Iran Rations Gasoline

Post by **Surlethe** » 2007-06-26 11:56pm

Valdemar, what have you done to me? My first reaction upon seeing the headline was not, "Oh, that's interesting." It was not, "Hey, it's Iran!" It was, "Oh, god, we're fucked."

The cause for rationing cited in the article was refinery undercapacity caused by US sanctions, not peaking oil production and consequent shortage, but this is still food for thought.

The BBC wrote:At least one petrol station has been set on fire in the Iranian capital, Tehran, after the government announced fuel rationing for private motorists.

Iranians were given only two hours' notice of the move that limits private drivers to 100 litres of fuel a month.

Despite its huge energy reserves Iran lacks refining capacity, forcing it to import about 40% of its petrol.

Tehran is trying to rein in fuel consumption over fears of possible UN sanctions over its nuclear programme.

Iran fears the West could sanction its petrol imports and cripple its economy.

'Dangerous move'

The restrictions began at midnight local time on Wednesday (2030 GMT Tuesday).

The BBC's Frances Harrison in Tehran says there is anger and frustration the government did not give people more notice.

An oil refinery and petro-chemical complex in Iran (file photo)
Iran's petrol is heavily subsidised, sold at about a fifth of its real cost
Eyewitnesses have seen at least one petrol station in the outskirts of the west of Tehran on fire and there are reports that three people died in the blaze.

All over the city there are huge queues and reports of scuffles at petrol stations as motorists try to beat the start of the rationing and fill their tanks.

Iran's petrol is heavily subsidised, sold at about a fifth of its real cost. So far there has been no announcement about whether Iranians can buy more petrol at the real market cost.

Our correspondent says rationing fuel is only likely to add to high inflation and the rising cost of living.

It is a dangerous move for any elected government, especially in an oil-rich country like Iran where people think cheap fuel is their birthright and public transport is very limited, she says.

The US, which is leading efforts to pressure Iran to suspend its uranium enrichment activities, has said Iran's fuel imports are a point of "leverage".

Washington and other Western nations accuse the Islamic Republic of seeking to build nuclear weapons.

Iran says its nuclear programme is entirely peaceful and is solely aimed at producing civilian nuclear power.

Death from the Sea · Post by **Death from the Sea** » 2007-06-27 01:15am

that blows my mind... they have the crude, just not a way to refine it.... you would think that they would have plenty of refineries over there...

Jadeite · Post by **Jadeite** » 2007-06-27 01:24am

Death from the Sea wrote:that blows my mind... they have the crude, just not a way to refine it.... you would think that they would have plenty of refineries over there...

The Iranian economy is being pretty badly mismanaged. In addition to the article below, during Ahmadinejad's term, Iranians have seen housing prices double, and food prices triple.

Iran interest rate cut sparks panic selling

Robert Tait in Tehran
Friday May 25, 2007

Iran's financial system suffered a fresh jolt yesterday with panic selling on the stock market after the president, Mahmoud Ahmadinejad, abruptly ordered banks to cut interest rates sharply, despite surging inflation.
The order, which Mr Ahmadinejad issued by telephone during a visit to Belarus and which flew in the face of expert advice - has triggered warnings of a financial crisis and spiraling corruption amid fears of a capital flight from the country's lending institutions.

Mr Ahmadinejad's decree forced all state-owned and private banks to slash borrowing rates to 12%. Inflation is officially 15% but is generally believed to be much higher. State banks had been offering rates of 14%, while those in the private sector ranged from 17% to 28%.
The decision caused panic in the Tehran stock exchange, with private banks losing much of their share value overnight. Shareholders in one bank, Karafarin, queued on Wednesday to sell their stock when previously there had been 1.2 million applicants to buy its shares.

There was speculation yesterday that the move could force the resignation of the economy minister, Davoud Danesh-Ja'afari, who was not consulted.
Interest rates are normally set by the head of the central bank, who is nominally politically independent. The Hammihan newspaper carried a picture of a disconsolate-looking Mr Danesh-Ja'afari holding his head in his hand under the headline: Shock on the Tehran bourse.
The rate cut was imposed at the same time as Mr Ahmadinejad raised the price of petrol by 1p to 5p a litre. That caused anger among motorists, who expected a new rationing system to be introduced on Tuesday. The government has postponed rationing until next month, citing difficulties in introducing the necessary technology to filling stations.

