And the world gets 4mbpd from these guys

And next door to Iraq, we have this train-wreck waiting to happen:

Addressing a conference in Tehran on Wednesday, entitled "The World Without Zionism", Ahmadinejad said, "To those who doubt, to those who ask is it possible, or those who do not believe, I say accomplishment of a world without America and Israel is both possible and feasible."
To a cheering audience that at several points erupted with chants of "death to Israel, death to America, death to England", Ahmadinejad continued, "Once, his eminency Imam [Ruhollah] Khomeini - leader of the 1979 Islamic revolution], stated that the illegal regime of the Pahlavis must go, and it happened. Then he said the Soviet empire would disappear, and it happened. He also said that this evil man Saddam [Hussein] must be punished, and we see that he is under trial in his country. His eminency also said that the occupation regime of Qods [Jerusalem, or Israel] must be wiped off from the map of the world, and with the help of the Almighty, we shall soon experience a world without America and Zionism, notwithstanding those who doubt."
So, will it be the threats and sabre rattling of the American neocon cabal that elicit a response of "no oil" from Teheran? Or will it be the Iranians attempt to cripple America by turning off their valve that precipitates that oft-predicted "Iranian Option"?

I guess that I have a different perspective having lived there and elsewhere. Stuart calls Iran a "train wreck waiting to happen". I call it the Iranian people exercising their free will and responding to American threats to their sovereignty. It wasn't the Iranians who started this little squabble - we did.

True, but...

Oh, nevermind.

Knuckleheads. All of 'em.

Knuckleheads - all of us.
The current situation is like asking what killed a guy who was shot, stabbed and poisoned in a ship that was sinking.  What killed him?  Take your pick.  

It looks like the world economy is going to crash.  From what?  It just depends on what happens first.  

Me don't know.
Can't be sure of anything already - only sure that the music band will keep playng the same repertoire until the end.
I think this is a chess move in a game that's been going on for the past 30 years.

I also think the Iranians are clearly very good at playing chess.

And I fear that Kurt Vonnegut's short story "All the King's Men" bears more semblance to our reality (or at least the reality of some of us) than many woudl care or like to admit. I just pray I don't act like the bawling corporal/pawn.
Just remember what CIA did to Iranian premier Mosadeq and their oil minister, Dr. Fatmi because they wanted more control over their oil and what the Shah did to the Iranian people for the next 25 years. That should shed some light on why they are angry at us. Angry people say outrageous things, particularly if they are weak, things they wish they could do, but have no power to do.  
I believe that it was Simon Weisenthal who, when asked what was the most important lesson he learned from the Holocaust, replied, "When someone says they plan to kill you, believe them."

I don't see this as an empty threat. But what can we do about it? It seems we're at the limit of our abilities in Iraq.

I read that some folks in the defense department are saying, "The war in Iraq is over, and Iran won."

Well said, George. What can we do about it indeed. I think that anyone who says that they have a solution to the problems in the middle east is fooling his/herself. There are NO SIMPLE SOLUTIONS!! Only hard work, co-operative work, humanitarian work etc. will bring the slighest glimpses of peace. Mr. Bush and his simplistic ideology have taken us up the proverbial waterway with no means of foward progression(oil-powered or otherwise.

Iran is looming dark on our horizon. My fear is that our gov't will be hell bent on a nuclear option for Iran without the availability of troop numbers. We're spread very thin. Hold on tight, this rides gonna be bumpy.

After reading about the decayed oil infrastructure in Iraq (or Irak to those in Turkey) the following questions came to mind: Do the Gulf countries have any steel mills? Can they manufacture any pipes? Do they have any heavy duty truck factories? Can they manufacture pumps, valves, or the associated electronics? I've heard that not a single citizen of any of those countries knows how to manufacture light bulbs. They have spent the last 30-50 years handing out doctorates in Islamic Studies which make up 75% of all Phds in Saudiland. We have the resources to manufacture our (meaning the industrialized nations) way out of the need for petroleum. They don't.
Exactly.  The USA uses about 40 quads of petroleum products every year, 43% as gasoline and another 21.6% as distillate fuel oil (total 64.7%).  That's roughly equal to our imports.  We have the potential to transfer this to other sources of energy and even skim much of it off other processes via cogeneration.  If we did that, the value of oil would fall.  The cheaper and more efficient our alternatives, the less oil would be worth and the more the price would fall.

