More Fascinating Analysis by A Jacksonian

...What is even more worrying is the eventual collapse of the Iranian oil sector within the next few years, with an upper limit at 13 years and the lower limit of the next real problem they have at any refinery. They have so angered the rest of the world and have been so dedicated to putting a funding stream in for terrorism and in bribing their own people with cheap hydrocarbons, that they have not only not invested in their petro-infrastructure for at least 4 years and more possibly 8 years, but they have not actively *educated* those in charge of the system on how to run it.

No modern Nation willingly loses *any* oil between pump-head and the end of the refinery. A very miniscule loss is expected, but in the fractions of a percent and as close to zero as can be done. Iran is currently losing 3-4% of its oil between wells and the end of the refinery cycle: not diverted, not put into storage, not in excess products someplace. It is lost due to waste, mismanagement and ageing infrastructure. In trying to get the old 1980's maritime pumps going again, they have actively diverted money away from current infrastructure maintenance and provisional expansion to meet up with increased domestic demand. The long and short of it is that the refineries are not well run and that is the huge cash cow of the system: the refined products get you a higher return on investment. When Iran starts to publicly talk about shutting down its refineries to *buy* gasoline on the open market and *not* subsidize that, they have a huge problem. Loss of oilfield productivity, waste of oil in the pipeline to refinery systems and subsidized internal demand are driving the output graph to a plateau which will be declining as the marginal increased capacity they have *not* been putting on is *not* meeting the internal demand curve for petroleum. Even if the Iranian regime *today* ended internal subsidies and did a huge, multi-billion dollar re-investment in the infrastructure AND started projects off to actually expand production, all of that would not have any beneficial effects for 2-4 years and might actually collapse their economy.

When you hear Iran boast that it will cut off its oil supply one now must realize that this is going to happen sooner or later when that supply curve headed flat or down passes the demand curve headed upwards. Best guess is 7 - 13 years on that if nothing is done *and* they actually just maintained what they have. As they aren't doing that latter, the number of years until that is moved downwards.

Indicative of this is the fact that for 18 months Iran has *not* met its oil export quota. Before those supply/demand lines cross, Iran will have trouble fulfilling contracts and continuing to *be* a member of OPEC. At some point they will be forced out of the regular OPEC consortium or so relegated to miniscule output that they will not be seen as a trustworthy supplier of oil. When it comes to buying finished petroleum products, that same differential that internal production would *gain* is now a delta of *loss*: money flows out of the Nation to purchase gasoline. And as the subsidized amount is 34 cents/gal. and the world market is about 5 times that, the net economic effect is large.

So, beyond the human rights abuses, arming external Foreign Legions, using repressive Revolutionary/Special Guards and the Basij and hired mercenaries to suppress their own people, Iran is also creating a 'poison pill' which is already dissolving. The threat of 'taking them over and you lose oil exports' isn't a threat buy a short- to mid-term expectation even if they sat at home and started knitting.

So, even if the Iranian regime were overthrown today, this minute, and an instantly democratic government elected the next moment, the entire Nation is 'touch and go' on economic viability and might *still* collapse no matter how much money is thrown into it as the lead-time on maintaining infrastructure is something measured in years not months. Iraq, which had a decrepit and so-so maintained infrastructure, has taken three long years to turn around to get to maximum capability of the equipment, which is Soviet junk to start with. Iraq will need years if not a decade to be a regular, reliable oil producer even if all the insurgents went up in a puff of smoke and with a wave of a magic wand *today*. If you think what Iraq needed to get things running is high in monetary value, put that up by a factor of 3 or 4 for Iran. Possibly more as we cannot know the true state of disrepair of their oil system as *no* foreign investment or training has gone to it for nearly 8 years. Thank you to Japan for doing the *right thing* and holding the regime accountable to the NPT. That *had* to be done. The consequences are huge on a global scale if that wasn't done and only less large because it *was* done. You want intestinal fortitude? It is Japan basically saying: We are willing to lose you as OUR main oil supplier if you do not keep to the NPT. Takes a lot of guts to be willing to throw your Nation into an economic quagmire for the sake of high ideals of not wanting a Nuclear Terrorist State.

With that looming, however, Syria has had its own fun and games with increasing 'yellowcake' production via its phosphorus industry and gulling the Swedes to give them expertise in refining phosphorus, which was then turned around to make enriched uranium 'yellowcake'. Syria, by being Iran's European 'middleman' has been able to get Iran nuclear/chem/bio technology, as Syria has also sought that. In return Syria gets a say in Hezbollah and trying to take over Lebanon between them. From recent UK reports, ex-Saddam era nuclear scientists have shown up in Syria along with Iranian nuclear Scientists and ones from the ex-Russian Republics. Add that with its yellowcake enrichment capability and small, but capable chemical industry and Syria now has the 'full monty' of WMD within its grasp, including long range SCUD-D technology and AQ Khan nuclear designs that it got from Iran. Possibly some of the Mitutoyo separators that Iran was helping to ship around, too. So, while we worry and fret over Iran, Syria has put together a nuclear 'finishing group' and has the equipment and expertise to start creating uranium based nuclear devices supplied by its huge phosphorus processing industry. If Iran went down the tubes *today*, Syria, being so weak economically already, would actually ride that out rather well as it does not depend upon exports. In point of fact with their VX and Sarin capacity, speculated bio-weapon capability and now adding a nuclear capability, they are in a perfect position to threaten most of the Eastern Med. for extortion. The very real threats of being able to strike and render inoperable a list of targets is huge: Suez, Bosporous straights, Saudi Oil fields to name *just* the economic targets. Civilian targets within that radius are also available for reprisals. The VX and Sarin capability are already there and Syria makes a point of having multiple, deep underground production and storage facilities.

Additionally Syria funds and protects Kurdish radicals in Turkey and supports the Ba'athist and al Qaeda insurgents in Anbar in Iraq. So Syria is a huge problem even if Iran turned into that self-same democratic government tomorrow.

Care to tell me where to start on that list?

My choice is Syria as it disrupts Iranian influence in the Middle East and removes the current Chem/Bio threat from Syria and gives a chance to close the underground facilities so as to dig them out and inspect them later. You do not put in multiple large bunker complexes with oil feeds into some and large launching pads nearby on others to play tiddly-winks. Do that and Iran is forced to either fund Hezbollah via more expensive routes or to increase problems in Iraq: they will have problems doing *both*.

Bringing Iran down is *not* the problem. Ensuring that the bottom doesn't slide out of the world oil market *is* and we are faced with that in a few years in any event. You can put paid to them now or later, but they will need to be addressed.

I am more than willing to support the United States in helping the Middle East to redress the social, ethnic, and economic problems *created* by the post-WWI treaties that made these problems in the first place and help to get the region on a more stable footing that is realigned towards respecting ethnic, religious and tribal differences and not exploiting them.

That is a 30 year project at least.

We can remove the basis for much in the way of state funded terrorism and Islamic based terrorism by helping the Peoples of the Middle East come to a better set of understandings amongst themselves. There will be some redrawing of the various maps to do this, but the current configuration is not stable as we have seen.

If we don't then al Qaeda and Iran will implement their concepts of destabilize/exploit/destroy/fund insurgents/destabilize and take over weak areas to continue that cycle. And build an Empire on ashes and destruction, but that is fine with them so long as it has outward motion via exploitation of remaining interior population and resources. That is a recipe for global destabilization and disaster.