With growing concern over Iran’s nuclear program, there is an increasing fear that a showdown between Iran and the west could lead to a significant energy crisis. Iran has even hinted at using its vast oil wealth to retaliate against the west if sanctions are imposed.

Now Guy Caruso, head of the U.S. Energy Information Administration, has warned of skyrocketing petroleum prices. According to Caruso, the world cannot afford to loose access to Iran’s petroleum reserves. The mullahs of Tehran are keenly aware of this fact and for this reason they have a clear advantage in on again, off again negotiations with the EU3.

The Iranians are negotiating from a vantage point of strength and they are aided by the fact that two of their largest benefactors, China and Russia, are adamantly opposed to sanctions or any serious threats to Iran. Once again we see the err of our ways as the US and the west in general, have failed to plan for the future.

The US lacks a reliable alternative to petroleum and as a result, every tin pan dictator with more than a few barrels of crude to their credit can dictate to us the new world order or shift the global balance of power. Witness Hugo Chavez in Latin America. Until we embrace alternatives and provide incentives for businesses to innovate in this sector, the US will continue to find itself in such a position.
Link to Reuters article