ON THE EDGE OF WAR OR A COLLAPSE IN OIL PRICES?

Why is the treat of war between Columbia and Venezuela, between Israel and Hezbollah, and between Iran and the US all surfacing now?

The price of gold and the price of oil suggest that conflict is ready to start. From "The Oil Drum" we find the following, "I was struck by just how fast the US has built gasoline inventories. ... The last time gasoline inventories stood at this level was in 1994."

Are gasoline supplies jumping because US demand is slowing rapidly or because the oil companies are preparing for a shut down of tanker traffic?

Bush jaw boned OPEC and won a reprieve. Normally at this time of year, OPEC cuts production as the winter heating season is over. Bush publicly lobbied for an increase in production and expressed disappointment at OPEC's decision to maintain production, but both sides got what they wanted; Bush kept production running and OPEC was able to stand up to Bush. The $4 jump in price will be short lived, unless conflict really is about to begin.

In the meantime, Iran is once again holding meetings with the USA in regard to "solving" the insurgency in Iraq. Iran is still funding terror and supplying bombs. Hezbollah is still active in Lebanon. Condi Rice is pushing Israel and Palestine officials to renew peace talks. All of these things are connected. Iran is the key to a lot of "stuff".

For two or three years, I have written that I expect significant "progress" before the 2008 elections. Nothing has happened to change my view. Bush has a deadline to meet. He will succeed or fail before he leaves office. Real success implies a "deal" well before the November elections.

Columbia has made good progress against FARC, the "terrorist of the South". Venezuela has the air power to give Columbia a difficult time. Does Venezuela dare to attack Columbia? If so, would the US respond? Oil is up $4 per barrel despite slowing demand and high inventories. Politically, Chavez and Amadenijad are weak because both nations have suffered severe economic hardship as a result of anti American policies. Will the people support armed conflict? The US would not need to invade either nation to cut back their exports. Bush has continued to add to the US SPR even after the price hit $100.

I do not believe war is about to break out. However, I believe that the US would be hurt less than Venezuela or Iran if there is a war. It is the strength of the US military that protects us from the necessity of war. The consensus view is that the US military has been stretched thin, but the reality is that the "shock and awe" used against Iraq is available from carriers in the South and in the Middle East. War is not likely because the US is prepared to wage war if necessary. The government of Columbia has the legitimate right to take on the menace of FARC and Iran has no right to sponsor Hezbollah and other terrorist organizations.