The entire Middle East would be a desert again if oil fell to $15/barrel.  The indigenes can't eat it, wear it or build houses out of it, they can only exchange it for things.  If the world decided that oil was more trouble than it was worth, it would be worse than a return to camels; the population in e.g. Saudi Arabia has grown so far beyond sustainability that there would have to be a large exodus or people would starve.

It wouldn't be nice, but it would certainly change their attitude.

Wait, what? Because our economy is extremely oil-dependent, we'll be able to take the upper hand in this conflict? That's a new one on me.

Remind me again how we're going to get oil down to $15 a barrel?

Because our economy is extremely oil-dependent, we'll be able to take the upper hand in this conflict?
That's not exactly what I said, and a long way from what I meant.  On the other hand, the low efficiency of use of petroleum in cars and light trucks (less so in large trucks) leaves a lot of low-hanging fruit.
Remind me again how we're going to get oil down to $15 a barrel?
We may not be able to, because other consumers would keep it bid above that price even if our consumption fell to zero.  But a serious decline in oil demand caused by greater efficiency and substitution of other energy sources would limit the price it could command while simultaneously limiting the amount that it was economical to pump.  The damage to the income of the oil dictatorships would be devastating.
Efficiency doesn't lead to less consumption. Jevon's Paradox.

And $15 a barrel is insane. I suspect we'll see $15 a gallon before that ever happens...

Mmm. If the alternatives were competitive with oil at $15/bbl, we'd be doing them already.
They might not be now, but the cost of wind, solar and batteries are coming down rapidly.  The cost of oil isn't going to go down very fast even if the expensive oil gets left in the ground.

As for how competitive alternatives are, wind power is currently about 4.5¢/kWh.  If gasoline is 126,000 BTU/gallon and car engines are 20% efficient, each gallon yields about 7.4 kWh at the crankshaft; the equivalent cost of wind power is about 33¢/gallon.  That's a smidge more than the cost of raw crude at $15/bbl, and you're not going to see pollution or carbon taxes on wind.  And wind power is getting cheaper as turbines get better.

All the cost of the alternatives is in the details:  batteries, transmission, DSM, charging connections we don't have yet.  This stuff isn't together yet; we don't have the economies of scale.  But they'll build with time, if we have enough time.

The usual objection is that to get wind power you must invest a lot of oil, coal, gas and other non-renewables and so will be with the newly needed infrastructure you talked about (which would be the bigger problem I guess). It might turn out that wind power is 4.5c now because the wind turbines were built when oil was 10$ per barrel (and in addition I know that in Germany it is being heavily subsidized).

Do you have reliable estimates about wind power EROEI?

Do you have reliable estimates about wind power EROEI?
On the order of 40:1 to 80:1.  At least some of those estimates are for 1.5 MW turbines; there is now a 5 megawatt turbine in testing in Germany, and some speculate that we won't hit the optimum size until we get to 10 MW.  Each increment in size puts the turbine higher and into stronger, steadier winds; this makes each square meter of disc more productive.

If wind power was an organism that multiplied using the energy it captures, it would double itself itself between 2-4 times per year.  If the average was 2.5 times per year, we would go from 14.2 billion kWh/year in 2004 to 454 billion kWh in 2006 and have all US electric demand met by wind power sometime in early 2008.

US electric demand averages about 450 GW; there is about 1.2 terawatts (2.67 times as much) of potential wind power in the continental US.

