Iran Gasoline Sanctions Legislation Introduced in House

Washington, D.C. (May 1, 2009) — The Foundation for Defense of Democracies (FDD) welcomed the introduction of the bipartisan Iran Refined Petroleum Sanctions Act of 2009, H.R. 2194, which would require that any foreign entity that sells refined petroleum to Iran or enhances Iran's ability to import refined petroleum be barred from doing business in the United States. It is similar to Senate legislation of the same name, S. 908, introduced on Tuesday by 25 Senators.

In introducing the bill, House Foreign Affairs Committee Chairman Howard Berman (D-CA) said, “I share President Obama's conviction that it is unacceptable for Iran to possess nuclear weapons and his determination to seek a diplomatic solution to this issue. However, should engagement with Iran not yield the desired results in a reasonable period of time, we will have no choice but to press forward with additional sanctions — such as those contained in this bill — that could truly cripple the Iranian economy.”

“Democrats and Republicans in both the House and the Senate have sent a strong message this week that Iran's nuclear weapons program is intolerable and that Iran must be prepared to make concessions as part of the diplomatic process or face strong sanctions,” said FDD Executive Director Mark Dubowitz. “Like Chairman Berman, we all hope the regime will see the light and that this legislation will not be needed. Congress recognizes that diplomacy is more likely to succeed if Iran's leaders understand that they will face dire consequences if they press ahead with their illegal nuclear program.”

Dubowitz recently coauthored an op-ed on Iran's dependence on imported gasoline for Canada's National Post, and was quoted in a Wall Street Journal editorial.

“Iran's need to import 40 percent of its gasoline is its Achilles' Heel,” said Orde Kittrie, an FDD senior fellow, law professor at Arizona State University, and former U.S. State Department official. “Iran relies on a handful of foreign energy companies, all with significant business interests in the United States, to supply it with the gasoline it needs. If these companies end their business relationships with Iran, Iran's economy will slow dramatically, its military will have to look elsewhere for fuel, and the Iranian people may demand that their government start investing in refineries for Iran's plentiful crude oil rather than continue pouring money into its illegal and dangerous nuclear program.”

Iranian oil wells produce far more crude oil than Iran needs. Yet, Iran has not developed sufficient capacity to refine that crude oil into gasoline and other products. As a result, Iran must import some 40% of the gasoline it needs to fuel its economy and military.

In November, Kittrie wrote an op-ed for the Wall Street Journal on how to increase U.S. leverage over Iran by focusing on Iran's gasoline suppliers. Those companies include Vitol (Switzerland/The Netherlands), Trafigura (Switzerland), Total (France), Reliance Industries Ltd. (India), Glencore (Switzerland), and Shell (The Netherlands). BP has supplied gasoline to Iran, but according to industry reports it has not in 2009.

During the presidential campaign, then-Senator Obama endorsed a cut-off of gasoline sales to Iran. On October 7, 2008, Obama stated: “Iran right now imports gasoline … if we can prevent them from importing the gasoline that they need … that starts changing their cost-benefit analysis. That starts putting the squeeze on them.”

FDD has provided substantial research and analysis on this subject, including identifying points of leverage over the foreign energy companies that supply Iran with the majority of gasoline it imports. Limiting gasoline sales to Iran to address its nuclear program has attracted broad support across the political spectrum.

For more background on the issue, please visit: www.iranenergyproject.org