Economist: Iran’s oil industry will collapse by 2015

posted at 3:18 pm on December 26, 2006 by Allahpundit

Even hypothetical good news is scarce enough these days to warrant a post. Bibi Netanyahu accused the mullahs last week of wanting to build another “thousand-year reich”; sounds like theirs is primed to last about as long as the first one did.

Iran is suffering a staggering decline in revenue from its oil exports, and if the trend continues income could virtually disappear by 2015, according to an analysis published yesterday in a journal of the National Academy of Sciences…

He said oil production is declining and both gas and oil are being sold domestically at highly subsidized rates. At the same time, Iran is neglecting to reinvest in its oil production.

Iran produces about 3.7 million barrels a day, about 300,000 barrels below the quota set for Iran by the Organization of Petroleum Exporting Countries. The shortfall represents a loss of about $5.5 billion a year, Stern said. In 2004, Iran’s oil profits were 65 percent of the government’s revenue.

If the United States can “hold its breath” for a few years, it may find Iran a much more conciliatory country, he said. And that, Stern said, is good reason to delay any instinct to take on Iran militarily.

Is it really good news? Long term, sure. But mid term, it may make their designs on Iraq that much more urgent. Plus, they’re already taking heat from younger Iranians for jerking around with nukes while the country’s economy is in a shambles; if the bottom drops out and they start to fear a revolution, they might make a move on one of their neighbors to turn the domestic discontent outward. Most intel experts predict they’ll have the bomb within five to ten years, too, so we can look forward to all of this playing out before a rich tapestry of nuclear paranoia. Good times, good times.

Then again, would the Saudis really let that happen? They’ve already threatened (through a mouthpiece) to double their oil production and bring Iran to its knees economically. Imagine it: a new regime in Tehran and a buck twenty-five a gallon at the pump. Sweet.

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If the United States can “hold its breath” for a few years, it may find Iran a much more conciliatory country, he said. And that, Stern said, is good reason to delay any instinct to take on Iran militarily.

This smells of a Left wing presstitute journalist trying sell a story. Iran is having trouble sucking on its huge reserves of oil and natural gas? This dude tells us to relax, Iran really only wants to develop nuclear power for peaceful reasons. I don’t buy it.

shermacman on December 26, 2006 at 3:24 PM

“oil industry collapse” is inaccurate.
“economic collapse” is more accurate.

both gas and oil are being sold domestically at highly subsidized rates

means that oil and gas sold inside Iran is below world market price. What results is ‘black market profiteering’ oil and gas is purchased from official Iranian sources, and then transported, and resold on the world market for personal profit.

What the study actually reports is Iranian oil production is falling while domestic ‘consumption’ is rising, thus, at some point in the future, there will be no more oil to export. Since Iran does no refining of its own crude oil production (why is that?), what crude Iran produces is ‘exported’, refined, and re-imported for its ‘domestic’ market.

The mismanagement of the economy, corruption by officials who profit from the black market, and influence peddling, destabilize the current government. With the public display of official governmental arrogance, ignorance, and corruption, it really is funny to watch.

rockhauler on December 26, 2006 at 3:30 PM

We could, of course, hasten that collapse with the correct placement of enough ordinance to cause the entire countries oil producing capabilities, to go up in smoke.

E L Frederick (Sniper One) on December 26, 2006 at 3:36 PM

Then again, would the Saudis really let that happen? They’ve already threatened (through a mouthpiece) to double their oil production and bring Iran to its knees economically. Imagine it: a new regime in Tehran and a buck twenty-five a gallon at the pump. Sweet.

that sort of day dreaming is irresponsible. You’ll have all of us lulled into a mass hysteria of “wow the world might not blow up”. What kind of conservative fear monger ARE YOU?!?!?

One Angry Christian on December 26, 2006 at 3:36 PM

If the United States can “hold its breath” for a few years, it may find Iran a much more conciliatory country, he said. And that, Stern said, is good reason to delay any instinct to take on Iran militarily.

Perhaps, but couldn’t the argument be turned around? Couldn’t it be argued this is a good reason to do whatever we can to delay Iran’s nuclear weapons program as long as possible, even through military strikes?

tommy1 on December 26, 2006 at 3:43 PM

I’m going to play Mr. Skeptical today. Let’s see if I got this right…

1. UN slaps sanctions on Iran.
2. A Johns Hopkins researcher releases a study shortly thereafter claiming Iran will be SOL by 2015.
3. AP releases a wire story summarizing the thoughts of the researcher with the clincher:

If the United States can “hold its breath” for a few years, it may find Iran a much more conciliatory country, he said. And that, Stern said, is good reason to delay any instinct to take on Iran militarily.

