Oil prices have regained over half their losses since the 2014 crash. OPEC production cuts led by Saudi Arabia have cut into storage levels and better economic conditions have raised demand for crude oil. To further bolster prices the Saudi oil minister Khalid al-Falih told Reuters, “We still have some time to go before we bring inventories down to the level we consider normal.” OPEC has reiterated the Saudi claims that Organization for Economic Co-operation and Development (OECD) countries oil inventories are only 44-million barrels above the five-year average, which means oil markets are nearing “re-balancing,” at a rapid pace.
But President Trump’s cabinet reshuffling could have a major impact on oil prices rising higher, leading to an increase in gasoline prices for California drivers. Trump choosing “hawkish,” John Bolton to replace H.R. McMaster as National Security Advisor reveals a shift in foreign policy that could dramatically raise the odds for a major conflict with Iran affecting the entire California transportation sector.
However, Iran’s actions since the 2015 nuclear deal will likely have the greatest impact on California energy prices and economic health in the near future more than Trump shaking up his foreign policy team. The former administration’s nuclear agreement hasn’t stopped the Iranian regime from continuing to make aggressive moves that violate the spirit of the agreement and taking advantage of concessions that has Ayatollah Khamenei more dangerous than ever.
Saudi-Iran tension has risen further when a recent intercepted missile over Saudi airspace caused a Saudi spokesperson to say, “We reserve the right to respond against Iran at the right time and right place.” Also, in late March the US Justice Department charged:
“Nine Iranians and an Iranian company for attempting to hack into hundreds of universities worldwide, dozens of companies, and parts of the U.S. government, on behalf of Tehran’s government.” The Justice Department described the attacks, “as one of the largest state-sponsored hacks ever prosecuted.”
With California having the leading universities in the world, more than likely, California universities were penetrated. Even more concerning is how Iran continues supporting President Assad’s government in Syria according to Foreign Affairs. After the nuclear deal economic integration was supposed to be the norm; instead an Iranian airline under US sanctions violated the agreement by, “ferrying weapons and fighters into Syria repeatedly and illegally bought U.S.-made jet engines and parts through Turkish front companies.”
Israel and the U.S. are also attempting to come up with a proportional response to Iran’s recent threats against Israel, Tel Aviv and Prime Minister Netanyahu along with how to cogently deal with Iran’s lethal, ballistic missile program. Unfortunately for California’s large Jewish population, Iran is still, “the epicenter of genocidal, Jew-hatred.”
A Politico report in late 2017 detailed how cutting off Iranian sanctions allowed millions of dollars to flow towards Iran-backed militias fighting for Assad in Syria. Even worse, according to The Washington Times, the U.S. government discovered billions in post-sanction relief money ended up:
“With Hezbollah, and the Quds Force (Iran’s special forces), which has an extensive history of state-sponsored terrorism, and Houthi rebels in Yemen fighting the Saudi monarchy and government.”
Energy though is where California officials should have some of their greatest concerns. The US, Britain, France and Germany are currently working to amend the Iran deal over worries that Iranian recalcitrant actions will drive up oil prices. What also doesn’t bode well for energy prices is Iran’s “elaborate oil sanction-skirting scheme,” which doesn’t alleviate concerns that Iran is using their oil and natural gas reserves as a weapon the way Russia weaponized, state-run, oil company Rosneft. Bloomberg did an extensive story on Iran skirting oil sanctions here. Since California is rapidly moving towards unreliable renewable energy, Iran has incentives to punish America and California by using their abundant energy resources as a military, foreign policy and terrorism tool to achieve their geopolitical goals.
Returning to Hezbollah, Iran and Israel – Hezbollah Secretary General, Hassan Nasrallah in a televised address in February – warned Israel about its claim to a oil and gas field off the southern coast of Lebanon called Block 9. Nasrallah said, “Hezbollah could disable Israel’s offshore oil installations within hours.”
With oil and natural gas still the backbone of California’s economy this type of inflammatory rhetoric has caused Israel to warn Lebanon, Iran, Hezbollah and international oil and gas companies from participating in any tenders that doesn’t recognize Israel’s maritime rights and territorial waters. Hezbollah activists in Lebanon are now fanning the flames over these disputed oil and gas sites that could cause another war to break out between Hezbollah and Israel. This would spike oil and gas prices to levels not seen since 2014 when $100 a barrel oil was the norm. This would have enormous impacts on California’s ability to create jobs, sustain a clean energy economy and continue addressing affordable housing issues through higher taxes.
What we know is that the battlefields of Syria, Iraq, Yemen, parts of Saudi Arabia, and Hezbollah’s influence in the global drug trade and illicit weaponry sales, Iran is the central figure. What California policymakers and voters who overwhelmingly support dismantling traditional energy resources for electrical vehicles, wind, solar and other forms of speculative renewables should realize is that Iran can cause chaos at a moment’s notice; splitting the American and California economy into pieces.
Iran could be welcomed into the world community and flourish immediately with its young, literate and highly educated population. By choosing authoritarian rule cloaked in religion this makes for a volatile mix, but California elected officials, and appointed commissions like the Coastal Commission and California Air Resources Board could mitigate dangerous Iranian actions by increasing fossil fuel energy production while pursuing renewable energy policies that are sensible and realistic.