The interest rate move theoretically helps the less-well-off, for whom Mr Ahmadinejad has pledged support with cheaper loans. But economists say cutting rates below inflation will scare investors into withdrawing their savings, thereby creating a black market in high interest loans. They also warn of higher inflation as investors redirect their money into property and push up house prices.

"Mr Ahmadinejad's argument is that the lower the interest rate, the more access people will have to money," said one analyst. "But you can't command interest rates down. They have to match inflation. To cut rates, the government has to balance its budget better."

Another economist, Saeed Leylaz, claimed the move was a reward to powerful groups who had supported Mr Ahmadinejad. "I believe the president knows the consequence of this decision but he doesn't care about the future."

"There are groups which helped put Mr Ahmadinejad into office and in my opinion, he is paying them back. In the last two years, the value of (outstanding) debts has reached US$11bn, compared with $3.5bn in the previous 100 years. Mr Ahmadinejad ordered the banks to pay these accelerated loans to the special groups. If you cut interest rates, it means they have less to pay back. You can imagine how disastrous this is to the banking system."

The best part is they still find a way to blame us for it.

Originally Posted by Nasr
The God-less imperialists do everything that they can to ensure the poverty and weakness of those who oppose them.

They lack refining capacity because nobody invests in Iran, because the US doesn't like to see people happy & prosperous, unless they submit to its every whim.

May America soon follow in the footsteps of the oppressors of the past.

Post by **Sea Skimmer** » 2007-06-27 01:27am

Lots of nations rich in oil have few or no refineries; Nigeria is a prime example of this. A refinery is very expensive, and when the products it produces are just going to be sold at a massive discount anyway, it’s not easy to raise the required funds. Most oil rich nations aren’t exactly know for long term economical planning anyway. Its only recently that most of the Gulf states have begun to admit that the oil wont last forever, even though the whole Arab oil bonanza is for the most part only 50 years old to begin with.

Jadeite · Post by **Jadeite** » 2007-06-27 01:47am

Sea Skimmer wrote:
*snip*

Most oil rich nations aren’t exactly know for long term economical planning anyway. Its only recently that most of the Gulf states have begun to admit that the oil wont last forever, even though the whole Arab oil bonanza is for the most part only 50 years old to begin with.

I'll bet that the Saudi royal family simply makes a run for it when their oil runs out. Hell, competent planning of any sort seems to be a scarce resource in the Middle East. For example, the Iranian government's hinted that their war plans in the event of a conflict with the US is to essentially attack their neighboring Gulf states for hosting US bases, even if those states are neutral.

Netko · Post by **Netko** » 2007-06-27 02:11am

That's just sabre rattling in hopes of discouraging them to allow more bases or other countries allowing any bases at all.
__

I don't really get the rioters who burned down the station, the 100 litre limit is pretty high - for urban driving I can't really see you going over without really trying, at least with a half-decent car, and presumably those that actually drive for a living (say, taxi drivers) have higher limits.

Jadeite · Post by **Jadeite** » 2007-06-27 05:12am

SA is great for finding out more information on certain topics.

Iran’s plans to ration gasoline and increase the price should help curb imports and raise fuel efficiency but may provoke considerable domestic opposition, the International Energy Agency (IEA) said on Friday.
According to Reuters, Iran imports 40 percent of its gasoline needs, making it vulnerable to trade sanctions in its dispute with the United Nations over its nuclear program.

The government has put forward plans to ration gasoline and raise the price, currently among the lowest in the world, from May 22. Iran is the world’s fourth largest crude exporter but a lack of refining capacity has made it dependent on gasoline imports.

“The new rationing plan should be seen as a clever move towards gradually adopting market prices, encouraging greater fuel efficiency and curbing demand,“ the IEA, which advises 26 industrialized nations, said in its monthly Oil Market Report.

