Pezeshkian Says We Shouldn't Buy Gas at High Prices and Sell It Cheaply to the People

The President of Iran states that there is no logic in buying gasoline at free dollar rates and selling it to the people with subsidies. Masoud Pezeshkian's remarks imply the necessity of increasing gasoline prices; a topic that also occurred in November 2019, leading to widespread public protests and their bloody suppression by the Islamic Republic. Currently, the FOB price of gasoline in the Persian Gulf is above 55 cents (33,000 tomans), while subsidized gasoline in Iran is sold at 1,500 tomans and non-subsidized gasoline at 3,000 tomans. Although Islamic Republic officials have reported gasoline imports over the past two years, there are no official statistics on the volume and price of these imports. Nevertheless, after winning the elections, Masoud Pezeshkian referred to the energy imbalance in the country during a conversation with the website of the Supreme Leader's office, stating: "Currently, eight billion dollars are paid for gasoline purchases. This means we buy gasoline for about 30 or 40 thousand tomans and sell it for 1,500 tomans. How long can we continue this?" Iran's daily gasoline production last year was about 111 million liters, while consumption was 115 million liters. Islamic Republic officials claim that daily gasoline consumption has peaked at 140 million liters, which seems to be primarily due to travel for religious Arbaeen ceremonies. Prior to this, the latest statements from oil officials indicated that gasoline consumption in recent weeks was 118 million liters. Pezeshkian's remarks about the need for higher gasoline prices come at a time when his oil minister announced on September 1 that there are currently no pricing solutions being considered to address the gasoline imbalance. Pezeshkian himself had stated in the first debate of the second round of presidential elections against Saeed Jalili regarding news of a potential gasoline price increase if he won: "I will not raise gasoline prices without the people's consent, and I declare this firmly." In this context, Mohammad Reza Bahonar, a former member of parliament and member of the Expediency Discernment Council, recently stated that if the gasoline imbalance continues in this manner, there is a possibility of the price rising to 50,000 tomans. Some Iranian media outlets have also reported the price of imported gasoline at 90 cents, both figures exceeding the usual price of gasoline in the Persian Gulf FOB, and it is unclear why Iran would purchase gasoline at such high prices if these figures are accurate. On Tuesday, September 6, Pezeshkian stated in a speech that Iranian economists should step forward and protest against the wrong policies being implemented, as low gasoline prices are not compatible with economic science. Pezeshkian, without mentioning that no new refineries have been established in the country over the past three years and that existing refineries still convert a quarter of received oil into low-value products like asphalt and mazut, said experts should protest against the low gasoline prices in the country, but they do not. He emphasized: "I have no money for wheat, no money for inputs, no financial resources to pay retirees' salaries, yet we buy gasoline at high prices and sell it cheaply." Gasoline consumption in Iran has reached 140 million liters per day. His remarks come at a time when since November 2019, the price of one US dollar has soared from 11,000 tomans to 60,000 tomans, making the current significant price difference between gasoline in Iran and global markets a given. On the other hand, the fall of the rial's value is a result of the Islamic Republic's economic policies, including the inefficiency of the system, the lack of development of new refineries, and the modernization of old refineries, as well as the Islamic Republic being subjected to Western sanctions; in other words, the gasoline deficit and its price difference with abroad are not within the people's control. Additionally, over the past years, about one million domestically produced vehicles with high fuel consumption have entered the market annually, and the government could have imported high-efficiency or electric vehicles instead, but after years of banning vehicle imports, limited imports of mainly Chinese cars have only begun since last year.