The Double Edged Oil Weapon

Just as the Iranians like to think that they have the West over a barrel of oil, the Iranians have some problems of their own.

A serious lack of refining capabilities, which means that they're beholden to importing refined gasoline despite sitting on tremendous oil reserves.

Officials said Iran, hampered by a shortfall in funding, would halt the import of 200,000 barrels per day of gasoline on Sept. 23, 2006. They said no decision has been made on when to begin gasoline rationing.
Despite its status as the fourth largest oil producer in the world, Iran lacks refining capacity to meet the nation's fuel needs.

The announcement to end gasoline imports — most of it from Western Europe — stemmed from a decision by parliament to reduce the budget for gasoline imports to $2.5 billion from $4 billion, Middle East Newsline reported.

A key parliamentarian has already dismissed the prospect of rationing in the near term.

"Next week will be time to decide when we start rationing," Iranian Oil Minister Kazem Vaziri-Hamaneh said on June 23.

"Because there is no budget for importing gasoline in the second half of the year, naturally imports will be stopped and gasoline will be supplied by rationing."