For the sake of discussion - we will also need something to level the power up like hydrogen electrolysis/fuel cell facilities or (preferably for me) enormous flyweight systems. Consider the capital cost of building the wind farms plus building the electrical highway system plus the energy storage system and we get to why we don't do that (and unfortunately probably will not until we've burnt almost all fossil).
Mind that even in Germany now they are reevaluating nuclear because renewables are just not possible to scale up that fast.
Wind power works best with good DSM, which means loads which can be adjusted in real time.  Here's a short list off the top of my head:
  • Electric water heaters.
  • Chargers for GO-HEV or electric cars.
  • Ice-storage air conditioners.
  • Zinc regeneration (by electrolysis) for zinc-air fuel cells.
That sound more complex than neccessary and I'm not even sure it would work. There would have to be a central system that controls both the production and the loads and makes sure they match. And it also leaves open the question what happens if the automous loads exceed the current production plus the potential stored power.

Another question - is 1.2 TW the net capacity or the installed capacity of the wind power potential in US? Wind turbines typically utilise on average 15-20% of their installed power.

There would have to be a central system that controls both the production and the loads and makes sure they match.
There's already a central system which controls production (has to be); adjusting loads instead of generation would be even faster, and probably have a much lower cost.  Check the white papers at for some results of experiments on this.
And it also leaves open the question what happens if the automous loads exceed the current production plus the potential stored power.
I have no idea what that's supposed to mean.
is 1.2 TW the net capacity or the installed capacity of the wind power potential in US?
Or that.  1.2 TW is the potential (average) capacity; typical capacity factor for a wind turbine in a good area is about 0.3, so peak would be about 4 TW if it was all cranking at once (very unlikely).
"And it also leaves open the question what happens if the autonomous loads exceed the current production plus the potential stored power."

Meaning you can not control all the loads everywhere - e.g. you can not start/stop factories, hospitals, schools etc. on request. Imagine a hot sunny week during summer, most of US area is within an anticyclone (low winds) - how long will it hold? From what I've read even Denmark now is realizing the necessity to include the wind power generation within a larger grid.

Meaning you can not control all the loads everywhere - e.g. you can not start/stop factories, hospitals, schools etc. on request.
When did you ever need to?  (A great many loads inside factories, schools and hospitals can be modulated, or modified to provide the desired service while throttling power demand per the needs of the utility; the facility reaps benefits as a better price on power).
Imagine a hot sunny week during summer, most of US area is within an anticyclone (low winds) - how long will it hold?
Now imagine every house sitting on ten or more tons of ice in an insulated tank, frozen when wind power was available.  A/C power demand can be trimmed down to fans and pumps without affecting climate control.  The equipment is paid for by buying power when the wind is blowing strong and it's cheap.
From what I've read even Denmark now is realizing the necessity to include the wind power generation within a larger grid.
That's so obvious it goes without saying.  It still doesn't explain why people would ignore great, big, juicy opportunities for cost-savings via DSM.
"I've heard that not a single citizen of any of those countries knows how to manufacture light bulbs."

That source would need to be checked. Iran now has its first self-bult satellite in space. If they can build medium-range ballistic missiles, their own fighter jets (which are although decades-old technology), guided weapons, and supposedly nuclear weapons I guess they will be able to build a light bulb - or take care of oil infrastructure at 1970s level which is what they are mostly still using. Iran also manufactures cars (and will start building for Mercedes soon).
The notion that all people in Gulf Countries only do "Islamic Studies" is quaint but untrue, Iran  has focused heavily on engineering and that is precisely one of the reasons why they are seen as "dangerous".

That's right. Iran is an industrializing country. It is the only ME country that has some coal, too. They have an ambitious 5 year development plan. They really need the nuclear power - they don't like to produce electricity with oil - neither does the US.

Iraq was fairly industrialized before the war and the Baath government policy was to use more of the oil as a raw material for petrochemical industry, use natural gas for making fertilizers etc. Even Saudi-Arabia has far-reaching plans to make the country a petrochemical hub. Nobody really wants to be only a crude exporter. But this may be a problem for those who only want to by unrefined crude.

Industrializing means increasing the domestic fuel consumption so less will be left for exports. Think about Nigeria: the population is over 100 million and they should use all of their oil themselves. The population of OPEC is about 550 million. If they used as much oil per capita as the US they would use all they produce...  

