Why Ahmadinejad Fears Falling Oil Prices
Meir Javedanfar explains for Pajamas Media why Mahmoud Ahmadinejad, Iran’s President, is so afraid of falling oil prices.
Although many think that it is all about hurting the West, hurting anyone is not Ahmadinejad’s main concern in this regard, Javedanfar argues. No, the real reason Iran is constantly trying to push up oil prices is that Iran’s economy is in trouble.
Iran currently suffers from the highest inflation rate since the outbreak of the ‘Islamic Revolution’ in 1979: 27%. Furthermore, sanctions do their work tremendously as well; the only thing that is keeping the Iranian economy somewhat alive is, Javedanfar explains, oil.
But oil will not be able to make up for all the other problems if prices remain (far) below $100 a barrel. Ahmadinejad knows he has to keep those prices up. If not, Iran’s economy will suffer and the only way for him and his allies to remain in power will be to give the West what it wants; a suspension of Iran’s nuclear program.
That is, of course, something Ahmadinejad wants to prevent against all cost. He has railed against the West and defended his country’s ‘right’ to develop nuclear ‘energy’ for years. Giving in to the West, his archenemy, would be disastrous for him and, perhaps, for the leadership of the country as a whole; they would all lose face.
So they are trying to keep the prices up. They are calling on other oil producing and exporting countries to produce less oil, hoping that the prices will once again go up (artificially). But those other countries do not seem willing to give Iran what it wants… and needs. Saudi Arabia and Iran, for instance, are enemies. They are both Muslim countries, and ruled by fundamentalists, but one is Sunni the other Shiite. The one is afraid of the other and vice versa.
Ahmadinejad’s only hope is that either his enemies in the region produce less (doesn’t seem likely) or that demand for oil in the West and the rest of the world will increase significantly. Sadly for him, the second option isn’t very likely either considering the economic problems Western economies face.
Greenspan’s got a nice write up on this (in his book) and other Oil producing countries where the Oil is their nearly sole source of income. Essentially saying the same thing. Went on more on the social programs that are funded by the oil revenue and the risk to the government if those programs were removed.
Iran can try ..my gas buddies and I have declared war on oil..now we use very little..as soon as gm delivers my volt I will stop using oil completely…I switched to grain as the heat source for my house 5 years ago..as soon as I have enough money saved my solar array goes up …all Americans should switch to something other than oil..become a member of of pickens initiative..free our country
Actually, Sydney coal/natural gas is used to produce electricity and home heat for most Americans and that we have in abundance. In fact, there seems to be no thought to the fact that electric cars are going to require a lot more natural gas powered electricity to charge. Where are we going to get it if if we lock up all the prime drilling sites?