Political  Calculations

On Friday, 23 March 2012, President Obama stated that tension with Iran was adding $20-$30 to oil prices:

"The key thing that is driving higher gas prices is actually the world's oil markets and uncertainty about what's going on in Iran and the Middle East, and that's adding a $20 or $30 premium to oil prices," Obama said in an interview with the American Automobile Association (AAA) published Friday.

Map: Persian Gulf and Oil Transport Systems, Source: EIA

So just how much tension is the world pricing in to each barrel of oil?

One way to find out is to estimate how much the world's oil supplies might be disrupted if tensions escalate. To do that, we've re-engineered the math from one of our recent tools so that we can find out how much oil would need to be either added or removed from world production in order to change the price of a barrel of oil by the amount that President Obama, or you, might enter.

Most of the other oil-related default data in the tool applies to the most recent figures we have from the U.S. Central Intelligence Agency, which at this writing, applies to 2010, and which we'll assume is similar to today's production figures. If you have more current data, enter it (the same applies for the values of the supply and demand elasticities for oil....)

Political Calculations

Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.

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