Beware ‘Peak Price Oil’

Ben-Gurion University historian Benny Morris caused quite a stir with his July 18 New York Times Op-Ed contribution. Morris believes Israel will “almost surely attack Iran’s nuclear sites in the next four to seven months.” He sees himself as a centrist, reflecting a broad consensus “shared by most Israelis across the political spectrum.” If a conventional attack fails, as Morris thinks likely, “A ratcheting up of the Iranian-Israeli conflict to a nuclear level will most likely follow.”

Given the above credible Iran war threat, a new conceptual approach I have labeled Peak Price Oil is needed. A possible Israeli conventional or nuclear strike/response would function as a trigger event for Peak Price Oil. Present estimates of oil/gas prices in the event of an attack on Iran are: $200-$400 per barrel of oil, and $12-$16 per gallon of gasoline. Another possible trigger event for Peak Price Oil would be a successful terrorist strike on the Abqaiq refinery in Saudi Arabia, crippling oil supplies for several years.


Rationing by price has its limits. Oil demand is only partly elastic