Petrol rationing in Iran

The New York Times says fuel rationing in Iran prompts protests. Those protests?

Those did not set themselves alight, no. The New York Times: understater extraordinaire. Iran has a lot of oil:

(you’ll notice I have a thing for maps) Iran however has rather poor refining capacity. Currently it can produce 4.3m barrels per day, but refine only 1.6m barrels per day. It actually imports more thab 50% of its oil, (around USD10bn), which it subsidises for the market.

Along the way, Iran’s budget defecits are anything from 14% (their estimate) to 25, 30% (other economists). That may or may not be related – another explanation is tough-love preparation for sanctions, due to the whole nuclear thing. This might also help their case, arguing that oil is running out, we need nuclear energy, etc. (sounds familiar, doesn’t it?). It’s running counter to the declining exports argument I was making this morning, which is interesting to observe. Given the reaction of Iranians, though, I don’t see this lasting.

It strikes me that, rather than announcing a 3 litre-per-day ration 2 hours before it began, without so much as telling local police, dropping those subsidies and letting prices do their job would have made a hell of a lot more practical and fiscal sense. At these level of rationing, prices will soon go through the roof in an underground economy anyway – the government took roughly the dumbest approach to saving money and reducing demand for petrol. Plus it’s so damn unpopular. Who knows? It might well help the reformists in Iran.

Also along the way, it is apparently bad news for Australia. For some reason we are big on Iranian oil (unrefined, it’s probably cheap). I shall see what happens. it follows rather hard upon the strike(s) in Nigeria, though (instability another characteristic of peak oil, by the by).