France Press Report on the Gasoline Crisis in Iran - 2003-12-09

The gasoline shortage is a danger that threatens Iran in the coming months. Can the Iranian government reduce gasoline subsidies? What consequences will the rise in oil prices have for the Islamic Republic? These are questions that a reporter from France Press has recently addressed in Tehran. The reporter writes: "In recent weeks, many gas stations, especially in Karaj and Qazvin, have run out of gasoline, and drivers have waited for hours to fill their tanks. The latest figures show that Iran's domestic gasoline consumption is 57 million liters per day, which is a 13% increase from last year. The refineries of the Islamic Republic can only convert 38.5 million liters of oil into gasoline per day. Thus, the rest of Iran's domestic needs must be imported, costing the government one and a half billion dollars annually. The total government subsidies amount to 3.5 billion dollars a year, thus taking a significant portion of the country's budget." The France Press reporter adds: "The main problem in Iran is the incredibly low price of domestic gasoline consumption. Gasoline costs 65 tomans per liter in Iran, which is 0.08 dollars, the cheapest price in the entire Middle East. Of every liter of gasoline sold, 0.16 dollars is paid from the government's pocket. Moreover, this gasoline is a suitable commodity for smuggling to neighboring countries where the price is 10 to 13 times that of Iran. Iranian gasoline can be found in the markets of Afghanistan, Pakistan, Iraq, and Turkey. The amount of gasoline smuggling in these countries is unknown, but a state newspaper reported last week that after the arrest of a smuggling gang in Khorasan, consumption in this province dropped to one million liters per day. Additionally, the number of cars on the congested streets of Iran is increasing every day, which itself increases gasoline consumption." According to the Baztab website, France Press continues by quoting Mohammad Aghaei, Deputy Minister of Oil in Iran, stating: "If we do not organize public transportation services as soon as possible, we will have to import 24 to 25 million liters of gasoline daily, but we have neither the budget nor the technology for such an action." The reporter concludes: "A solution proposed by a special commission addressing this crisis is to limit subsidized or cheap gasoline consumption to 120 liters per car per month, so that drivers are forced to pay the full price for their remaining needs. However, analysts believe that a significant increase in gasoline prices will bring the risk of urban unrest, adding that most Iranians consider cheap gasoline their natural right, and with high inflation in the prices of basic goods that take a large portion of their income, raising gasoline prices will bring a serious crisis for the government.