A handful of legislators are hard at work this month, ironing out the differences between a House bill and a Senate bill designed to sanction Iran's energy sector as a way to make the Mullahs back down from their nuclear quest. The law, when passed, will hit Iran where it hurts; Iran's energy sector is the lifeblood of the men who rule the country.
The sanctions bill targets Iran's Achilles' heel: its heavy dependence on gasoline imports to meet between 30-40 percent of its total gasoline needs. Iran lacks the refinery capacity to convert its massive petroleum resources into gasoline to meet soaring domestic demand. It depends on supplies from a handful of gasoline traders. That number has been rapidly decreasing as more companies terminate their business ties to Iran in response to looming sanctions.
As the sanctions bill gets marked up in conference committee over the next few weeks, it makes sense to target not only Iran's gasoline supply chain but its massive natural gas deposits.
Behind Russia, Iran's natural gas reserves are the second largest in the world, with an estimated 1,045.7 trillion cubic feet. According to the U.S. Department of Energy, however, over two-thirds of Iran's natural gas reserves have not even been tapped. This presents Iran with enormous wealth potential, which it could use to increase its leverage over Europe, India, Pakistan, and other countries dependent on natural gas imports. At today's prices, Iranian reserves may be worth upwards of $4 trillion.
Natural gas also allows Iran to circumvent the sanctions that Congress proposes. Recognizing that it is flush in natural gas, and understanding that gasoline sanctions are imminent, the Iranian government has sought in recent years to shield its underbelly. To that end, it has relied more on its natural gas resources. For example, the BBC reported in 2007 that all cars manufactured in Iran were mandated to have dual-fuel capacity -- to run on either gasoline or compressed natural gas (CNG).
This was a clever move. Not only is natural gas more bountiful in Iran, it's cheaper. In fact, CNG costs around one cent per gallon and there is no limit to how many times Iranians may fill their tanks. Compare this to 38 cents that Iranians pay per gallon for gasoline. While this may seem inexpensive to Americans, it's not to Iranians. Iranians consider cheap gasoline a birthright. Recall, also, that Tehran has imposed rations on gasoline -- 21 maximum gallons per month.
To fully exploit its natural gas reserves, however, Iran needs help. Natural gas projects are complex endeavors that require specialized, sophisticated technology and services to compress or liquefy the natural gas. Much of this technology and services expertise comes from western companies, particularly Germany.
To encourage these companies to cut their business ties, Congress should add to the legislation specific sanctions against products, technology, services, support, and specialized energy information for Iran's natural gas sectors.
To miss an opportunity to do so would provide the Iranian regime with a financial enrichment scheme to match its increasingly successful -- and dangerous -- uranium one.