Not that I’m a fan of going after Iran militarily, especially an invasion (which would as brilliant as the Vietnam war), but come on. This just seems a bit too set up for me.

Seixon on December 26, 2006 at 3:49 PM

I smell a set up too, one designed to make the West less opposed to Iran having nuclear reactors and rolling back UN resolutions.

I question the timing.

Buzzy on December 26, 2006 at 4:03 PM

We need to connect the Ukrainian pipeline to the Alaskian pipeline. Ukraine gets a higher price for their oil and a big screw you to Russia, and we get oil for less and a big screw you to the middle east.

- The Cat

MirCat on December 26, 2006 at 4:05 PM

Is it really good news? Long term, sure. But mid term, it may make their designs on Iraq that much more urgent. Plus, they’re already taking heat from younger Iranians for jerking around with nukes while the country’s economy is in a shambles; if the bottom drops out and they start to fear a revolution, they might make a move on one of their neighbors to turn the domestic discontent outward. Most intel experts predict they’ll have the bomb within five to ten years, too, so we can look forward to all of this playing out before a rich tapestry of nuclear paranoia. Good times, good times.
Then again, would the Saudis really let that happen? They’ve already threatened (through a mouthpiece) to double their oil production and bring Iran to its knees economically. Imagine it: a new regime in Tehran and a buck twenty-five a gallon at the pump. Sweet.

I said that like two, three weeks ago. *shrug* Oh well.

Also Iran has to import the gas that they use, they do not even have the infrastructure to refine their own crude. The irony. They want nukes so the current regime can stay in power permanently ala Pervez in Pakistan. It is to dangerous not to support Pervez and the mullahs know it. They are shrewd as well as radical. They know nukes makes them a player.

Ultimately Iran Achilles heel of an economy will bring them down. I hope the CIA is currently plotting assasinations of their top scientists while feeding fake but expensive technolgy to bring about their economic demise all the more quickly.

The prospect of that happening will greatly discredit radical Islam for which I will be very thanful indeed.

Theworldisnotenough on December 26, 2006 at 4:05 PM

Perhaps, but couldn’t the argument be turned around? Couldn’t it be argued this is a good reason to do whatever we can to delay Iran’s nuclear weapons program as long as possible, even through military strikes?

tommy1 on December 26, 2006 at 3:43 PM

But why? If Iran is on the brink of a nuke sure. I have no problem with that. When they are in the Oak Ridge development stages I prefer cold war tactics.

Theworldisnotenough on December 26, 2006 at 4:09 PM

Good points, Seixon & Buzzy.

Just goes to show you, never take things like this at face value.

LegendHasIt on December 26, 2006 at 4:14 PM

Count me in the if it’s really this bad and this imminent in Iran it’s more likely to make them desperate than it is concilatory camp. While I would love to believe that Iran is this close to total economic collapse, I also can imagine how very much damage they can do to Israel and the West in that amount of time. And if they have nothing to lose?

Desperate men act dangerously.

Bob's Kid on December 26, 2006 at 4:18 PM

Please. Iran doesn’t face any looming crisis that couldn’t readily be hastened and intensified by neutron bombs dropped on the ruling class.

Kralizec on December 26, 2006 at 10:34 PM

Please. Iran doesn’t face any looming crisis that couldn’t readily be hastened and intensified by neutron bombs dropped on the ruling class.

Kralizec on December 26, 2006 at 10:34 PM

Gee really have the bloodlust during the holiday season don’t we? Brown and yellow people kind of don’t count as “real” in your estimates I take it?

Bradky on December 26, 2006 at 11:56 PM

Like I have said before…

We have the resources for energy independence. However, if we are at war, what is the best strategy? SUCK THEM DRY!

Thanks to China and Russia I can almost hear that giant sucking sound now. How would things change when the mid-east runs out of oil. They would not have the technology (or money) to sustain their economies (unless they go nuclear while they can afford it).

First they would raise prices. As much as we rue the day, we can afford it, even at $200/bl. We would adapt. Next they would become belligerent. Words, then terror. Finally they would become suicidal, seeking ways to bring back the Mahdi.

Perhaps there is no good ending with these guys. I can imagine the conspiracy theories now. “The CIA and Israelis stole the oil with under ground pipe lines!”

Agrippa2k on December 27, 2006 at 1:35 AM

So what happened to that UK Christmas terrorist attack? Predicting the future is a funny little game, isn’t it?

honora on December 27, 2006 at 11:17 AM

or we could just try asassinations til we get a more “cooperative” group of leaders. I imagine that would be a greater deterrent and it wouldn’t cost one American soldier. Much cheaper to buy a few of those nuclear hair sprays than break down buildings we will inevitably have to pay to rebuild.

frreal on December 28, 2006 at 7:47 PM