I CAN’T RECALL WITNESSING such all-pervasive gloom as pervades Washington and New York. Washingtonians are focused on the coming war, and the disintegration of the space shuttle Columbia jolted them into a realization that risks taken can result in deaths realized. New York businessmen, surrounded as they are by laid-off investment bankers, on-going investigations of CSFB technology banker Frank Quattrone and some of the city’s once-superstar analysts, and a city budget that suggests massive tax increases and service cuts cannot be far behind–watch share prices and convert their board rooms into bunkers from which edicts about “hold the line on hiring and investing” are issued.

One source of discontent is the hard numbers being produced by the White House and other analysts as war with Iraq comes closer. The effect on oil prices has long been known, or at least guessed at. If the war proves to be a quick–surgical excision of the Saddam regime–analysts expect the oil price to surge at its outset, and then quickly retreat to something like $20 per barrel as the “war premium,” now estimated to account for some $10 of the current $35 price, is eliminated, and as Venezuelan production continues to recover. Under this scenario, an investment (estimated by the Council on Foreign Relations and the James A. Baker III Institute for Public Policy) of $5 billion will be needed over the next two years to modernize Iraq’s oil fields and maintain capacity at something close to three million barrels per day. Adam Sieminski, a London-based oil analyst at Deutsche Bank, is a bit more optimistic: He thinks that in two-to-three years Iraq can increase its ability to produce by 1-2 million barrels a day.