Friday, June 23, 2006

Something not considered?

Iran to halt gasoline imports, impose rationing - Yahoo! News

This is something that I have not considered in my prior analyzes of the Iran situation. The fact that Iran can not indigenously refine oil into gasoline is something that may have a big impact on what is a possible solution to Iran having nuclear weapons. Much has been said about Iran shutting down the Straits of Hormuz if the United States or Israel attacks the nuclear facilities. This would shutdown most of Iran/Kuwait/Upper Saudi Arabian/others crude oil flow. I highly doubt that stopping tankers will actually be accomplished, many nations besides the Unites States need them to stay open, and will ensure that they do. This does not mean that no tankers would be sunk, I just think that control would swing in the World's favor relatively quickly. The only major city/town in Iran on the other side is Chabahar (missing accents).

India has been working with the Iranians to develop the port of Chabahar for oil pipelines and other trade. I don't know if it has been completed, I know that they had been talking about this. It would go through Pakistan though. Now, this is for getting oil OUT. For Indian consumption and refining. Having a bunch of light sweet crude does you no good if all of your cars are gasoline. Or your fighter run on kerosene. Heating oil, not sure if they use it. They are only pumping 4 million barrels of crude a day, not the 6 million that they were in 1974. Some of that is because they don't have as much technology but some of that is because you control prices using supply. Check this out for more current information.

So, you have a gasoline shortage. This leads to a very pissed off populace. Currently, gas is really cheap in Iran. They need to raise prices or ration. Both make the public mad. In Saudi Arabia, earlier this year they decided to try and raise oil prices. It didn't completely stick, the people didn't like it. Word on the streets is that there are some in Iran that aren't the happiest with the government. Something like higher gas prices, or rationing could become a catalyst for a regime change. Iran wants to make it expensive to buy oil, we need to make it more expensive to buy gasoline. Public dissent was pretty high in Atlanta, when everyone freaked out about a hurricane. Can you imagine if gasoline prices doubled? It's easier for that to happen the cheaper that the gas is. Using the estimate of 10 cents a gallon, 20 cents a gallon is not an unreasonable increase in price. I can't find where I got this initial 10 cents estimate, if anyone can find it, please tell me. This would devastate the poorer people (most likely to revolt anyway). Gas in Iraq went from 5 cents a gallon to 10 cents after the fall of Saddam, so doubling has happened historically. Washington Post says 33 cents, but that still works. Say it rises to 50 cents a gallon. thats still a big percentage difference. When the dude running the gas pump makes $2.30 a day, it could be a big deal. "Because Iran's refineries can pump out only 10 1/2 million gallons of gasoline a day, and Iranian motorists burn 17 million gallons, the gap is filled by gasoline purchased at full price from other countries." This is from the same article from the Washington Post. That is a big deficit. Hopefully Iran does not fix this problem, and it can be used to the World's advantage.

I support countries using nuclear power for electricity. I don't support nuclear weapon owning governments that proclaim that they want to destroy another country in a fire, and will sacrifice their country and its people to be able to do so. We need to stop insane people, and right now they are winning with the whole "just a minute" routine.

off topic:

haha, Al Gore quote of the day "The earth has a fever". Sorry I was watching/listening to some videos of news clips. It was from an interview with him by ABC. He got fat, btw, or at least looks like it. I like all the carbon-neutral/ emissions reductions stuff. He just sounds stupid sometimes.


fookstick said...

You forgot to take into consideration that the US has an entire fleet based out of Bahrain. Prices would dramatically increase in Iran as oil accounts for a huge percentage of their exports, but most likely the effects of the price increases will be felt by the government not neccesarily the "people" as oil is heavily subsidised, well at least at first. So the government pays the heavy burden, gets pissed then starts laying off workers as revenues decline. SO only a certain part of the country is pissed

sstc said...

I would like to direct you toward the Palestinian government right now. Hamas is feeling the heat because it doesn't have any money. And the people don't like it. The government only has so much money, and can't subsidize gas too much. If the price of gas doubles, it would hit them pretty hard, because they would have to make up the difference. You could almost look at the subsidy as an option to a stock, as far as smaller changes in the price of the stock dramatically increase the price of the option.