Iran: energy policy isn't easy in an Islamist state, either

Energy policy to address global warming, technology, and higher gas prices isn't just the problem of the United States, although President Bush's meeting with the Big 3 automakers today suggests we have a long way to go (no, the proposed 4% per year increase in fuel efficiency standards was not discussed).

Iran's conflict with the United States and other Western powers also has to do with energy - primarily, the Iranians' dramatically increasing energy use. Demand for electricity and gasoline has been rising at double digit rates as government subsidies reduce any market pressure to conserve.

Image from the Wall Street Journal Story

Demand for electricity is rising along with the rest, as Iranians avail themselves of cheap imports of basic consumer goods from China - TVs, refrigerators, and air conditioning (with summer highs exceeding 110 F, I can understand why). Thus, Iran wants to develop nuclear energy since its fossil reserves clearly can't keep pace.

Ironically, Iran's energy crisis is a problem of political will. In addition to subsidizing gasoline to reduce prices to $0.40 per gallon, oil-exporter Iran has to import gasoline to meet this subsidized demand. With $7 billion spent on gasoline imports last year - Iran lacks sufficient refining capacity for its crude oil - and $9 billion projected this year, they know consumption must be curtailed. But in a country with one all-powerful Supreme Leader (See: Iranian government structure), cutting subsidies is apparently as hard as cutting Congressional pork projects in the United States.

This time, President Mahmoud Ahmadinejad says the government is serious about cutting back consumption, though he acknowledged recently it's politically impossible to get rid of subsidies and raise pump prices the 40% to 50% that would require anytime soon. (emphasis mine)

And we thought leaders of democratic countries had it rough.

The final irony in the Iranian energy debacle is that the brinkmanship with the West might not be the economic hope they envision (although if it's nukes they want, they may not care). Uranium prices have increased ninefold since 2002 as demand for carbon-free energy has rejuvenated interest in nuclear power. In other words, there's no cheap solution to the energy crisis, whether it's more expensive nuclear power for Iran or carbon taxes in the United States.