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Why Obama Must Keep Israel from Bombing Iran

World

There is no doubt that Iran could cause major problems not only for Israel, but also for the entire region if the country is allowed to complete a nuclear bomb. That being said, if Israel or the United States decides to take military action against Iran it could have immediate ramifications that would send the world economy reeling.

It is All About Oil

The price of oil has been hovering above $100 per barrel for over a month and the price of gasoline is at its highest level for this time of year ever. The rise in the price of petroleum products has a direct link to the geopolitical uncertainty in Iran and neighboring countries. However, that is not the whole story. There is also an increase in demand for oil that has been accompanying the supply concerns.

Supply has been a reason for higher oil prices with the rich-country oil stocks at a five-year low and Saudi Arabia is pumping out oil at the highest level in three decades. The Saudis, the largest oil exporter in the world, is pumping 10 million barrels per day and the International Energy Agency (IEA) has estimated its spare capacity is down to only 1.88 million barrels per day.

The total OPEC spare capacity is falling and about to fall below 3 million barrels per day for the first time since 2008. We all remember what occurred in 2008 when the price of oil surged to $146 per barrel and crippled the global economy. Another concern is the fact that western oil inventories are below their five-year average for the seventh consecutive month. Then add in the issues with South Sudan, Yemen, and Syria to name a few countries and supplies could be further hurt in the months and years ahead.

Now what if the bombs begin to fly and the supply from Iran is disrupted? Considering Iran produces approximately 3.5 million barrels per day, a partial or complete shutdown would cause a shock that sends oil prices soaring. There is the even more frightening scenario that involves the Strait of Hormuz being cut off as a transportation hub for delivering oil to the world. With 17 million barrels of oil per day making its way through the Strait, it would send oil to its highest price ever and could cripple the global economy.

Panic at the Pumps

Everyone from Energy Secretary Steven Chu to President Obama has acknowledged that rising gas prices could put a halt to the already lethargic economic recovery. If the bombs start flying into Iran, the possibility of $5 gas prices goes from fantasy to reality.

Americans by and large should already be prepared to pay over $4 this summer when the driving season hits full throttle. There is already talk that many Americans are considering changing their vacation plans based on the price of gasoline. If the price spikes above $5 across the country, it would have a much larger affect on the spending and driving habits of consumers. Considering the consumer makes up 70 percent of the economy, it could be the shockwave that sends the country back into a recession.

In fact, as The Blaze previously reported, gas prices have already soared over $5 at a handful of petrol stations in both the Los Angeles and D.C. area.

Confidence

Not only does $5 gas hit Americans directly in the wallet, it has an even more damaging affect on the country -- and what little confidence Americans have in the government and our economic recovery will be wiped away overnight.

If consumers lose confidence to this degree, a population of hermits could realistically develop across the nation. Americans will be forced to stay home in order to save money, thus spending will drop to recession-levels.

The sudden decrease in spending will also lower overal national growth as it will lead to corporations being forced once again to increase their lay-offs. This spiraling affect will push unemployment back to double-digit numbers.

End Result

If this scenario occurs, the government will not be in a position to throw money at the problem. The U.S. would be out of ammo and the only option would be to take our medicine and struggle through a deep and painful recession that will spread around the globe.

So yes, Iran is a major threat to Israel and the world. However, before the bombs begin to fly the U.S must realize the economic consequences that will occur immediately following the first explosion.

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