Tip of the Iceberg
Why Iran and Nigeria will push oil prices to record highs.

We currently have very little excess capacity in oil production. There is very little margin of error between supply and demand and any disruptions would no doubt cause a dramatic rise in oil prices. We all woke up to news headlines surrounding Iran and Nigeria. At this point it may be worthwhile to also review the U.S. government Oil Shockwave Simulation findings. This simulation determined that, " a roughly 4 percent global shortfall in daily supply results in a 177 percent increase in the price of oil (from $58 to $161 per barrel.)"

Current estimates are that Iran alone pumps nearly 3.9 million barrels per day or 5% of the worlds daily production.

The transportation sector within the U.S. would suffer the most as a result of any kind of oil disruptions. The airline industry would be among the hardest hit especially since it has had very little pricing power due to excess capacity. I predict that current events surrounding Iran and Nigeria will push some legacy aircarriers into liquidation over the next 2 years. United and U.S Airways would be the first to be liquidated. Delta, Northwest, American and Continental would not be far behind. Eventually such an oil crisis would require the federal government to reregulate the airline industry. In other words, the government would have to subsidize the remaining airlines for purposes of national security and the economic requirements of air travel. The issues in transportation would only be one of countless problems for the United States.

The geopolitical problems would be the tip of the iceberg. Below the waterline would be the inescapable hidden supply and demand issues that virtually all politicians and people fail to recognize. Most people today feel strongly that today's high oil prices are a result of Wallstreet, Washington, the big oil companies, or any combination thereof.