Oil-Rich Middle East Dictators Want…Oil Independence?

If you needed any further evidence of the upward momentum of oil prices, witness Iran, where the price of gasoline is a small fraction of what it is here in the United States due to the country’s vast domestic reserves and heavy government subsidies. This week, reports came out that the Middle East’s largest carmaker, Iran-Khodro Company (IKCO,) will improve the average fuel economy of its vehicles to the equivalent of 32 mpg this year.

As an carmaker based in the “Axis of Evil” with no sales in the United States, IKCO doesn’t have to worry about meeting CAFE or any other standards. So why would a company based in a country where gas costs less than a 50 cents per gallon worry about fuel economy?

Because the Iranian government apparently views oil as too valuable to waste on the domestic market. Several years ago, Tehran began making moves toward transitioning its cars from petroleum to compressed natural gas—which is expected to remain cheap and abundant for most of this century.

In Saudi Arabia, renewable solar generation is poised to help remove petroleum as the kingdom’s leading source of energy within the coming decades. Last month, the Saudi government announced a $100 billion investment in nuclear and renewable energy, with the stated goal of increasing the amount of oil available for export.

“The use of alternative sustainable and reliable resources reduces dependency on hydrocarbons and keeps them as a source for income for future generations,” said Khalid Al Sulaiman of the King Abdullah City Center for Atomic and Renewable Energy, as reported by Forbes. “To [meet] growing energy demand and maintain long-term economic prosperity, it is critical that the Kingdom add new power generating capacity while reducing the amount of fossil fuels used to produce electricity.”

By 2030, the Saudis will attempt to replace 20 percent of their energy generation with renewables, making up the rest of the difference with nuclear power.

Saudi Arabia, Iran and IKCO all realize—and recent investments solar power and electric vehicle technology in other Middle Eastern countries confirm—that as world demand for gasoline increases, so too does the economic argument for selling oil to countries like the United States and China instead of giving it away at home for nickles on the dollar. Every gallon of gasoline the Saudis and Iranians save means one more gallon to sell on the world market—and more money in the coffers of their governments.

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  • Jim1961

    We’re way behind Europe on energy efficiency. We’re in danger of falling behind China too. If middle eastern countries beat the US in energy efficiency then we are just pathetic.

  • MrEnergyCzar

    I think its to lesson the impact and chances or rioting when fuel prices eventually have to be adjusted up. I remember they were burning gas stations when they raised a gallon of gas in Iran by like a penny…..


  • zhubin

    this is very interesting, I live in santa monica but was born and raised in iran, i think this is a wise and good policy regardless of it’s
    true intentions. Tehran has a terrible air-quality, it’s deadly and despite their efforts to have subway-transit, people suffer from a nasty air-quality that can kill them. Their number one priority shouldn’t be democracy, nor a nuclear program but”CLEAN-AIR”.

  • Carguy

    Iran has limited refinery capacity and gas is rationed at subsidized prices. Anything over and about the allocated amount must be purchased at regular rate which is about $1/ liter. If you look at the cars in the picture you can see that the majority of cars are 4 cylinder compacts.

  • Anonymous

    even iran is moving forward on the oil dependence issue… north america really needs to wake up and smell the coffee!!!

  • tapra1

    growing energy demand and maintain long-term economic prosperity, it is critical that the Kingdom add new power generating capacity while reducing the amount of fossil fuels used.Cloud Hosting Reviews