Just as Iran’s bulge generation approaches retirement, Iran’s output of oil and gas is likely to shrink drastically. Iran’s GDP is just $7,000 per capita, mostly derived from oil and gas, and Iran’s oil production may fall to below domestic consumption requirements before 2020 because of the gradual exhaustion of reserves and neglect of needed investment.5 Estimates of Iran’s available reserves and explanations of the causes of its supply problems vary, but it seems likely that a combination of geology and incompetence will shrink state oil revenues—and the country’s capacity to subsidize
Just as Iran’s bulge generation approaches retirement, Iran’s output of oil and gas is likely to shrink drastically. Iran’s GDP is just $7,000 per capita, mostly derived from oil and gas, and Iran’s oil production may fall to below domestic consumption requirements before 2020 because of the gradual exhaustion of reserves and neglect of needed investment.5 Estimates of Iran’s available reserves and explanations of the causes of its supply problems vary, but it seems likely that a combination of geology and incompetence will shrink state oil revenues—and the country’s capacity to subsidize consumption—precisely when Iran will need them the most. “Iran’s natural gas exports will be minimal due to rising domestic demand even with future expansion and production from the massive South Pars project,” according to the U.S. Department of Energy.6 Iran’s aging oil fields will lose an estimated 8 percent of output per year, according to the DOE, although secondary recovery measures can slow the rate of decline. In 2010, the International Energy Agency predicted that by 2015, Iran’s oil production would fall by 18 percent, to 3.30 million barrels a day, compared to a 1970s peak of 6 million barrels per day.7 Even if secondary production methods reduce the decline from 8 percent a year to only 2 percent a year, oil output will fall by more than half by 2050, when an avalanche of retirees will make impossible demands on the Iranian economy. We have never seen anything like this before...
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; we have difficulty imagining the degree of misery that will befall Iran. Assuming a 2 percent per annum decline in oil output—a relatively benign scenario—Iran will encounter precisely the sort of national disaster of which Ahmadinejad warns. The years of the institutionalized Islamic Revolution have been, relatively speaking, economically fat years, subsidized by oil and natural gas production. And yet in those fat years, the educated urban population is slipping into drug addiction, prostitution, and despair. What will Iran’s lean years look like?
