DAR AL HARB/ISLAM - THE WEST/IRAN: "MULLAHS GONE WILD"

Mullahs Gone Wild
by John Mauldin, Millennium Wave Advisors

I want to briefly look at a development in the oil markets, which I find intriguing. Dr. Woody Brock, in a recent paper on oil prices, wrote a rather interesting sentence, to wit, that Iran would not have net oil to export in 2014.

I found that rather remarkable. Woody is very serious and sober-minded even for an economist, not given to rash analysis, but this was certainly a new idea to me. I knew they were importing most of their gasoline, as they do not have a great deal of refining capacity. As it turns out, there is much more to the story.

I have said for years that I expect Iran to be the new friend of the U.S. sometime next decade, as the regime is not popular and the country is growing younger. (Think China, once an implacable enemy.) I thought that the impetus would be the lack of freedom and knowledge of how the world is better off coming from the Internet, but it turns out that it may be a desire for more freedom combined with economic problems, which help bring about regime change, much as in Russia last century.

How could a country with the third (or second, depending on which source you quote) largest oil reserves in the world not be churning out ever more black gold? The answer, as it almost always is for such problems, turns out to be governmental and not economic in nature. Let's start out with a few facts.

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Pertinent Links:

1) Mullahs Gone Wild