Wednesday, April 05, 2006

Gasoline Rationing to Continue

Rooz Online:
Two days ago, Farhad Rahbar, the head of Iran's Planning and Management Organization announced that the government would continue the policy of quotas for gasoline during the second half of current Iranian year starting March 21. Gasoline rationing also means that there would soon be two different rates of gasoline, with some Majlis (Iranian parliament) representatives mentioning Rials 800 (10 cents) and 4000 (50 cents) as the prices.

Government officials and Majlis members have changed their position on the issue recently. Just two months ago Rahbar insisted that the government would not increase gasoline prices in the coming Iranian year. Even the Majlis of two years ago had blocked a plan by the then-reformist government of president Khatami to gradually raise the price of gasoline.

The debate over the impact of a gasoline price hikes continues, with some believing it would have a spiral inflationary effect and turn into Achilles’ heel hurting the government. Then there are those who argue that a managed hike would actually control inflation and that this is a preventive measure against possible economic sanctions that may be imposed on the country by the UN Security Council because of the nuclear issue that is currently before it.

Deceptive although catchy slogans such as eliminating poverty and supporting the deprived groups of Iranian society that hardline conservative politicians have been advancing during the past three years are similar to those that some revolutionaries of 1979 had advanced and which eventually led them to the apex of power in Iran. But time will soon show that these are merely empty promises and whatever little trust there is in the government will soon dissipate as poverty continues and in some cases even deepens.

Ahmad Tavakoli, a hardline right-wing economic thinker claims that since Iran is the largest gasoline consumer, economic pressures would mount on the government if the gasoline price rise to Rials 1800, hiking the inflation rate to 22.5%. His camp's political strategies and their resistance towards the gradual increase in the price of gasoline during the days of the former administration disappeared when Ahmadinejad came to power about nine months ago. This policy now appears to be their best strategy to cope with the increasing international pressure on Iran which has come about because of the nuclear issue.

On the other hand, in order to pave the way for Ahmadinejad's empty promises and his controversial requests to withdraw $4 billion from the country's foreign exchange safety account, the Majlis allocated $2.5 billion of the Iran's savings to import gasoline.

With Iran's nuclear file now at UN’s Security Council, Iranian officials are concerned about the outcome. Although Iran is among the world's biggest oil exporters, it is a major gasoline importer as well. It is reported that Iran has a daily gasoline consumption of 62 million liters. This figure would rise to 70 million liters caused by a 10.5% consumption rise as recorded during the past two years. Government officials have predicted that in 15 years, the gasoline usage would increase to 308 million liters per day. Although the capacity of the country's refineries stands at 38.5 million liters a day, Iranian oil industry officials report that Iranians used more than 30 million liters of gasoline last year.

It is widely recognized in Iran that if economic sanctions are imposed on Iran, gasoline imports could turn into a serious crisis for the country. READ MORE