Friday, January 27, 2012

Blog 2: Iran: EU oil sanctions 'unfair' and 'doomed to fail'

This article is further looking at the oil/nuclear issues that face many aspects of our life today. This oil ban which was agreed by the European Union will be phased in over a period of months to try to reduce the impact on some of the weaker European economies. This is the most significant toughening of sanctions to date. Iran has continued to push for nuclear testing for "energy purposes", this is a big, huge red flag that indicates future war. According to the article, Obama has welcomed the EU sanctions, saying they show international unity against the "serious threat" posed by Iran's nuclear program. Iran sells most of its oil to countries in Asia; the top three countries are China, Japan and India. Therefore, the EU and the United States are working to persuade Asian countries to reduce their purchases from Iran as well. But Iran has already blocked the Strait of Hormuz, where about 20% of the world's oil exports pass (see image below for more details). What is the economic outcome of these events? The oil prices have risen (already) because of the increased tension and the expected impact of an EU ban on oil supplies to Europe.

I think that there will definitely be some sort of "war", maybe a World War Three because of this issue. Because the economies of the EU countries are the weakest in Europe, the rising price of oil would benefit Iran's exports elsewhere. Currently about 20% of Iran's oil exports go to Europe. So, the stress is on the Asian countries. Since we have already reached our peak oil, we can only expect our prices to rise higher unless we find another substitute for oil; the most environmental friendly way to do this is to reduce our consumption of oil. To do this, we would globally have to depend on public transportation instead of cars. This itself would reduce our consumption significantly. Since these actions depend on groups of people and society as a whole, affects everyone on this planet, and has a solution, this is a social problem.



Map


http://www.bbc.co.uk/news/world-europe-16693484


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