Iran running out of gas

Bloomberg/Houston Chronicle:

Iran, the world's second-largest holder of oil reserves, may ration gasoline to less than a gallon a day as early as September to curb imports as surging world prices bankrupt the government's price-subsidy program.

The decision follows a parliamentary vote last month that cut the state's annual budget for gasoline imports for public and private use by 40 percent to $2.5 billion. The rationing won't apply to taxis and public transport vehicles, Deputy Oil Minister Mohammad Reza Nematzadeh told reporters Wednesday at an Abadan, Iran, briefing broadcast by state television.

"Perhaps the rationing will start sooner than the end of September," as the budget may be exhausted by the end of August because of rising international crude prices, Nematzadeh said.

Mounting tensions over the Islamic nation's nuclear research has helped push crude oil prices to record levels in New York.

Iran, the second-largest oil producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia, imports more than a third of the gasoline it uses because of waste, lack of refining capacity and smuggling. Last year alone, Iran spent about a 10th of its $44.6 billion in oil export revenue on gasoline imports.

The Pakyan car, a descendant of Britain's Hillman Hunter model that's owned by four out of every 10 Iranians, uses as much as 16 liters of gasoline per 100 kilometers (15 miles per gallon), according to the state-run Iran Daily in 2005.

A 3-liter ration would limit the least efficient Pakyans to 18 kilometers, or 11 miles, a day, less than half the distance between the edge of Tehran, the capital, and the city's new airport about 19 miles south.

A 40-liter tank of gasoline costs Iranian drivers the equivalent of $4.

...

Markets can be brutally efficient. Iranians are smugging the cheap gas to neighboring countries costing Iran's mullahocracy an extra billion dollars a year in their ridiculous subsidy. It is crasy that they are investing in nuclear energy instead of refinery capacity. It also suggest that Iran's military could operate only a matter of days before the machinery of warfare ran out of fuel.