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The world’s fourth-largest exporter of crude oil, Iran ironically depends on the world market for 40 percent of its gasoline due to a shortage of refining capacity. This lack has meant Iran has not been able to enjoy profits from skyrocketing oil prices as its Arab neighbors have. With a population of more than 70 million, Iran also has to deal with robust and ever-increasing domestic needs; consumption is about 20 million gallons per day, a figure that has been rising more than 10 percent a year for the past five years. The situation became so serious that the government imposed gasoline rationing in June, causing riots in Tehran with angry crowds chanting, among other things, “President Ahmadinejad should be killed.”
Remedying this shortfall could force Tehran to choose between energy independence and its ability to play the nuclear card.
Faced with the international condemnation over its nuclear program and potential economic sanctions that could include gasoline imports, Iran needs to resolve its dependence on foreign imports fast. At the moment, Iran’s nine refineries have the capacity to process 1.7 million barrels per day (bpd) of oil, with upgrades currently under way aimed at expanding this figure to 2 million bpd. The proposed eight new refineries would raise this figure to 3.4 million bpd.
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