“However, the change will entail considerable social and political hurdles, which will need to be overcome if it is to be a success.“
According to the IEA, there are 15 million cars on Iran’s roads and gasoline demand is estimated at about 78 million liters per day--about 5.2 liters per day per vehicle or three-quarters above Iran’s planned three liters per day quota.

“On average, therefore, the quota will last around 17-18 days. Heavy users who are unable to find transportation alternatives will be highly penalized, but there will be some drivers who will manage to curb their own consumption and feed, what will likely become, a highly profitable black market with their own quota surpluses,“ the IEA said.

So each Iranian driver will be paying more money for only enough gasoline to last about half a month, assuming they keep their driving patterns. The coming weeks should be fun.

Just for fun, I decided to do the math for per car gasoline consumption in the US compared to Iran. The US consumes 1,514 million liters of gasoline a day, and has 231 million motor vehicles. This is 6.5 liters per car per day, compared to Iran's 5.2 liters.

CJvR · Post by **CJvR** » 2007-06-27 05:22am

Perhaps the bearded bastards are having second thoughts about their atomic program now, they could have built refining capacity for that money instead. (Provided they actually know how, one has to wonder if there is any domestic competence there.)

Also this was faintly amusing:

It is a dangerous move for any elected government, especially in an oil-rich country like Iran where people think cheap fuel is their birthright and public transport is very limited...

How fortunate then that the people have practically nothing to say on the matter of how Iran is managed then.

CJvR · Post by **CJvR** » 2007-06-27 05:27am

Jadeite wrote:...the Iranian government's hinted that their war plans in the event of a conflict with the US is to essentially attack their neighboring Gulf states for hosting US bases, even if those states are neutral.

I bet the US war plan is to level the refineries and watch as Iran sputter to a halt.

Admiral Valdemar · Post by **Admiral Valdemar** » 2007-06-27 09:08am

The Iranians are considering a massive new refinery in China, if only because it won't be under threat from US attack at any point in the future should the US get an itchy trigger finger. Aside from that, refineries are expensive to build, so most, as the US does, simply add capacity to already existing refineries. The simple fact is, there's no point in pumping cash into projects that take years to build and may be running under capacity as crude dries up. This is why OPEC's top five are currently looking to working as exporters of finished products like mixing agents, plastics and so on. Why sell off crude for cheap so other nations can refine it, then sell it back for huge profits to them?

Internal demand for fuel as a consequence of growing population and wealth is the issue Iran, and other ME nations now have. Do they support their own kind first, or continue to rake in the cash by exporting to ever thirstier Americans, Europeans and Chinese?

Jadeite · Post by **Jadeite** » 2007-06-27 04:58pm

Tehran, Iran, Jun. 27 - Large numbers of youths across the Iranian capital demonstrated violently late Tuesday against the government's decision to ration fuel.

Angry youths set fire to several petrol stations in Tehran and chanted slogans against Iran's hard-line President Mahmoud Ahmadinejad.

"Gun, tanks, fireworks; Ahmadinejad must be killed“, they chanted.

Riot pictures.

Post by **Sea Skimmer** » 2007-06-27 05:05pm

Jadeite wrote: I'll bet that the Saudi royal family simply makes a run for it when their oil runs out. Hell, competent planning of any sort seems to be a scarce resource in the Middle East. For example, the Iranian government's hinted that their war plans in the event of a conflict with the US is to essentially attack their neighboring Gulf states for hosting US bases, even if those states are neutral.

I fail to see how planning to attack US bases less then 200 miles away is incompetent planning. They’d be insane not to try to attack, just as Saddam was incredibly stupid for not throwing his air force into offensive missions in 1991. Even a few successful bombing runs on that big base in Qatar would be able to inflict more damage on the USAF then it has suffered in the last twenty years put together. The only alternative is to hunker down and simply endure the aerial pounding unopposed; Iran’s air defenses are pretty pathetic.

The fact that a first strike would bring extra nations into the war wouldn't really matter, what are the likes of Qatar doing to do after they declare war on Iran? Not much the US isn't already. Certainly the UN wont matter, as always.

