$20 Gas

Whether it be $5, $10, $15 or $20 gasoline, heavily inflated prices are a certainty in a fiat economy. Although alarming, these prices are sustainable so long as incomes are inflated relatively higher as well. The most likely scenario for a rapid increase, however, would be escalated violence in Iran impacting not only their oil production but the shipping done through the straight of Hormuz where more than 1/3 of the world's oil supply passes through each day.

The recent history of sabre rattling is summed up briefly below on Wikipedia:

In 2008 the commander of Iran's Revolutionary Guard, Ali Mohammed Jafari, stated that if Iran were attacked by Israel or the United States, it would seal off the Strait of Hormuz, thereby wreaking havoc in oil markets. This statement followed other more ambiguous threats from Iran's oil minister and other government officials that a Western attack on Iran would result in oil supply turmoil.

In response, Vice Admiral Kevin Cosgriff, commander of the U.S. 5th Fleet stationed in Bahrain across the Persian Gulf from Iran, warned that such an action by Iran would be considered an act of war, and that the U.S. would not allow Iran to effectively hold hostage nearly a third of the world's oil supply.

On July 8, 2008, Ali Shirazi, a mid-level clerical aide to Iran's Supreme Leader Ayatollah Ali Khamenei, was quoted by the student news agency ISNA as saying to Revolutionary Guards, "The Zionist regime is pressuring White House officials to attack Iran. If they commit such a stupidity, Tel Aviv and U.S. shipping in the Persian Gulf will be Iran's first targets and they will be burned."

In mid 2008 an International Security article contended that Iran could seal off or impede traffic in the Strait for a month, and a U.S. attempt to reopen it would likely escalate the conflict.

$5-$10 oil will cripple the US Economy and its consumers. $15-$20 oil will force desperation to avoid total collapse at all costs.

Vulnerable industries like airlines, autos, shipping and retail would never recover.

This is all particularly alarming as the tension continues to mount between Israel and Iran.

Other routes to $20 described below.

Priming the Pump for $20/Gal. Gas: Interview with Chris Steiner
By Lara Crigger - Seeking Alpha

As you're filling up your tank this weekend, it'll be hard not to think about the cost. Back when gas was $4/gallon, many of us made seemingly radical changes to our lifestyle, cutting back how much we went out to eat, riding the subway more, even moving closer to work.

But $4 gas was only the tip of the iceberg, says Chris Steiner, author of the new book "$20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better" (Hachette Book Group, June 2009). According to Steiner, a staff writer at Forbes magazine, gas prices could top $20 per gallon soon - dramatically changing every aspect of life as we know it.

Recently, HAI's associate editor Lara Crigger sat down with Steiner to discuss why the Chinese will drive up gas prices, what's behind the death (and rebirth) of globalization, and why Wal-Mart is doomed to extinction.

Lara Crigger, associate editor, HardAssetsInvestor.com (Crigger): So tell us a little about "$20 Per Gallon."

Chris Steiner, author, "$20 Per Gallon" (Steiner): Simply put, the book is a thought experiment on what life would be like at higher gas prices. The chapters of the book are arranged by increasingly higher prices - Chapter $4, Chapter $6 and so on, up to Chapter $20 - and they address changes that happen at each level. Some changes happen gradually; it's not like you hit $12/gallon and boom, the suburbs disappear. But I pick critical inflection points for each event and describe what the future would be like as the price of oil marches up.

Read More Here: http://seekingalpha.com/article/148167-priming-the-pump-for-20-gal-gas-interview-with-chris-steiner