Strauss Center Fellow: Iranian capability to disrupt oil flows exaggerated
New research project assesses energy security in the Persian Gulf
August 20, 2008
AUSTIN, Texas – As many Americans worry that a disruption in the oil supply could drive energy prices even higher, the Robert S. Strauss Center for International Security and Law at The University of Texas at Austin announced today that it has launched a comprehensive web resource on how the Strait of Hormuz and escalating military tensions in the Persian Gulf affect global access to oil.
Strauss Center Senior Fellow Eugene Gholz and a group of 16 graduate students at the Lyndon B. Johnson School of Public Affairs developed the web site, http://hormuz.robertstrausscenter.org, which raises questions about how much capability Iran really has to disrupt oil flows in the Persian Gulf.
About 90% of the oil exports from the Persian Gulf transit the Strait of Hormuz each day, accounting for about 20% of daily worldwide oil demand. The Strait, less than 30 miles wide at its narrowest point, is in a neighborhood rife with political conflict. Many experts fear that an accident, terrorist attack or military effort to close the passage could severely threaten the global economy. Some presume that it would be relatively easy for an attacker – including the Iranian military – to close the Strait.
The site includes information on how difficult it would be to block the Strait; how the oil market would adapt to such a disruption; and what political and military steps could be taken by countries like the United States to remedy the situation.
The working group found that while Iran could surely capture the world's attention for a time, it would be extremely difficult for Iran to sustain a disruption in the Strait for very long. Recent surges in the price of oil widely attributed to a growing "risk premium" – for example, based on fears that threats and counter-threats between Israel and Iran might escalate into open warfare – exaggerate a conflict's likely effect on oil flows.
“Politicians, the media, investors and those involved in the oil business all react to incidents in the Persian Gulf,” Dr. Gholz said. “Overreactions may offer Iran or terrorists excessive leverage, and sudden, unnecessary surges in the price of oil caused by investor psychology and fear cost consumers a great deal and threaten global prosperity. A primary goal for this resource is to help provide information to differentiate serious threats – times when the world really should fear and react – from exaggeration.”
The website is the result of a Policy Research Project, a year-long graduate course at the LBJ School of Public Affairs at The University of Texas at Austin. The project was sponsored in part by the Strauss Center, through a grant given by the Confidence Foundation.
For additional information on the group’s research or energy security in general, please contact Dr. Eugene Gholz at 512-471-5882.
The Robert S. Strauss Center for International Security and Law engages the best minds in academia, government and the private sector in developing practical solutions to the pressing problems of an increasingly globalized world. For more information on the Strauss Center, please visit www.RobertStraussCenter.org.
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