Oil 1 Peak Oil 21

Neg Answers- Oil revenues temporary and have no effect

Patrick Clawson, (senior editor of the Middle East Quarterly and director for research at the Washington Institute for Near East Policy), WINTER 2007, Middle East Quarterly, VOLUME XIV: NUMBER 1, http://www.meforum.org/article/1068

Perhaps—but perhaps not. Firstly, there is no evidence that the Iranian government has been able to use its oil to influence other countries to turn a blind eye to its nuclear violations. Secondly, even if Tehran did throw its oil weight around, it could not do so for long. Production outside of the Organization of Petroleum Exporting Countries (OPEC) is increasing, in part in response to the stimulus of high prices, and the return of Hurricane Katrina-damaged facilities will only add to the higher output.[27] Despite the red-hot Chinese and Indian economies, world demand is growing more slowly as price influences consumption. It was the experience after both the 1973-74 and 1980-81 price increases that, within four years, the oil market softened. Iran's strategic leverage regarding oil may well decline with time.

In April 2006, world oil production was one million barrels per day higher than demand according to the prestigious Petroleum Intelligence Weekly. OPEC countries had excess production capacity of about 1.5 million barrels per day.[28] Further, the world refinery situation is changing so that heavier Saudi crude oils can be more readily absorbed whereas before, refineries were unable to take advantage of low Saudi prices because they simply could not refine its heavy crude. These two factors alone more than offset any potential cutoff of Iranian oil exports.

What about Iran's threats to disrupt oil shipments from the Persian Gulf? On June 4, 2006, Khamene'i warned, "If the Americans make a wrong move toward Iran, the shipment of energy will definitely face danger, and the Americans would not be able to protect energy supply in the region."[29] The Iranians have persuaded themselves that they have this capability. Ali-Ashgar Kazemi, a retired Iranian admiral now a political science professor at Tehran University, said, "Iranians are preparing for guerilla war at sea ... In an enclosed, narrow, and rather shallow region such as the Persian Gulf, this tactic can be very decisive against large units and can deny the enemy from effective deployment, sea lines of communication, and power projection."[30] Such a threat demonstrates Iran's ambitions: it wants to be a regional power whose wishes are accommodated by its neighbors. Defense News writer Riad Khawaji warned, "Iran could sortie nearly 400 small, high-speed craft armed with rocket launchers, torpedoes, and mines."[31]

But the Iranian government cannot cut off oil exports without considerable harm to its economy. The Iranian government relies on oil revenue to fund 75 percent of its expenditures. While Iran's foreign exchange reserves would cushion the impact, those reserves could only pay for a year's imports.[32]

Perhaps Iran's most immediate vulnerability is its dependence on imported gasoline, which provides about 40 percent of the 350,000 barrels of gasoline sold daily.[33] This vulnerability may be less than meets the eye. The price of gasoline at the pump is 800 rials per liter, or about 35 cents a gallon. Such a cheap price encourages gasoline smuggling to neighboring countries where gasoline prices are more than ten times higher and leads the Iranian government to hemorrhage revenue. Customer payment does not even cover the cost of fuel distribution. The Iranian government is, however, preparing. It is well along with gasoline ration plans to allow a quick response in the event of a gasoline import cutoff. Nevertheless, oil rationing remains politically unpopular.[34]