Well yes, increasing consumption in industrializing producer countries is definitely a factor. not so long ago China and Indonesia did not need to import oil. Iran is already consuming something like 1.5 mbpd of 4+mbpd and has enjoyed robust economic growth around 4-5% for some time. If Iranian oil production does not increase vastly this meanstheir own consumption is going to cut ever more rapidly into the export fraction.
Unless of course, some event should occur that removes the industry in Iran, but keeps the oil production (which is mostly sitting in Khuzestan, right next to iraq, and a site of some ethnic unrest) intact.
Like a bombing campaign against Iranian infrastructure that is alleged to be used for WMD development, then extending to all infrastructure that keeps the regime afloat,  and  accompanied by a seizure of Khuzestan province by foreign forces. Not that anyone could be planning such a heinous crime...
You are right to the point, Plastic. That's why the Iranians need nuclear power. They need to have some crude left to export to earn currency and they need economic development. The US itself is an example of a country shifting from exporting oil to importing it.
"They really need the nuclear power - they don't like to produce electricity with oil - neither does the US."

I thought that Iran also possessed huge natural gas reserves.

Would it not make sense to utilize as much natural gas as possible for domestic use (i.e. electricity generation and manufacturing) before even considering the nuclear option?

I understand that a similar program is occuring within Saudi Arabia, to replace as much domestic oil consumption with natural gas to maximize export earnings.

Also, wouldn't the development of nuclear power be far more costly and can only produce electricity, whereas natural gas  is far more useful in the way it can be utilized?

The most effective use of NG is for heating.
If I can propose to let a different view - if I am producer of oil and NG and see that BOTH of them will be scarce (and very profitable along the way) in the near future, I would also consider every alternative, and the best one available is nuclear. I think that it is cinism that the only country that has used nuclear weapons ever accuses much weaker countries without any proof.
When it comes to nuclear weapons, it doesn't really matter which part is the weak one. I'd trust the Iranian government as far as I could throw it.
This type of thinking reminds me of the good ol' days when everyone in my country lost sleep because of the "American threat" and how USA supposedly intended to use nuclear weapons against us. Now you could laugh at it but it was quite real.

The truth about nuclear weapons is that if any country is crazy enough to decide to use them it could as well blow up a dirty radioactive bomb on its territory and just wait for the whole world to become depopulated.

Iran has recently made agreements to develop its natural gas resources for exports to China, India and elsewhere. Europe and the US are also very interested.

And check EIA: "Currently, natural gas accounts for nearly half of Iran's total energy consumption, and the government plans billions of dollars worth of further investment in coming years to increase this share." Yes, they are using NG.

Iranian oil production cannot increase significantly in the future and domestic oil consumption is growing. They need NG for maintaining exports income in the longer run. That is why nuclear energy is important.

I'd like to note here that developing countries like Iran, China, India are the first that jump on the nuclear train and the first who will benefit from it in the energy scarce future.

We have become so short-sighted and conservative during our years of prosperity and this will cost us a lot - including the world dominance.

A quote form Wikipedia:
By 2050, China plans to deploy as much as 300 gigawatts of reactors. If PBMRs are successful, there may be a substantial number of reactors deployed. This may be the largest planned nuclear power deployment in history.

By 2050 there will be no oil neither NG even according to the most optimistic projections. Some people are capable of looking ahead.

I wonder if the people of Iraq know as little about us as we know about them? They probably believe we still live in log cabins and fight red indians while ambushing the redcoats.
No, the Iraqis are fed with the American TV. Many university professors have had advanced studies in Europe, usually in Britain. Iraq was not a closed society before the war. It was not a socialist country like Soviet Union or something.
Iran is pissing the U.S. off in so many ways. The MSM continues to report on the "news-worthy"/scary stories such as nuclear nightmares and uranium enrichment. Now we have a face neatly placed on this enemy by way of a LOUD threat against the U.S/Israel/

Not so broadly covered is the coming Iranian oil bourse, its valuation of crude in euros and a big "up yours" to the greedy, overconsumptive american public.

