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not all is equal. what choice will you make?

Why Iran hates the strategic oil reserve

Alykhan June 27, 2011

Looks like the mullahs in Tehran aren’t thrilled about the fact that oil consuming countries, including the U.S., have started releasing their strategic oil reserves to try and cool down the rising price of oil:

“The measure by the International Energy Agency in consuming their oil stockpile is meddling in the natural oil market trend and the drop in oil prices will not be sustainable,” quoth Iran’s OPEC governor Mohammad Ali Khatibi in the Al Arabiya News.

The last part of Khatibi’s point will probably be proven true: pushing a million barrels a day onto the U.S. market will probably at best shave a few pennies off a gallon of gas, and the reserves won’t last more than a few months before they run dry. But the insignificance of the effect is exactly what makes Iran’s petty reaction so remarkable. Notice that  you don’t hear Canadian officials publicly griping about the maneuver, as minor as it is.

There’s a reason for that. While Canada produces loads of Ethical Oil—it’s the number one exporter to the U.S. market—it has also developed an enormous economy beyond its energy sector that relies on manageable energy prices, just as much as the American economy does. Canadians don’t exactly celebrate when oil prices are too low to make production uneconomical, but neither do they celebrate when oil prices make everything else—trucking, manufacturing, airlines, farming, etc.—uneconomical, either. In Canada, where we also make cars and smartphones, oil accounts for less than 3% of GDP. In Iran, where they also make, um, pistachios and rugs (and not much else – seriously), oil revenues constitute more than 60% of government revenue. Tehran parties when oil prices soar. No wonder they complain at even the smallest measure that might temporarily moderate prices.

That’s the thing about petro-states that rely so heavily on Conflict Oil to enrich their brutal regimes. Their interests are naturally misaligned with that of the free, developed, economically diversified world. Canadians rely on a strong American economy, as well as affordable oil. Canada wants only to sell yet more of its Ethical Oil to the United States—and the more oil Canada can produce, the more stable prices remain—while Iran protests at even the mildest mitigation of oil prices, even if it’s bound to last only a short while.

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