It now seems inevitable the US will go to war with Iraq. The only question remaining seems to be the date for the first assault and how many other nations are going to line-up alongside it. While keeping in mind the terrible human cost of the conflict, we may also cast an eye over the financial and economic consequences of a conflict in the main oil-producing region of the world.
So what will any potential conflict mean to pump prices for the motorist? What if Iraq attacked Saudi Arabia, or Kuwaiti installations? Then, according to former Saudi minister Sheikh Yamani, crude could end up costing $100 a barrel.
According to Dr Marcel Cohen of the Imperial College Management School in London, crude oil prices are now around $30 a barrel and already contain a part of what is being termed the war premium, assumed to be in the realm of $5.
Peter Regnier of OPAL, the oil price assessments consultants, says it is hard to make a direct comparison between crude oil prices and adjustment in pump prices, particularly in Ireland where nearly 70 per cent of the final pump price is driven by taxes. Thus even a 50 per cent increase in crude prices will only increase prices by several cents for the motorist.
In the short term the Government may reduce taxes to soak up some of the rise and reduce the effects on inflation. In the longer term it may force planners to continue to look for ways to be more economic with the way we use this natural resource.
