Legislation is circulating in Congress, backed by the American Israel Public Affairs Committee, that would punish oil traders and transporters that sell refined gasoline to Iran.
Iran, like a handful of fellow OPEC nations, has a deeply deficient intranational oil refining infrastructure. Only 40 percent of their crude is processed in the country, the rest being imported or reimported from abroad as gasoline. So despite Iran’s plentiful reserves and current, boiling-point market prices for oil, proponents of the plan see an opportunity to hoist the Muslim nation on its own petard.
[Rep. Mark] Kirk said his bill would authorize the American Treasury to approach the underwriters at Lloyd's of London that insure the tankers that service the Iranian market and offer to buy out their contracts. He would also limit or restrict the amount of gasoline Iran would be allowed to import until the Islamic Republic was in compliance with the nuclear nonproliferation treaty and the additional protocol it signed with the International Atomic Energy Agency.
Nukes in Iran are bad news, of course. But this gambit is not likely to add much leverage on the diplomatic front. An embargo could indeed cause political headaches for state leadership as the Iranian public sours on high fuel prices, but Iran already highly subsidizes its people's gas--and has credible solutions on the table other than disarmament.
From a strictly environmental standpoint, the sanctions are not a horrible idea—if Iranian gas prices go up, consumption contracts, or (perhaps better) its offline refineries undergo redevelopment to increase capacity and slow the need for costly reimportation.
But in fact, the plan masks America’s own Achilles heel—our desperate need for energy. Kirk and co. hope that the gasoline that everybody else is withholding from Iran will flood the world market, increasing supply for the US and others at a time when petroleum is crippling the American livelihood and economy. But if the Iranians simply shut down production in protest, the global market is stuck with the resultant sticker shock. We’re over a barrel and, well—who’s with us? Kirk:
"The markets would look then to the swing producers, particularly Saudi Arabia, to see if they would make up the difference. I think a lot of countries would make up the difference. Remember there is no love lost between the Arab kingdoms and Iran."
Nor, Mr. Kirk, between the same kingdoms and the United States. Let’s recall Bush's gulf-state charm offensive last month, a beggar’s errand that was, to his consternation, ineffective. Further, Bush is in no position to convene the kind of coalition that could impose a true and tight sanction on gasoline entering Iran. For the same reasons these thinly-veiled “solutions” continue to bubble up from factions obsessed with the fun and games of bomb, bombing Iran.