Iran Oil Revenue Quickly Drying Up, Analysis Says
Tuesday, December 26, 2006
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.
Iran's economic woes could make the country unstable and vulnerable, with its oil industry crippled, Roger Stern, an economic geographer at Johns Hopkins University, said in the report and in an interview.
Iran earns 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 they could disappear by 2015, Stern predicted.
Stern's analysis, which appears in this week's edition of the Proceedings of the National Academy of Sciences, supports U.S. and European suspicions that Iran is trying to develop nuclear weapons in violation of international understandings. But, Stern says, there could be merit to Iran's assertion that it needs nuclear power for civilian purposes.
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.
"What they are doing to themselves is much worse than anything we could do," he said.