Iran has staggering decline in oil revenues

AP/NY Times:

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 Monday 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 then disappear by 2015, Stern predicted.

...

... the report said the country could be destabilized by declining oil exports, hostility to foreign investment to develop new oil resources and poor state planning, Stern said.

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 ''as badly as it claims.''

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.

''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.''

Iran produces about 3.7 million barrels a day, about 300,000 barrels below the quota set for Iran by the oil cartel, 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 revenues.

''If we look at that shortfall, and failure to rectify leaks in their refineries, that adds up to a loss of about $10 billion to $11 billion a year,'' he said. ''That is a picture of an industry in collapse.''

...

The theme of the piece is that Iran is collapsing on itself so we don't need to do any thing. Of course that assumes they don't get a nuke during the tame frame of their collapse. It does suggest that the lack of US investment and their own lack of investment in their production infrastructure is having an effect. They have unwisely chosen to try to solve that problem by building nukes rather than by building a relationship with the west. They took this course because they are ruled by religious bigots who don't want a deal with us. They want to destroy us. The analysis does explain their desperation for the nukes.