Monday, July 2, 2007

Better Whip Up A Nationalsit Frenzy Soon


In a strange twist of fate, Iranians are chanting “Death to Ahmadinejad!” in the streets of Tehran.
What gives? The Iranian population has been enjoying 34-cents-per-gallon fuel for years. But beginning last week, the Iranian guv’mint put a gas-rationing program into place. Iran -- the world’s third-largest oil producer -- imports over 40% of its gasoline because its current refining capabilities… well… suck.
Iran’s understanding of market economics isn’t much better. As usual, a chart is worth a thousand words:

Our friend John Mauldin estimates that 15% of Iran’s GDP is spent keeping gas cheap. Ahmadinejad is stuck. If his gas-rationing program continues, there will be blood in the streets. If he abandons the ration and drops subsidies, there will be blood in the streets.

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