Threat of Iran War Hurting Weak U.S. Recovery
March 19, 2012
CHARLESTON, W.Va. - Concerned that Iran may be building nuclear weapons, some in Congress are pressing the U.S. to bomb Iranian nuclear facilities or help Israel do it. However, economists warn that even the threat of war is hurting economic recovery.
Economist Mark Weisbrot, co-director of the Center for Economic and Policy Research, blames the standoff in the world's most important oil-producing region for driving up the price of crude. Any conflict there would probably have a terrible impact on the frail European economies, which in turn could damage what is still weak growth in the U.S., he warns.
"We're only growing one point 1.8 percent this year. The threats against Iran, the threat of war, could easily tip the U.S. economy into recession."
Gas in West Virginia is averaging around $3.90 a gallon, seven to 10 cents above the national average.
Economists point to numerous factors behind the price of gasoline, including a bottleneck at refineries and the exporting of gas to Europe. But Weisbrot says the threat of war is the single reason crude oil has gone up $6 to $10 a barrel since the beginning of the year. And, he says, since it's a global market, drilling or building pipelines here would not make much difference.
"Any kind of oil production here or in Canada would have very little impact. What we're looking at, really, has nothing to do with whether the President wants to drill anywhere or build a pipeline."
He says the European economies are in an even more vulnerable situation than the U.S. economy, and a new crisis there could easily spread across the Atlantic.
"It could tip the U.S. economy into recession; Europe is already in recession. And Europe is more fragile, as well, because of the financial problem."
Estimates vary widely on how far Iran may be from producing nuclear weapons, and it is unclear if that is even the regime's intention. Most experts agree that Israel already has nuclear weapons, although that government refuses to confirm or deny it.