Jadeite · Post by **Jadeite** » 2007-06-27 05:16pm

Sea Skimmer wrote:
I fail to see how planning to attack US bases less then 200 miles away is incompetent planning. They’d be insane not to try to attack, just as Saddam was incredibly stupid for not throwing his air force into offensive missions in 1991. Even a few successful bombing runs on that big base in Qatar would be able to inflict more damage on the USAF then it has suffered in the last twenty years put together. The only alternative is to hunker down and simply endure the aerial pounding unopposed; Iran’s air defenses are pretty pathetic.

The fact that a first strike would bring extra nations into the war wouldn't really matter, what are the likes of Qatar doing to do after they declare war on Iran? Not much the US isn't already. Certainly the UN wont matter, as always.

Well, they've hinted at hitting oil production as well. It just comes across as a great way to get their neighbors to declare war on them as well.

Admiral Valdemar · Post by **Admiral Valdemar** » 2007-06-27 05:25pm

Iran said months ago it would not use its oil as a weapon. Last week they performed a U-turn on that issue. They've also voiced threats on hitting major oil fields in the ME should they come under attack, as well as the obvious priority one site, Israel. Iran will go down in flames, but not without essentially killing the world economy with a well thought out strike with what offensive systems they have. They better have those PAC-3s covering those areas well, else it could, like Iraq, bring more harm than good.

Jadeite · Post by **Jadeite** » 2007-06-27 05:32pm

Crap, sorry Skimmer, I didn't notice that last line of your post before I responded. Yes, the other Gulf states can't really do much, but destroying their economies will inflame Arab nationalism and the Sunni/Shi'ite feuding. It could see the beginning of terrorist warfare between the Iranians and Arabs, and that could easily go on for decades (particularly with how well these cultures hold grudges).

Wanderer · Post by **Wanderer** » 2007-06-27 06:25pm

Jadeite wrote:Crap, sorry Skimmer, I didn't notice that last line of your post before I responded. Yes, the other Gulf states can't really do much, but destroying their economies will inflame Arab nationalism and the Sunni/Shi'ite feuding. It could see the beginning of terrorist warfare between the Iranians and Arabs, and that could easily go on for decades (particularly with how well these cultures hold grudges).

You do realize thats whats already happening and has been going on for years now.

Golan III · Post by **Golan III** » 2007-06-27 06:39pm

Sea Skimmer wrote:I fail to see how planning to attack US bases less then 200 miles away is incompetent planning. They’d be insane not to try to attack, just as Saddam was incredibly stupid for not throwing his air force into offensive missions in 1991. Even a few successful bombing runs on that big base in Qatar would be able to inflict more damage on the USAF then it has suffered in the last twenty years put together. The only alternative is to hunker down and simply endure the aerial pounding unopposed; Iran’s air defenses are pretty pathetic.

The fact that a first strike would bring extra nations into the war wouldn't really matter, what are the likes of Qatar doing to do after they declare war on Iran? Not much the US isn't already. Certainly the UN wont matter, as always.

In Qatar's case, that's correct. The entire reason the US is present in Qatar is so that they don't have to fund their own defense - 'build it and they will come'. Qatar has had a squadron's worth of Mirage 2000s for the last 10 years or so; they were put up for sale about 4 or 5 years ago (though so far there's been no takers). Why pay for expensive fighters and training if the US and GB are flying their stuff out of there? For the most part, nobody in their right minds wants to start shit with the US.

On the other hand, the UAE isn't small fodder. They already have a strong defensive base and are building a pretty decent offensive capability. If Saudi Arabia gets their shit together they can be pretty lethal too, good defensive, offensive, refuelling and C2 assets. Bahrain can probably defend themselves OK if they know what's coming, however having flown over the Persian Gulf region it's amazing how small that part of the world is - from 25,000 feet over Qatar you can see well into Iran. There just wouldn't be all that much notice once stuff left Iranian airspace.

Now depending on how Iran chose to lash out at the US bases in the gulf, could violently increase the scale of response. Were Iran to hit any of those bases with, say, chems or bios, then I think it's a pretty sure bet the US response would be nuclear, especially since Iran is pursuing a nuclear attack capability of its own.

