Iranian President Mahmoud Ahmadinejad claimed Sunday his country has met a key target for its nuclear program and more than 3,000 active centrifuges to enrich uranium. Meanwhile, President Bush is turning up the heat, as well he might. It is after all, very difficult to negotiate with someone - Iran - who wants something you don't want them to have - nuclear weapons.

And speculation continues to grow that President Bush, egged on by the Vice-President, is planning a military confrontation, sooner rather than later. Leaving aside the human tragedy of any war, there is a school of thought emerging that a war with Iran would be a fillip to alternative energy stocks, because it will send the oil price through the roof. Is there strength to this argument?

Obviously, for a start, it depends a great deal on how effective the military strike is. If the Iranians were able to launch a successful counter-attack (and one is all they'd get), they just might close down the Straits of Hormuz. A far worse scenario would be if the Iranians choose to "red cell", or attack first themselves, overwhelm a few capital ships with a barrage of cheap anti-ship missiles and sink a tanker or two.

Yet far too many words have been expended on everything going wrong and the assumption that America's policymakers would sit on their hands while the world went into an "oil shock recession". That's why alternative energy investors should pay close attention to a 4 month-long war game, organised by the Heritage Foundation, that not only modelled worst-case circumstances in a war with Iran. It also came up with policy responses and using the same model, tested their effectiveness in combatting a high-oil price. One of those policy responses stands out;

Ending tariffs on ethanol - to encourage eth­anol imports and reduce retail biofuel prices.

The Brazilians have wanted this for some time, and outside of the Midwest and for shareholders in US ethanol stocks, it's hardly an unpopular move. Critically though, combined with a raft of other measures, the group's policy recom­mendations eliminated virtually all of the negative outcomes from higher oil prices.

So there we go; if there's going to be a war, there's at least a chance that it will be short, overwhelming and just might, after the first couple of weeks, even send the oil price down. Don't forget that Middle East tension is already priced in to the price of oil. Still, many people thought a drop in oil prices was possible after the war with Iraq in 2003 . . .