Notes

Winter has come in the Islamic Republic. Iran is facing a major power outage in the middle of a cold spell. Government offices have cut their opening hours. Schools have closed. Street lights are switched off. Last month, there were scheduled two-hour power cuts across most of the country; this month, they’re random and last longer. One Iranian official said the country has lowered its industrial manufacturing output by 30 to 50 percent. The government has responded by inaugurating a campaign to encourage people to lower the temperature of their homes by 2 degrees. “God willing,” said Iranian president Masoud Pezeshkian, “next year we will try for this not to happen.”

But Iran has the third-largest oil reserves and the second-largest natural gas reserves in the world. Energy really shouldn’t be a problem here. How could this have happened at all?

As residents of Iran are wont to tell you, Iranian officials are neither incorruptible nor remarkably competent. “Blackouts on top of everything else!” Javad, a Tehran-based engineer, said to the Financial Times. “This is the result of ineffective managers and officials who are all talk and no action.”

Those same managers and officials have blamed the people of Iran for their “excessive” consumption. But if Iranians consume lots of gas, it’s not least because the government offers extremely generous subsidies—on which the International Monetary Fund estimates Iran spends more than one-quarter of its GDP. As a result, a liter of gas at the station costs less than three U.S. cents, making Iran one of the world’s cheapest countries to purchase gas. The government has tried to scale these subsidies back, but it fears repeating the circumstances of a 2019 gas price hike that led to widespread street protests.

Meanwhile, the government in Tehran has long prioritized gas to residential neighborhoods over industrial facilities. More than nine-tenths of Iranian households are connected to gas pipelines, which has caused industrial outages in crunch times. Last month, the government had to choose between supplying residential homes or power plants: On Wednesday of last week, officials said they’d temporarily closed 13 power plants. By Friday, they had closed 17, with the rest only operating partially.

Diversifying the country’s energy supply might’ve helped, but Iran hasn’t; roughly seven-tenths of its energy comes from natural gas.

Iran's energy infrastructure is in need or modernization. It lacks the technology to minimize gas flaring, which burns off tonnes of gas. And the country has struggled to transport gas from the resource-rich south to the big cities in the north. That problem got worse this February, when Israel blew up two gas pipelines inside Iran, forcing the Iranian government to tap into its strategic reserves. But instead of investing in its infrastructure, the Iranian government has spent billions propping up its regional allies.

Apart from these structural problems, there’s the sanctions regime imposed on Iran, principally by the United States—what Donald Trump called the “maximum pressure” strategy. The sanctions have limited Iran’s capacity to trade with the rest of the world—and precluded international investment in the country. So it lacks the refining technology to keep its output in line with its vast resources.

—Gustav Jönsson