Could Iran be telling the truth about the nature of its nuclear program? Could it really be for energy?
U.S. policymakers tend to discuss that program
as if it must be a weapons program. Some time ago, I talked to a former intelligence official who was VERY skeptical about Iraq WMD back in 2002 but dismissed Iran's energy claim when I asked him about it.
However, Roger Stern, of the Department of Geography and Environmental Engineering at Johns Hopkins University recently investigated Iran's claims about energy and found they have some real credibility: "the oil export decline we project implies that Iran's claim to need nuclear power to preserve exports is genuine."
This is from his abstract
Because Iran's government relies on monopoly proceeds from oil exports for most revenue, it could become politically vulnerable if exports decline. Here, we survey the political economy of Irani petroleum for evidence of this decline. We define Iran's export decline rate (edr) as its summed rates of depletion and domestic demand growth, which we find equals 10-12%. We estimate marginal cost per barrel for additions to Irani production capacity, from which we derive the "standstill" investment required to offset edr. We then compare the standstill investment to actual investment, which has been inadequate to offset edr. Even if a relatively optimistic schedule of future capacity addition is met, the ratio of 2011 to 2006 exports will be only 0.40-0.52. A more probable scenario is that, absent some change in Irani policy, this ratio will be 0.33-0.46 with exports declining to zero by 2014-2015.
Think seriously about that last line: "exports declining to zero by 2014-2015."
There's another important zero mentioned in the piece
"Iran's petroleum investment climate therefore appears to have greatly deteriorated since 1998–2004, a period when investment was insufficient to offset the recent production decline (Fig. 2). Zero future foreign investment thus appears plausible."
The national Iranian Oil Company currently imports gasoline at the market price!
The political implications are interesting too:
The regime's dependence on export revenue suggests that it could need nuclear power as badly as it claims. Recent analyses by former National Iranian Oil Company (NIOC) officials project that oil exports could go to zero within 12–19 years (5, 6). It therefore seems possible that Iran's claim to need nuclear power might be genuine, an indicator of distress from anticipated export revenue shortfalls. If so, the Irani regime may be more vulnerable than is presently understood.
...We believe scenario 2 is most probable. In this case, export extinction in 2014–2015 is preceded by a decline to 33–46% of 2006 exports by 2011. Notice, however, that export declines are substantial, even in the least likely, most optimistic scenario. Because government revenue could be sustained only by rising price in all scenarios, absent such a price rise political challenges might overwhelm the regime long before exports go to zero.
The full piece is available as html
Hat tip: The April 2007 Atlantic Monthly.Visit this blog's homepage.