If anyone can give good reason why the neocon army isn't planning a sandy vacation in sunny Iran, I'd love to hear it. I'd like to call this mission "Operation Supply Destruction"
G.W. is already rehearsing the war speech, he just can't seem to get past that dang word "nuc-u-ler"

I think direct war with Iran would be a suicide.

Both sides know it and just play this macho game to get support for covert actions against each other. Cold War on a smaller scale.

Actually, the New York Times buried this story in the middle of the paper and didn't include the threats against America, only those against Israel. I got the quotes from an Asia Times piece. Not sure why the NYT is so anxious to bury what is very little short of an open declaration of war by the elected leader of another country.
I just don't see this as being anywhere close to "an open declaration of war". Well, at least no more close than "Having said that, all options are on the table."

To me, it seemed more of a statement about the shaky foundation upon which the US sits and a prediction that that foundation would soon begin to crumble.  He might have a point (especially when the Iranian oil bourse is taken into account).

Ignore the rhetoric on both sides and focus on the deeds.

Well, he says rather clearly that his goal is to have us not exist as a nation. Now, granted, we've given Iranians ample reason to be pissed at us over the years. And I'm not saying he's proposing anything different than the US did in illegally invading Iraq for the sake of "regime change". But, just as US statements to Iraq should have been taken seriously, I think his statements should be taken seriously. He may or may not have the means to hurt us significantly, but in my mind this establishes intent pretty clearly.
"He may or may not have the means to hurt us significantly, "

how well are american refineries protected?

Iran has become increasingly bold on a number of fronts recently. I think the cozy relationship they're building with China might account for their willingness to thumb their noses at America and Europe so publicly. The stage seems to be set for a new cold war with new vassal states, protectorates and proxy wars.
Don't forget Russia.  Russia, after all, is providing them with the nuclear power plant technology they desire.  A Russian-Chinese-Iranian trilliteriate scares the crap out of me, as it's all the people that have the biggest reasons to hate us.

We beat the Russians.
Our existence as superpower undermines Chinese ethnocentrism.
We're the religious enemy of Iran.

Fun, huh?

Of course, Russia is weak now, but they still have manufacturing brawn (something we lack).  And China may not want to risk having their entire economy collapse underneath them by fighting us.  Then again, maybe they've been hiding secret machines in all their factories for years now which will let them convert over to wartime manufacturing in a heartbeat.  Won't that be great?

We beat the Russians.
Our existence as superpower undermines Chinese ethnocentrism.
We're the religious enemy of Iran.

Fun, huh?

Why do people always have to focus on really unimportant things when a simple word resumes everything:


It's as simple as that. Energy and world currency wars. The world just doesn't accept anymore that the USA has the power to export it's insane debt to the rest of the world and effectively tax it. Russia (Putin) and China have started to make moves to topple the Petrodollar system. Iran is a good pawn.

Now stop talking about religion, ethnocentrism and resent. Worlds are never fought because of those reasons. "It's about the economy stupid". (no offense intended)

Of course I meant "Wars are never fought for those reasons"
I suggest you read The Transformation of War by Martin Van Creveld. It's extremely eye-opening.
That's bull.  Of course wars are fought for those reasons.  Wars are always fought for stupid reasons.  Yes, the underlying economy is an important factor too.  One only has to look at the Roman Empire to see an economy that was dependent on conquest, and eventually broke it's own back.  

But to say that these differences have nothing to do with war is foolish.  If that were the case, Western Europe, who we exploit just as much, would be rising up against us (and don't mention the EU.  Yes, they're getting big and powerful, but don't think for a minute that if world war were to break out again we wouldn't become chums.  There's too much history there to sever.)  Things like resentment, ethnocentrism, fanaticism, and, in the US, fear of terrorism are the popular forces that drive wars.  So even if the underlying motive is economic, the wars do not happen without a popular message, and the messages coming out of Iran are what scares me the most, not their economic competition with us.

wars are (and have always been) fought for monetary and power purposes.  money and power are synergistic:  one helps prop up the other.  

all other reasons: religion, racism, political animosity, etc. are merely window-dressing for the ignorant populace.  these sentiments are fostered to make war and genocide more digestible to the morons of society.  the ones who decide when and where we go to war rarely are so deluded (even if they are occasionally racist/fanatical).  

indeed, the love of money is the root of all evil.  or at least 99% of all evil.  

watch The Money Masters to see how international banking cartels have fueled wars in the last 300 years.

