REFILE-US, world reserves can offset Iran oil for 18 months

Reuters ^ | 03OCT06 | Tom Doggett

[familyop]

WASHINGTON, Oct 3 (Reuters) - U.S. and world emergency crude oil reserves could replace a complete shut-off of Iranian oil exports for 18 months, avoiding an estimated $201 billion in damage to the American economy, the Government Accountability Office said on Tuesday.

There has been concern among energy traders that tough action by the United States and other western countries against Iran's nuclear program could cause Tehran to retaliate by cutting off the country's oil exports. Iran is the world's fourth biggest oil exporter, selling about 2.7 million barrels a day.

Such a disruption would remove close to 1.5 billion barrels of crude from the market over an 18-month period, according to the GAO, which is the investigative arm of the U.S. Congress.

To avoid a huge price spike and ensure adequate supplies, the United States could coordinate with its fellow member countries in the International Energy Agency to jointly release their emergency oil reserves to offset a disruption in Iranian crude shipments for 18 months, the GAO said.

U.S. Secretary of State Condoleezza Rice, speaking in Saudi Arabia, said on Tuesday that the "only choice" for the international community is to impose sanctions on Iran if Tehran does not suspend uranium enrichment in the country's nuclear program.

The United States does not directly import oil from Iran, but a shut-off of Iranian oil exports would force countries that do buy Iranian oil to compete with the United States for crude supplies from other producing nations.

"Removing this (Iranian) oil from the market would raise prices everywhere, thus impacting the U.S. economy," the GAO said in its new report on how the U.S. emergency oil stockpile should be operated.

"At their current capacities, the SPR (Strategic Petroleum Reserve) and international reserves can replace the oil lost ... doing so protects the economy from significant damage," the agency said.

The United States holds about 688 million barrels of oil in the SPR. In addition, other IEA countries have about 2.7 billion barrels of public and industry reserves, with about 700 million barrels under government control for emergency purposes.

The GAO said using excess world oil production capacity, particularly in Saudi Arabia, along with industrial customers switching from oil to natural gas for fuel, would also be needed to help offset a disruption in Iranian oil exports.

Not replacing a cutoff of Iran oil shipments would cost the U.S. economy about $201 billion, the GAO said. Tapping just the SPR oil would avoid $132 billion in damage to the American economy, but also using international oil reserves would cause no substantial economic damage, according to the GAO.

The Energy Information Administration, which is the Energy Department's analytical arm, estimates the harm to the U.S. economy would be much lower at between $34 billion and $99 billion if the lost Iranian oil were not replaced.

The GAO said the lower number reflects the EIA model's assumption that oil price increases would not cause as much harm to the U.S. economy.

The GAO report comes as the Energy Department says it will delay purchasing until after the winter some 11 million barrels of oil that would replace SPR crude it sold to energy companies last year after Hurricane Katrina in order to keep more supplies on market during the upcoming heating fuel season.

[familyop]

...related.

Iran unable to block Hormuz
http://www.freerepublic.com/focus/f-news/1621693/posts

[LesbianThespianGymnasticMidget]

heh heh heh.... That damn Rove-O-Tron 2000©®™

[rocksblues]

If this is true coming from Reuters than Tehran residents better start digging in!

[cripplecreek]

The other oil producers in the region wouldn't be too happy to see Iran try to block the straight.

[jveritas]

And we only next 4 to 6 weeks of a massive Air War campaign to destroy anything called military infrastructure in Iran including their nuclear sites. After the war the Iranians will be quick to export as much oil as they can to avoid massive starvation of their population, so in other word the oil weapon will be used against them not against us.

[unkus]

Makes sence. We just needed more refineries and drilling here in the USA YESTERDAY

[edcoil]

True but under 12 years of republican rule - have we achieved anything we needed?

[familyop]

Ping to something maybe of interest.

[TheLion]

I read somewhere that Iran has to import 60% of its finished petroleum products. Also, they only have enough for a couple months on hand.

[DaveTesla]

We don't import oil from Iran.





