Dec 26, 2006

Iran Oil Revenue Woes

It looks like the Iranians actually need to develop their nuclear energy industry after all.

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

Iran's economic woes could make the country unstable and vulnerable, and its oil industry could be crippled, Roger Stern, an economic geographer at Johns Hopkins University, said in the report and in an interview.

Iran makes about $50 billion a year in oil exports. The decline is estimated at 10 to 12 percent annually. In less than five years exports could be halved and then disappear by 2015, Stern said. ...

Stern said there could be merit to Iran's assertion that it needs nuclear power for civilian purposes "as badly as it claims."

He said that oil production is declining, and that 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.

"With an explosive demand at home and poor management, the appeal of nuclear power, financed by Russia, could fill a real need for production of more electricity." ...

If the United States can "hold its breath" for a few years, it may find Iran to be a much more conciliatory country than at present, he said.

And that, Stern said, is good reason to rethink any instinct to take on Iran militarily.

"What they are doing to themselves is much worse than anything we could do," he said.

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