Admiral Valdemar · Post by **Admiral Valdemar** » 2007-06-27 06:44pm

I believe the Qatar base has more to worry about from Blackout dropping in for some fun.

Wanderer · Post by **Wanderer** » 2007-06-27 07:06pm

Golan III wrote:especially since Iran is pursuing a nuclear attack capability of its own.

Proof of this please. IAEA never found anything to indicate that.

Admiral Valdemar · Post by **Admiral Valdemar** » 2007-06-27 07:26pm

What Iran wants first is nuclear infrastructure. Quite what they'd do with nukes right now is anybody's guess when they have an already adequate ace in the hole which happens to be their biggest export. They have a problem with a massively growing population that consumes more and more. They need a sustainable energy source, and nuclear fits that bill.

One way or another, they, and many others like them, will be reaching for this technology or face total ruin. I await the day KSA announces such plans along with LPG powered cars.

Darwin · Post by **Darwin** » 2007-06-27 07:40pm

Jadeite wrote: The Iranian economy is being pretty badly mismanaged. In addition to the article below, during Ahmadinejad's term, Iranians have seen housing prices double, and food prices triple.

wow. Just like California.

Golan III · Post by **Golan III** » 2007-06-27 09:01pm

Admiral Valdemar wrote:What Iran wants first is nuclear infrastructure. Quite what they'd do with nukes right now is anybody's guess when they have an already adequate ace in the hole which happens to be their biggest export. They have a problem with a massively growing population that consumes more and more. They need a sustainable energy source, and nuclear fits that bill.

One way or another, they, and many others like them, will be reaching for this technology or face total ruin. I await the day KSA announces such plans along with LPG powered cars.

Yes, but hasn't Iran stubbornly pursued nuclear capabilities above and beyond the needs of a civilian nuclear power demand?

And hasn't it repeatedly rebuffed offers for outside nations (such as Russia) to do the necessary enrichment for them?

I have no doubt that Iran has a nuclear power need. There are better ways to go about it than the path they're choosing.

Wanderer · Post by **Wanderer** » 2007-06-28 12:27pm

Golan III wrote:Yes, but hasn't Iran stubbornly pursued nuclear capabilities above and beyond the needs of a civilian nuclear power demand?

Define above and beyond their needs.

And hasn't it repeatedly rebuffed offers for outside nations (such as Russia) to do the necessary enrichment for them?

And be vulnerable to that nation's whim, sorry the Iranians tried that before with oil and got a repressive Shah for their trust.

I have no doubt that Iran has a nuclear power need. There are better ways to go about it than the path they're choosing.

How so?

Post by **Sea Skimmer** » 2007-06-28 04:15pm

Golan III wrote:
In Qatar's case, that's correct. The entire reason the US is present in Qatar is so that they don't have to fund their own defense - 'build it and they will come'.

I certainly agree that several of the Arab states have very substantial militaries. My point just was that if the US and Iran are at war, those militaries will already be defending territory to the advantage of the US, and they have little offensive power in comparison to the US already. Thus Iran has nothing to lose by being openly at war with them.

As for the Qatar base, it certainly is well protected, but I’d still expect some missiles to score hits, Iran has a big arsenal and better missiles then Iraq did in 1991. The potential launch areas for Iranian missile crews would also be crawling with civilian road traffic. Iran would also shoot down UAVs left and right, the result all being that finding and killing mobile missile launchers remains very difficult.

Anyone else looked at the base recently on google earth? Since it was first revealed to the world it’s gained a considerable number of hardened aircraft shelters, some new blast walls on the existing big shelters and a whole crapload of extra ramp space and taxiways. Not a single tactical fighter of any type is visible. Plenty of vital transport and tanker aircraft remain totally exposed though, as do huge areas of housing and support buildings. Some of those building clusters are over 1km across and could be individually targeted by Iranian weapons.

A lot of field fortifications too, all clearly meant to protect against car bombs and gunfire coming out of the surrounding desert and especially in areas near paved roads outside the perimeter. Its just amazingly big overall, a platoon of tanks would be a reasonable asset for the base the defense force