Opinion - Politics

Oil is probably the reason we won't go to war with Iran

Key Points
  • Many cynics have long contended that the real reason the U.S. entered a slew of recent wars was only to protect American oil interests.
  • But now it's beginning to look like oil may be a major reason why the U.S. isn't getting into a war with Iran.
A U.K.-flagged tanker, Stena Impero, was seized and detained by the Iranian Revolutionary Guard between July 19 and July 21, 2019 in the Strait of Hormuz.
Contributor | Getty Images News | Getty Images

Many cynics have long contended that the real reason the U.S. entered a slew of recent wars was only to protect American oil interests. But now it's beginning to look like oil may be a major reason why the U.S. isn't getting into a war with Iran.

Believing that flies in the face of a common sentiment that the need for oil costs lives, especially when discussing the first and second Persian Gulf Wars. That sentiment was helped along by the fact that President George H.W. Bush and his son President George W. Bush had both been oilmen before embarking on their political careers.

No matter how convincing the non-oil arguments for those wars coming from Washington were at the time, a significant number of voters and politicians continue to believe American lives were sacrificed to either protect or expand oil company interests in the region.

But the first Gulf War ended so quickly with what was widely considered to be a resounding U.S. victory that the first President Bush never really bore the brunt of that specific criticism.

However, it's hard to forget all those "No Blood for Oil" bumper stickers that sprouted up across the country around 2005 and 2006 when popular support for the second Gulf War began to disappear.

Those who thought that anger was only felt by liberals and Democrats were disabused of that notion during the 2016 Republican presidential primaries when Donald Trump's frequent criticism of the second war in Iraq clearly resonated with GOP voters and helped him sweep to the nomination.

Stable crude prices

But no matter how much President Trump bashed the war in Iraq as a candidate, those hoping to avoid a Persian Gulf war against Iran have something else going for them: and it's the price and supply of that same oil they blame for the previous wars.

Iran appears to be committing a different act of harassment every week in the vital oil shipping lanes in the Strait of Hormuz. But U.S. crude oil prices remain relatively tame at the $56 a barrel level.

Even the national average gasoline price is holding below the $3 level at $2.76. That $56 number is well under the all-time high of $147.30 a barrel price we hit in July of 2008. The $2.76 number is far below the $4.11 per gallon national average peak we hit at the same time 11 years ago. Of course, those lower prices are even lower when adjusted for inflation.

Prices are just half the story, because oil prices similarly did not spike to much higher levels in the periods before either war with Iraq. What did spike was the fear that the bulk of the existing supply of the oil the U.S. needed would be blocked or even destroyed by Saddam Hussein.

That's where the most dramatic, and now most potent current anti-war factor comes into play. The U.S. is now the world's number one crude oil supplier. That doesn't mean shutting off the spigot of oil from allies like Saudi Arabia would be easy, but at least now it's possible.

That means the myriad of voices from oil lobbyists, to concerned manufacturers, to worried American drivers, can remain relatively silent in the face of any rising threats to oil traffic in the Gulf. In short, it's hard to compare how much less pressure that puts President Trump to go to war right now compared to both Presidents Bush years ago. All thanks to oil.

Even if President Trump doesn't want to completely sit on the sidelines, this situation opens up the possibility of one or a series of smaller pinpointed attacks against Iran. The argument against those kinds of smaller attacks on Iraq was that Saddam Hussein could massively disrupt the global oil supply for any reason in response.

So it didn't make sense to attack him without using the massive force needed to severely handicap his regime's ability to respond. Now, the Trump team can injure Iran and not worry that every small gesture will send crude prices skyrocketing overnight.

U.S. advantage

Of course, there's one more added bonus. Iran's mischief in the Gulf is a de facto argument for more foreign countries to buy more U.S. crude and even natural gas. President Trump may not be nearly as close to the oil industry as the Bushes were, but he's certainly an ally and would certainly enjoy seeing the economic boost that would come from more demand for American energy.

That leaves global terrorism by Iran and the threats to our allies, especially Israel, as the only real reasons to confront Iran head-on at this time. But it's not even clear that Israel supports such a confrontation at this time, and the threat of increased Iranian-backed terror has been greater ever since the U.S. withdrew from the Iran nuclear deal.

Just a decade ago, it seemed like every move in the Gulf, every Saudi production change, and every pipeline disruption in Nigeria could send prices at the pump back to $4 a gallon and increase violence at any time.

Now it's undeniable, even if hard to believe, that oil is giving peace a chance.

Jake Novak is a political and economic analyst at Jake Novak News and former CNBC TV producer. You can follow him on Twitter @jakejakeny.

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