The State of the Iranian Oil Industry and Its Role in Irans Economy Case Study

The State of the Iranian Oil Industry and Its Role in Irans Economy - Case Study Example This research will begin with the statement that Iran's economic reliance on the oil industry has been stronger than ever as demonstrated by the steady trend in domestic demand and the government’s effort to counter the adverse impact of its economic isolation. An increase in its energy output is seen as the only way to solve the issues it currently faces. This focus has led to several sustainability challenges that require immediate attention if the country is to achieve a viable economy in the long-term. Iran belongs to the top five oil-producing countries in the world. The International Energy Agency reported that in 2013, the country produced 2.5 million barrels per day and about 1.2 million barrels were exported. For this reason, the oil industry remains a backbone of the Iranian economy. It generates revenues that represent at least 18.7 percent of the country's gross domestic product and claim 85 percent of the country's total export and foreign currency earnings. Repor ts indicate that high oil prices in the past decades enabled Iran to accumulate almost $60 billion in foreign exchange reserves. The focus in oil production, however, has led or has aggravated three important sustainability challenges: air pollution; damage to water resources; and the environmental damage stemming from potential conflict. Air pollution remains the leading environmental problem in the country. It is caused by vehicle emissions, refinery operations, and industrial effluents. Particularly, combustion of vehicular traffic dominates pollutants. In Tehran, for example, they contribute to around 80 percent of air pollution.