The corporation is a modern invention (last 100 or so years) to further promote this.  

why do you think Genghis Khan, Alexander, and all the rest of the monarchies and tyrants decided to fight wars?  were the Crusades about fighting heretics and infidels?  it was always about amassing money and power.  nothing has fundamentally changed.  

"The essential act of war is destruction, not necessarily of human lives, but of the products of human labour. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent. Even when weapons of war are not actually destroyed, their manufacture is still a convenient way of expending labour power without producing anything that can be consumed".

George Orwell, 1984

Your examples of Iranian technological prowess is weakened by the facts that they are buying Russian nuclear expertise and German auto expertise. As for sattelites how much Russian talent that was available at bargain basement prices did they buy?
First, this is a comment to all Americans: Your press is weak, censored and manipulated by the 5 major conglomerates and the government. Your perception of increased Iran hostility comes from the fact that the Bush administration wants you to perceive increased hostility from Iran and support future military action. Why you ask? Petrodollar warfare. If you do not already know what this means, find out, it has become the main theme of U.S. foreign policy. Finally, a note about Iran. Recent estimates have placed Iran 20 years away from successful completion of a nuclear program (remember those WMD's Bush was so certain existed). Also, my chemistry book describes the process used to enrich Uranium. It is naive to think that in the information age such knowledge can be withheld from a group desiring it. Finally, under the Bush doctrine, Iran has more than ample cause for a 'preemptive strike' on America.
Ultimately, I agree with the point that dangerous things should be kept away from dangerous people. However, I feel the American people are being manipulated. The lack of truth only serves to further compound a complex situation. Currently it is not clear what should be done. Though it would be nice to know which the American public prefers: economic collapse or nuclear war.
Yeah, I kind of thought this was Bush admin PR stunts till these stories last night and today. So here's Al Jazeera, that well known tool of the American corporatocracy, on Ahmadinejad's remarks:

Iranian President Mahmoud Ahmadinejad has openly called for Israel to be wiped off the map.

"The establishment of the Zionist regime was a move by the world oppressor against the Islamic world," the president told a conference in Tehran on Wednesday, entitled The World without Zionism.

"The skirmishes in the occupied land are part of a war of destiny. The outcome of hundreds of years of war will be defined in Palestinian land," he said.

"As the Imam said, Israel must be wiped off the map," said Ahmadinejad, referring to Iran's revolutionary leader Ayat Allah Khomeini.

Addressing about 4000 students gathered in an Interior Ministry conference hall, Ahmadinejad also called for Palestinian unity, resistance and a point "where the annihilation of the Zionist regime will come".

"The Islamic umma (community) will not allow its historic enemy to live in its heartland," he said in the fiery speech that centred on a "historic war between the oppressor and the world of Islam".

The term "oppressor" is used by the clerical government to refer to the United States.

"We should not settle for a piece of land," he said of Israel's pullout from the Gaza Strip.

"Anyone who signs a treaty which recognises the entity of Israel means he has signed the surrender of the Muslim world," Ahmadinejad said.

"Any leaders in the Islamic umma who recognise Israel face the wrath of their own people."

I don't see how he could say it much more clearly than that. I think we know where the man stands now.

The Israeli part of Ahmadinejad speech is just standard rethoric. The Israeli-Palistinian conflict is very profitable for everyone (but not for ordinary Palestinians, and may be for ordinary Israelis, but nobody asks them) and nobody wouldn't do anything to resolve it, in any way.

The American part is more interesting. But consider the fact that Tehran is the most important ally of the US in Iraq at the moment. Tehran has kept Southern Iraq quiet and prevented the total collapse of the American forces. But of course Iran is just after the Southern oilfields. Now the question is, does Tehran see a possibility of a deal with Americans or not. The Iranians know what they want, and have shown that they are ready to cooperate with the US. Can they trust that the Americans are ready to continue that cooperation? Can the Americans accept the fact that Iran is winning the Iraq-US war?

