Up Your Gas Tank and Buy Exxon Stock

Our addiction to foreign oil has led the U.S. to get a substantial amount of its oil needs from the Gulf Region (Iraq, Iran, Saudi Arabia, etc). Unfortunately, one of our sworn enemies holds the keys to a most important gate. Bloomberg reports that Iran has now established a military base along the shores of the Strait of Hormuz. Around 28% of the world’s oil production happens in the Gulf Region and 93% of it passes through the Strait of Hormuz. Any interruption of exports from the region would be immediately felt around the world. Iran has made similar claims in 2006 but this is this time carries more weight due to the development of the naval base.

 

The U.S. and other countries in the international community have been pressing Iran to come clean about its nuclear production and plans. They will only say that they have nuclear capability and will produce, design and use the technology to protect its country only. Of course, we do not believe them but we can’t realty force them either. Sanctions on the sale of Iranian oil/gas will drive the price of those commodities higher than they are now. Military action would pit the U.S. against a country that is much better positioned and armed than Iraq or Afghanistan ever was. Bush and his team have now shifted to pursuing a diplomatic middle ground between Iranian President Mahmoud Ahmadinejad and the world but it has met with little success. This presents a troublesome quandary for the President-elect. The President will need to have a cool head and the intellectual capacity to handle this issue with true diplomacy to avoid a more disastrous global crisis.

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