Military conflict erupts between U.S. and Iran

By Alex Mills   January 9, 2019 The recent events in Iraq – the attacks on the U.S. embassy, the death of an Iranian general by U.S., and Iran’s missile attack on an U.S. air base in Iraq – have renewed tensions in the Middle East that have been brewing for 50 years with crude oil at the center of attention. Countries in the Persian Gulf – Iran, Iraq, Saudi Arabia, Kuwait, United Arab Emirates, and others – have been large exporters of crude oil worldwide with the U.S. being the largest customer. In 1973, some of these countries decided to reduce their exports to the U.S. because of its support of Israel in its conflict with Egypt. It was the first time that the “oil weapon” was used against the U.S., and it had a dramatic impact: shortage of petroleum products, lines at gasoline stations, rapidly rising prices, inflation, declining economy, and fear of future use of the “oil weapon.” The U.S. and other countries that imported large amounts of crude oil decided to begin putting large amounts of oil in storage for use in case of another embargo. The U.S. spent billions of dollars to store 625 million barrels of oil in salt domes in Louisiana that became known as the Strategic Petroleum Reserve. There was another embargo in 1979 as Iran stormed the U.S. embassy and took 52 Americans hostages. Again shortages occurred, prices rose, and the U.S. economy declined. Politicians screamed at the oil industry, alleging it was the cause of the shortages and rising prices. Congress passed the Crude Oil Windfall Profits Act, which punished domestic oil producers not oil imported into the U.S. The law was later repealed because it collected little revenue as oil prices dropped to as low as $10 per barrel in 1986.......  
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