Wednesday, June 27, 2007

Why Does Iran Now Need to Ration Gasoline?

Why is one of the world's richest oil countries now faced with the dilemma of rationing gasoline?

For the same reason the U.S. might one day be faced with a similar predicament.

It's the "r" word, stupid. R for refinery, R-E-F-I-N-E-R-Y. Without "in house" refinery capacity not all the domestic crude oil in the world is worth a hoot.

Iran may have vast amounts of crude which it extracts from the ground and exports to the rest of the world, but it only has enough refinery capacity to process about 60% of its needs. Therefore it must import up to 40% of refined gasoline. In America, we have only about 50% refining capacity to meet our growing needs. And what we have is often stretched to full capacity.

One could only shudder to think what might happen if there were a terrorist attack on one of our country's overloaded refineries. But for decades environmentalists have blocked construction of any new refineries in the USA. (It's like for years radical tree huggers have fought cutting timber on national forest lands, with devastating effects, such as the accumulation of fuel and now the attendant forest fires.)

Now faced with sanctions from the U.N. and the rest of the world because of its rogue nuclear program, or worse, faced with trade embargoes that would prohibit oil tankers with refined gasoline from entering the country, Iran sees the handwriting on the wall.

Like the cobbler who has no shoes, Iran faces the harsh reality of a looming energy crisis, a sagging economy with growing inflation and unpopularity in the Arab and non-Arab world. It also faces the possibility of war. And fighting a war---war that it and its chief loud mouth Ahmadinejad has been picking---without enough energy is a losing proposition.

And so Iran prepares for the worst, as it hopes for the worst.

We in U.S. should take note of the very real possibility that we may face gas rationing in this country. We use much more refined oil than we produce domestically. Our refineries are stretched to capacity. There hasn't been a new one built on U.S. soil in almost forty years.

Not only do we need to develop crude oil reserves, we also need to increase domestic oil refining capacity to meet growing demand and to eschew our dependency on foreign refined oil from countries like Venezuela. Exxon and Mobile are pulling out of Venezuela altogether with Chavez takeover of the oil industry there.

Remember the word for the decade is r-e-f-i-n-e-r--y. I think it now has a new meaning in Iran. It should also in the United States.


Bob said...

Thanks for this post. Educate, educate, educate!

pam said...

You might like to know - gas is 19 cents per gallon in Venezuela right now.