OECD Oil Imports from the Persian Gulf U.S. gross oil imports from the Persian Gulf rose during 2003 to 2.5 million bbl/d (almost all of which was crude), from 2.3 million bbl/d in 2002. The vast majority of Persian Gulf oil imported by the United States came from Saudi Arabia (71%), with significant amounts also coming from Iraq (19%), Kuwait (9%), and small amounts (less than 1% total) from Qatar and the United Arab Emirates. Iraqi oil exports to the United States rose slightly in 2003, to 481,000 bbl/d, compared to 442,000 bbl/d in in 2002. Saudi exports rose from 1.55 million bbl/d in 2002 to 1.77 million bbl/d in 2003. Overall, the Persian Gulf accounted for about 22% of U.S. net oil imports, and 12% of U.S. oil demand, in 2003.

[jveritas]

I think you are correct.

[thackney]

I read somewhere that Iran has to import 60% of its finished petroleum products.

Not quite that much but they do import a lot.

Oil-rich Iran to continue petrol imports
http://www.iranian.ws/iran_news/publish/article_16960.shtml

Iran's refineries have a capacity of 40 million litres of petrol a day, but demand is over 70 million litres a day. The shortfall has up to now been met by spending billions of dollars each year on imported petrol.

The government then takes a double hit by selling fuel at just 800 rials (or US34c a gallon). Super costs 1,100 rials (or 45c a gallon).

[Earthdweller]

"U.S. and world emergency crude oil reserves could replace a complete shut-off of Iranian oil exports for 18 months.."

Go for it. Just wait until after the US Congressional elections.

[AwesomePossum]

In case no one has noticed, domestic oil drilling and production is going gangbusters. Drilling, storing, exploration, unlocking pumps, ______ to the wall...............and, if price per barrel stays above $48.00, it will continue that way...............plus, we have vast stores of oil sands & shale oil ready to be converted and used............and, mountains of coal, most of which is highly suitable for low temperture carbonization (rexresearch.com) to create bunches of high quality oil, gas and solid smokeless char.

We can be completely energy independant in five years or less, without nukes and without any serious pollution problem.................

Add on to that alternative fuels and wind, solar, wave, steam, etc.................and, check out blacklightpower.com and see a for real, promising new power source (hydrogen atom electron orbit lowered to produce max energy and heat) without radiation..................plus stuff I haven't even talked about or even know about........

The future of energy in America looks bright and promising,..........it's up to us to make it happen......VOTE REPUBLICAN (unless it's a liberal republican running against a Zell Miller type democrat).

P.S. Almost forgot......... death to the MSM

:}

[AwesomePossum]

The demonrats have tried and succeeded in blocking much of the Republican agenda..................Vote REPUBLICAN, and get the demonrats out of there..........

[M. Espinola]

Thanks for the ping. This article is of keen interest, much food for thought.

Here are a couple of interconnected links concerning Iranian oil.

Japan Will End Iran Oil Project Support If UN Imposes Sanctions - Bloomberg - Oct 2, 2006
Briefly: Iran to back 'any' move by OPEC to lift oil prices - International Herald Tribune - Oct 1, 2006

[M. Espinola]

Those first links did not function for some reason, these should.

Japan Will End Iran Oil Project Support If UN Imposes Sanctions

Briefly: Iran to back 'any' move by OPEC to lift oil prices

It's show time!

Government Spokesman: Iran Rejects Nuclear Suspension

[TheLion]

Thanks for the info. Looks like they have some vulnerability here.

[familyop]

You're welcome, and those links work fine. It appears that Japan is willing to give much to the effort. As you know, several OPEC leaders are angry with Iran. Maybe we should even toss in an offer to change "Persian Gulf" to "Arabian Gulf" for friendlier Arab states in that area. [g]

[EQAndyBuzz]

We are basically waiting to see what happens in November.

I will guarantee that if the Republicans hold congress and the senate Iran is coming to the table. The last thing they need is for Bush to have two years with a majority in both houses.