Until a couple of weeks ago, who heard of the Straits of Hormuz. It sounds like some kind of love story. Well it’s not a love story it’s a 25 mile stretch of water that 20% of all the world’s oil goes through daily. Of course that wouldn’t be a big deal if it were in Iran. One of the United States favorite countries. At $100 a barrel right now, if Iran does close the Straits look to the sky for your diesel fuel prices. Right now it’s a game of chicken between the U.S. and Iran.
Saudi Arabia announced that they will step up oil production if needed to fill any gaps. This is wonderful but would put the Saudis at virtually their maximum production for oil. The last time that happen was the summer of 2008. Do you remember that summer, it was a hot summer and most of us had very little spare cash because diesel fuel prices were over $4.70 a gallon, gas prices were over $4.00 a gallon and crude oil was near $150 a barrel. So what will happen?
Who knows really. We are in areas that we have never been before as it relates to this. We all know that oil rules the world. Those Straits can’t remain close to long, so does that mean a war? We just left Iraq. (Yes, the people in that country were not being treated right before we got there and the threat of “Weapons of Mass Destruction”. It was oil, why we went there. We need to protect those that have oil because we don’t have enough ourselves.
This will be the first of many crazy things that happen this year that makes the price of oil go crazy. It could be weather, uprising of a country, potential shortages, increased demand, China, India, pick your poison. Stable in 2012 for oil is not in the cards.
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