January 01, 2007

Iranian Oil some backup

As I recently posted on the crisis in the production of Iranian oil I thought I'd bring some new information in to bear on the issue for those interested. This is all courtesy of Bereft and they have discussed some of the implications politically for Iran over there. There is a fascinating post from the Jacksonian, what it points to is horrendous neglect by the regime of the basic economics of their major resource. It also points to the difficulties they are having because of their political machinations, if you cut off treaties with companies, they tend to ignore you and not trade with you and not help build up your infrastructure. They are in danger if they withdraw from the NPT of losing the cooperation of Japan, a country which really matters to them in this regard. Lastly there is the report on which this whole business is based by Roger Stern which by the way points out that it is very unusual for a country not to meet its OPEC targets and that Iran's domestic consumption is now rising fast while its production of oil doesn't increase but remains static- the point at which the two lines cross is obviously a point of danger. All these articles deserve reading and are by people who understand the issue much better than I do.

I would add though one point, it does demonstrate how difficult running a regime with people who neglect economic logic and who neglect relationships with foreign companies actually is. If even a state like Iran, which sits on a massive cash cow in the form of its oil reserves, can't in the longterm maintain its uneconomic policies and its affiliation to autarchy, then it says something about the capacity of states like this to have a longterm future. Of course we may all go up in smoke thanks to the Iranian nuclear bomb before then, but it does make one think about the way that the pressure of the market could come to bear in states who disdain the rule of law and neglect economic rationality.

(Apologies for repeating material, but I do think these reports with the added data are important to get out there and thanks to all the authors for providing me with that data.)


CityUnslicker said...

You are right to update. People need the facts and figures to make their arguments coherent; otherwise we bloggers end up as small time newspaper columnists, all waffle and no insight.

I still think it is overall a good thing that Iran is run economic incompetents as they always lose power; often sooner than they hoped. Even the Venezuelans can keep their oil flowing!

Gracchi said...

Yes and I think the great thing about blogging is the ability to update- to say I said in this in the past and here's some new evidence which makes me rethink it now.