Analysis: Strong carbon cap would cut Irans petrodollars by over $100 million a day

Strong Climate Policy Cuts Iran Petrodollars

A strong cap on carbon would significantly cut the flow of petrodollars to Iran’s hostile regime, a ThinkProgress analysis shows.

The economic and political strength of Iran’s dictatorship is a threat to the national security of the United States and the world, and its nuclear ambitions threaten to destabilize the Middle East. Yesterday, diplomats from “six world powers have met for the first time to discuss imposing new sanctions on Iran for its failure to suspend work on its controversial nuclear program,” but negotiators have not yet figured how to achieve President Barack Obama’s goal of being “consistent and steady in applying international pressure.”

Iran, “which holds the world’s second-biggest oil and gas reserves and supplies about 4.5 percent of the world’s oil production,” uses its oil power “as a strategic asset.” One mechanism to control the flow of petrodollars to Iran “” whose oil production is worth $120 billion a year at current prices “” is for the United States to control its appetite for oil. ThinkProgress has found that a carbon cap that reduces global warming pollution by 80 percent by 2050 would mean Iran would lose approximately $1.8 trillion worth of oil revenues over the next forty years “” over $100 million a day [as the figure shows].

The United States is by far the world’s biggest consumer of oil, accounting for 25 percent of world production. Our demand is more than the four next biggest consumers “” China, Japan, India, and Russia “” combined, despite having only 11% of their population. Unilateral action by the United States to reduce oil consumption has a profound effect on the world market, and is the first step towards global climate policy that builds a zero-carbon economy.

If the world moves away from oil dependence, Iran’s regime will no longer be able to rely on petrodollars to stay afloat. Other unfriendly regimes propped up by carbon-fuel money, such as Hugo Chavez’s Venezuela, will also feel the pinch, improving our national security and making it less likely our armed services will fight battles amid the oil fields. For that to happen, the United States must pass comprehensive climate and clean energy legislation as fast as possible, the stronger the better.

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10 Responses to Analysis: Strong carbon cap would cut Irans petrodollars by over $100 million a day

  1. Tammy Skillings says:

    “Strong climate policy” It is actually using energy as a medium for western Imperialism. The climate doesn’t get effected by policies. I suspect the west was told to leave south africa alone. We have our own problems to deal with..

  2. Leif says:

    Good post Joe, shout it from the roof top.

  3. Bob Wallace says:

    Not just Iran, but a lot of other countries which we are allowing to jerk our strings. Got to keep your dealer happy or ….

    Get ourselves off of our oil jones and we can save billions of dollars from importing something that we could do without. If we didn’t have to protect “our” oil supply we could reduce our military expenses, saving even more.

    Just think what we could do with all that additional money – fix our schools, cut higher education costs, pay down our national debt (saving us even more money on interest payments), improve public transportation, fix our transportation infrastructure, ….

    Get our cars hooked up to the grid and each car owner could save $100 or so a month. A lot of that money would then get spent in ways that increase jobs inside the country – fixing up houses, eating out, vacations, etc. That would mean even more money flowing into government taxes allowing us to do even more good stuff.

  4. Bill W says:

    This is actually the one thing that worries me about curtailing our oil use. My impression is that many (most?) oil-exporting countries, particularly in the Middle East, have few, if any, other exports. What happens to their economies when we stop buying their oil? And what are they likely to do as a result? Now they’ll blame the West for destroying their livelihood, and have another reason to hate us. They may not have the funds for large scale attacks, but terrorism is pretty cheap.

    That being said, we still need to get off oil. Even greater conflicts are likely to arise due to the effects of climate change if we don’t. But we need to consider that there may be some negative consequences beyond cutting oil company profits.

  5. Bob Wallace says:

    We most likely will get off oil. But it will be slow.

    Even if the Nissan Leaf and a few other EVs/PHEVs coming out in the next year or so are wildly received it will take years to work ICE vehicles out of our fleet.

    It won’t be an abrupt loss of income for oil-producing countries.

    And some of the oil-producing countries are already moving their economies to a post-petroleum economy. Those holes in the ground containing black stuff are not bottomless and leadership of those countries know that.

  6. Brad Johnson says:

    Bob gets this right — the oil-producing nations will have time to shift away from petrodictatorships.

  7. GFW says:

    Yep, oil-producing nations will have the time, but they probably won’t have the political courage.

    BTW, does comment #1 (Tammy S) make any sense, other than the linkage between our current thirst for oil and our imperialistic tendencies? I mean, what does South Africa have to do with this topic? And yes, climate will indeed be affected by policies if policies affect the amount of carbon we put into the atmosphere.

  8. Leif says:

    Brad, #6: “Bob gets this right — the oil-producing nations will have time to shift away from petrodictatorships.” And they will be able to do it with dollars collected from the west and paid for by us, our youth and including interest. Good move parents!

  9. quokka says:

    #1 Tammy Skillings: ““Strong climate policy” It is actually using energy as a medium for western Imperialism.”

    The urgent need to control emissions exists regardless of geo political alignments and configurations is quite real. This is beyond reasonable doubt.

    Having said that I have little doubt that western powers will try to do it in a way that furthers their interests and perpetuate global inequality. You need to turn your attention to mechanisms and policies for reducing emissions that do so in a fair and equitable manner.

    It may be not be the right forum for this, but seeing that these political issues have already been raised, the notion of countries such as Venezuela “jerking the US’s strings” is really a bit rich after a century of US intervention, both covert and overt, in Latin America for purposes of the preservation and extension of US power. Intervention that frequently lead to misery for the hapless populations.

    It is manifestly obvious that getting emissions under control requires a global commitment. While I doubt that too many people inside or outside of the US will find US concern about energy security objectionable in itself, there will be many who will find a “strong climate policy” cited as an instrument for continuation of the neocon foreign policy of aggression against sovereign states to be alarming.

    Waffling on about US foreign policy objectives is not the way to build global consensus.

  10. Chris Dudley says:

    Climate legislation does not do a lot about oil demand unless it targets oil consumption directly. Mechanisms that simply price carbon have little effect on oil because the US has a high oil price policy. With a high price of oil, a carbon price adds relatively little to the cost of gasoline and so does not affect demand. CAFE standards do but are generally passed as separate from climate policy and are aimed at a high oil price currently.

    If we want a low oil price policy, which would remove the profit from low cost oil production such as in Iran and boost our domestic economy, we need to set demand to a level which ensures substantial excess production capacity among low cost producers. Saudi Arabia, in particular, needs to have enough of its capacity out of production that it becomes difficult for them to repay investment, at which point they must undersell other OPEC members. And, we need to be prepared to continue to cut demand as lack of investment in new oil production leads to a decline in worldwide production capacity.

    A low oil price policy would be the best economic choice for the US but we are strongly influenced by domestic producers who need a high oil price to operate at all. Royalties from domestic oil production on public lands do not begin to make up for the lost revenue from other tax sources when the economy is damaged by high oil prices so high oil prices are also bad government. But, we seem to be stuck in a rut and climate policy, on its own, won’t get us out of it.