Monday, July 17, 2006


Iran, surprisingly, cannot refine its own oil. I did not know this when I first arrived here and was always baffled by the long lines at the pumps combined with the often empty reserve tanks. I thought it had to do with the (in)efficiency of measuring the reserves in the station’s tanks, not with the availability of gasoline.

On the highway, Iranians stop at every station they see to make sure their tanks are always filled. It’s not unusual to find stations in the middle of nowhere with no gasoline available to sell.

Iranians have giant plastic containers that they bring to the station to fill. They often drive around with these containers in the trunks of their cars. Any taxi driver you meet can tell you about witnessing a small accident that ended in a large explosion, confirming my speculation that Iran’s horrible accident fatality rate may have something to do with carrying gasoline in plastic containers.

And now, Iran may be running out of gasoline and running short on gasoline policy:

With demand far outstripping its domestic refining capacity, Iran buys foreign gasoline for slightly more than 50 cents a liter (about $2 a gallon) and sells it at the pump for about 8 cents a liter (less than 40 cents a gallon), the highest subsidies in the region.

The discount prices have further encouraged consumption and cut into the country’s export windfall. Waste and pollution are rampant. The cheap gas is smuggled out to other countries at the rate of some two million gallons a day, according to one study by Parliament.

Iran, an Oil Giant, in a Gasoline Squeeze


mike davis said...

Is there any rational reason why Iran has not built several refineries in the last 50 years?

If the government of Iran had put half as much energy into securing the welfare of the nation as they have in keeping women's hair out of sight, the country would be far better off.

When one thinks of it, why would any oil producing country sell unrefined oil?..why not get the real value added economy of the situation and refine all the product at source? The West couldn't actually stop this, short of more Mossadeq-style coups...and we all know what that leads to.

Why does not any political party in Iran run at an election on a program of '10 Refineries for Iran'? (good work opportunities for the 'religious' police)

Am I missing something here?

aje said...

Driving to work this morning I saw a billboard advertising the unbelievably "low" price of $2.94 for a gallon of gasoline. With a half - full tank I pulled off, thinking it may be a while before I can get gas this cheap again. No other cars were there and I thought I'd be back on the road in no time. All of the lanes were barricaded. What's up with that? I soon realized that every gas station at this crossroads had sold out of gasoline. Life is changing here in the US.

angel said...

Now that Iran has plenty of nuclear fuel (and not even one reactor to use it in), this "Oil Empire" runs out of gasoil... maybe Iran should USE NUCLEAR FUEL IN CARS.... why not?
How can Iran invest billions (money of other dependent countries of course, with rising costs of crude because of the iranian nukes and other provoked conflicts) to the nukes and is not able to build refineries or factories to give jobs to the people and solve the other social issues? The domestic production is in crisis, everything has to be imported, factories are closing down... at least 15% unemployment, inflation and so on (the daily roozonline reports quite well, do people read it?).

So the government claims "independence"?

National pride is beautiful, but if for this doubtful technology Iran is ready to sacrifice all the economy and risk international isolation, sanctions and even a military strike... I'm sorry to tell it, but either the government wants a confrontation, or it just doesn't give a damn about the people (like the Iran backed Hezbollah in Lebanon) and follows just it's own interests... or both.

Anonymous said...

Iran does refine its own oil, but the capacity hasn't grown on par with consumption. They a certain portion, the rest is domesticly produced. I am surprised you were misled in this regard. And a good number of new refineries have been built in the past 30 years at a cost that is many times more than what is invested in the nuclear industry.