If the Iranians are sure that the Americans will attack them in any case, they will not wait to be attacked but will take the initiative. They are already moving fast. The Iranian backed political forces are not interested in sitting in the Green zone. Governing in Basra an Iranian-friendly Southern Iraqi state is much better. They have already their own armed forces in place. Iran fought eight long years for these areas and oilfields and they are ready fight for them now. If necessary they are ready to show Americans some effective Chinese and Russian anti-tank weapons and cut the logistics routes from the Persian Gulf ports.

The US threatens Iran with air strikes, and may be with nuclear weapons. Iran threatens the US with a havoc in Southern Iraq. If any one of them thinks that the conflict is unavoidable he will seize the initiative. Iran can afford an oil shock - can the US?

Well, of course, those would go hand-in-hand.

What we really want is the oil, and maybe some nice little neo-colonial governments like we had with the Shah.

Well, we've already seen how credible the Bush Administration's warnings were regarding Saddams WMDs and ties to Al Quaeda, so of course we must believe their warnings regarding Iran.  

I think it's a safe assumption that, given our lack of available ground forces, any military action against Iran will be confined to massive air attacks.  While such attacks can do massive damage, they are hardly likely to topple the current Iranian government.  After we make such an attack and destroy lots of military installations and kill lots of civilians, then what?  Is the Iranian government going to  raise their hands and surrender?  Hardly!  

Iran's natural response would be to inflict as much damage on the US, Isreal, and the UK. Not just militarily, but economically.  

 I could easily picture a massive ground assault into southern Iraq, probably closely coordinated with the sympathetic Shiite militias.  While the Iranians would suffer a huge number of casualties, they could (at least temporarily)
wrest control of Shiite Iraq from the US-back Iraqi central government. What do we do then, send over another 100,000 troops?  What would the Brits do?

I think the worst damage they could do would be economic. It goes without saying that if we initiate a massive air attack on Iran, the spigot gets shut off immediately, and 4 million barrels per day instantly vanishes from the global oil market.  Then, they could attack US- and UK-bound tankers with land-based cruise missiles (already obtained from their chums, the Russians and Chinese). While we could take out many of these missile batteries, the coastal area of Iran along the Gulf has quite rugged terrain ideal for the concealment of mobile missile launchers.  All it would take is one supertanker sunk in the Straits of Hormuz to put world oil markets into a panic. There might also be torpedo boat attacks on supertankers which would be very difficult to totally prevent.

The US would have to escort every single supertanker passing through the Gulf, and in doing so would put its own naval vessels at risk. As I have said before, many military analysts  believe that even our super carrier battle groups are sitting ducks if they stay within the Gulf (the Aegis missile defense system notwithstanding). Which is why an attack on Iran will most like be preceded by the withdrawl of our super carriers out of the Gulf rather than moving them closer to the Iranian coast.

Whatever we do, and whether or not we prevail, there will be an enormous price to paid in the event of an attack on Iran by the US and/or Israel.

