Why Iran Is Driving Oil Up

Of course, what you’re really looking at is oil money that’s been turned into the kinds of goods that keep people happy, or quiet, or both. While cutting back controls on imports, Tehran has jacked up salaries, pumped up pensions and doled out extra benefits from charities like the Imam Khomeini foundation. For Iran’s body politic, the cash infusion is like a drug. With the enormous surge in world petroleum prices, about $50 billion was injected into the country last year alone. And if the government’s spending has created a kind of public euphoria, it’s also creating an addiction. Some Iranian economists talk of a “disease.” What’s certain is that the regime’s pathological craving for continued high oil prices has become a key factor in the crises that President Mahmoud Ahmadinejad is helping to fuel, from the showdown at the United Nations over Iran’s nuclear program to the exploding cost of a gallon of gas. Many factors are to blame for high oil prices—but Iran’s increasing dependence on those revenues looms large among them.

But it’s a dangerous game, longer-term.

Newsweek