Bellevue gas prices respond to Iranian sanctions

Gas prices a burden for BC Students. Photo courtesy of Reuters.

Since Memorial Day of 2010, gas prices in Washington State have risen by 95 cents in the Seattle metro area—and this does not take into consideration the summer, fall and winter of 2011. Gasoline prices are a major issue here, especially for students at BC.

“High gas prices are hurting our economy and impacting Washington families and businesses…Congress may need to take action to hold them accountable,” said Senator Maria Cantwell (D-WA), who has continually worked to prevent gas prices from rising, even appealing to Congress to step in.

On Dec. 1, 2011, Congress passed a bill that will impose economic sanctions on Iran. Unfortunately, this bill may actually backfire, increasing oil prices instead of decreasing them. And it’s no small fee, either. The worse possible scenario could result in an additional $1.25 per gallon. With gas prices already soaring, another dollar would have a painful effect on students who drive to BC every day.

“This bill will definitely affect students who live further away from Bellevue. Although I am not a student who is facing the issue of transportation and gas (since I take the bus and I live in Bellevue), I know students who live as far [away] as Renton, Kent, or North Bend. They have enough trouble trying to carpool and/or take multiple bus trips to commute to Bellevue College,” said Megan Phan, the Environmental and Social Responsibility Representative for the ASG.

“Although we [the ASG] are not directly helping students save money, we are hoping to educate students about all their commuting options. I want to emphasize that often times, to save money in the long run means spending more money or time through effective planning now.”

Iran has the world’s fourth largest proven oil reserves, as well as the world’s second largest natural gas reserves. Iran is also the third largest crude oil exporter in the world. Currently crude oil costs about one hundred dollars a barrel, but without Iran’s exports, prices could shoot as high as $150.

The White House, opposing Congress, objects to this bill. Several administration officials believe that the sanctions on Iran would do more harm than good, saying that it would only increase gas prices here in the U.S. and have no effect upon Iran’s nuclear projects. Treasury Secretary Timothy Geithner agreed, saying that “it threatens to undermine the effective, carefully phased and sustainable approach” that the White House recommends.

Others, like the senators who passed the bill, say that we must stop every kind of trade with Iran if we are to prevent terrorism. Many senators believe that purchasing oil from Iran may also indirectly aid Iran’s nuclear weapons program and terrorists.

“The United States cannot accept an Iran with nuclear weapons,” said Senator Mark Kirk (R-IL), who helped author the bill. “As the world’s leading state sponsor of terrorism, it’s quite likely that the Iranian regime would transfer nuclear weapons to terrorist organizations like Hezbollah and Hamas… The time has come to impose crippling sanctions on this terrorist and nuclear-financing institution.”

On the other hand, the White House is worried that skyrocketing prices could actually have the opposite effect.

“There is absolutely a risk that in fact the price of oil would go up, which would mean that Iran would in fact have more money to fuel its nuclear ambitions, not less,” said Wendy Sherman, the State Department’s undersecretary for political affairs.

There are several debates over whether Saudi Arabia would be able to make up for some of the banned oil. Saudi Arabia was able to ease the transitions during both of the Persian Gulf wars, even though its oil has been reduced since then. It may help relieve the current shift now as well.

Iran has different ideas though. The last time Iran was threatened with economic sanctions, it threatened to block any oil deliveries coming through the Strait of Hormuz. With 17 percent of the world’s oil passing through it, the Strait is essential for the oil trade. If trade was blocked from the Strait, gas prices could shoot up to as much as eight dollars a gallon

Fortunately, economists say that this is a practical impossibility. If gas prices ever reached that high, demand would drop drastically, and it could even result in a naval response from the U.S. and its allies. Moreover, the bill still needs approval from the House and the president’s signature before it becomes law. There is still time to consider all the implications before a final decision is made.

Hopefully the final result will be beneficial to BC students.