Indeed, the massive recent erosion of the US strategic position in the Gulf region is probably the best explanation for the increasingly aggressive Iranian rhetoric. They just feel a lot safer now than a couple of years ago.
While for the casual newpaper reader it may look the contrary ("US troops stationed in Iraq and Afghanistan, establishing bases in Central Asia"), in reality the US troops at their current strength are already struggling to contain the pretty localized and small Sunni insurgency. On top of it virtually the entire supply for them is going through southern Iraq, Kuweit and then the Persian Gulf, always under threat of being cut off if hostilities between the US and Iran should be breaking out. Not to forget the fact that the various infrastructure providing a quarter of the worlds oil supplies is literally within striking distance for the Iranians.
Under these circumstances the US cannot even plausible make threatening noises about limited airstrikes against iranian nuclear facilities. They would either have to substantially upgrade their forces in the region to try to pressure the Iranians into submission by threat of an invasion (and risk a massive escalation with potentially catastrophic consequences during the process), or withdraw most of their ground forces from Iraq. This way a limited air strike scenario would become much more feasable and thus Iran might be more willing to consider US demands.
Of course the problem with either of these options is that the situation in Iraq is far too volatile to consider a complete withdrawal probably for years. This option would risk either outright civil war or the installation of a pro Iranian puppet regime (or maybe a combination of both), basically it would be openly admitting defeat. Massive longterm reinforcements are also out of question, the US military is already struggling to maintain current troop levels.
On the diplomatic front the situation is not looking better, any security council resolution to impose sanctions would be certain to be shot down by Russia (probably more due to old cold war resentment then anything else) or China (here comes actually Peak Oil into play, they see Iran as a vital stone in their global energy strategy, mainly as a supplier of natural gas).
Thus Iran has every reason to be confident. Frankly the only halfway appealing option that i see is for the US to try to  make up with Iran, establishing full relations, maybe even turning a blind eye to their nuclear program in return for a stabilizing influence by Iran in the region in combination with an informal military alliance (like Persia under the Shah or Pakistan now).
The benefits would be obvious, but the likelihood is very low, it would involve far too much swallowed pride on the side of the Americans. My prediction is they will try to maintain the status quo until the shit truly hits the fan. That could mean an Iraqi civil war with foreign involvement, an outright Iran-US war or maybe a Saudi revolution, take your pick.
You forgot that the Iranians can mine the Strait of Hormuz as well as use Exocet type anti ship missiles against supertankers and American warships.
And the world gets 5 mbpd crude from this guy...
"The United States makes no distinction between those who commit acts of terror and those who support and harbor them because they are equally guilty of murder," Bush said."

Bush says in effect that the Iranian leaders are murderers and wants to topple their government: "We're determined to deny the militants control of any nation". The Iranians are "Evil men who want to use horrendous weapons against us are working in deadly earnest to gain them." They are fanatics and not only murderers but potential mass murderers: "And we are working urgently to keep weapons of mass murder out of the hands of the fanatics". Syria and Iran are "outlaw regimes", which "deserve no patience". This with patience sounds bad and has been generally considered a diplomatic codeword that means threatening with an imminent war.

So the Americans should not envy Iranians for their eloquent president nor be worried. They understand each other well and are on the same wavelength. Only when they start speaking about peace we should be alarmed.

I don't know if people are still reading on this thread. The vitriol and warmongering nature of Iran's president Ahmadinejad's statement appears very bizarre. On the other hand
  • Iran is in a fairly strong position right now with the Iraq war failing and a Shiite majority in the south there
  • His speech could be meant for consumption by his hard-line political base
  • He is taking a (extreme) negotiating position vis-a-vis their nuclear program
  • He is making oil & gas deals with Iraq, China and India (see the first bullet)
So, all in all, this may make some sense though the Zionist Entity and the Oppressor are not going away anytime soon. And yes, it makes me nervous that we get over 4/mbd from these guys. It also makes me nervous that they could have nuclear weapons in a 5 year timeframe.
When the previous Iranian president championed "dialogue between civilizations" and "breaking the (US-Iran) wall of mistrust," the US media made fun of him and the "mullahs" in Iran.  During the Iranian presidential election a few months ago, Condi Rice, George Bush, and a few other senior US officials said that it made no difference who won.  So the people voted for the only candidate (out of seven) who did NOT advoacate further overtures to the US.  They had finally understood that the US had officially gheto-ized Iran and had no intention of slumming it.  

The new "non-mullah" president's Israel remarks are stupid, but it's what we get when we play dirty.  The US wants to stir Iran's Arab minority, so they play the anti-Israel card.  The Egyptian press has been talking about Israeli agents in Iraqi Kurdistan planning anti-Iranian operations for a year now.  

And finally, don't forget that our friendly Saudis have said much worse things about Israel.  At least Iran's "mullahs" have always gone out of their way to say they respect the Jewish religion and people and are only opposed to the colonial state of Israel which was founded by the British rulers of Palestine.    

Where were you guys back in the 80's when America's favorite King Fahd used to go on about the Communist-Jewish conspiracy ...