Thursday, March 22, 2012

Iran gas

Would blocking gasoline imports to Iran put pressure on the government? While Iran exports oil it imports gasoline because it does not have the refining capacity to meet its needs. Thus they have to pay the world price for much of their gasoline. The government subsidizes gasoline so the cost to consumers is low. If a blockade is put in place the people will pay more for their gas and there will be rationing and the thinking is that this would cause them to revolt.
The other argument is that the Iranian government would say this is a plot by the west to hurt Iran and the people would rally around the government. A third possibility is that China would increase its exports of gasoline to Iran to offset the blockade. The danger here is that China is growing so fast it needs more of its own gasoline and exports last year dropped by 21%. China has recently proposed building 7 new refineries in Iran. EU sanctions on shipping oil from Iran have hurt because most of the insurance companies that cover shipping are in Europe, primarily in London.
New subject
The Chevy Volt was voted the car of the year by Motor Trend Magazine and it was also voted the European Car of the Year. Following these honors GM has stopped producing the Volt because of low sales. Apparently the value of a car is not determined by sales but rather by some experts sitting in an office somewhere.

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