As the threat of economic sanctions over Iran's nuclear activities has helped push the price of crude over US$78 a barrel, the country, the world's fourth-largest oil exporter, is struggling with the cost of its gasoline imports.
With demand far outstripping its domestic refining capacity, Iran buys foreign gasoline for slightly more than US$0.50 a liter and sells it at the pump for about US$0.08 a liter, the highest subsidies in the region.
The discount prices have further encouraged consumption and cut into the country's export windfall. Waste and pollution are rampant. The cheap gas is smuggled out to other countries at the rate of some 7.57 million liters a day, according to one study by parliament.
Months ago, parliament acted to break this damaging cycle, reducing the budget for importing gasoline to US$2.5 billion from US$4 billion.
"We cannot use the income from oil to buy gasoline for over 5,000 rials per liter and give it to people for 800 rials," said Ismail Jabarzadeh, a member of parliament. "We have postponed making this decision for many years, but eventually the right decision should be made."
Those funds will be exhausted by next month, and the government must then either secure more money for the imports or begin limiting consumption. Without imports, drivers would have to consume 42 percent less gasoline.
Parliament and the government of President Mahmoud Ahmadinejad are still discussing options, including rationing domestically produced gasoline and selling imported gasoline at its regional price.
The minister of economy, Davoud Danesh-Jafari, said on July 10 that rationing would have to wait until at least December, the ISNA student news agency reported, so that the government could issue smart cards to track sales to replace its gasoline coupons, which are easily sold on the black market.
And while the government has publicly said it definitely intended to ration supplies, doing so would risk serious political and social consequences.
Even the previous president, Mohammad Khatami, who encouraged liberalizing the economy, was afraid to raise gas prices or ration supplies, fearing inflation and social discontent.
In 1995, riots broke out in the working-class towns of Akbarabad and Islamshahr, near Tehran, after bus fares were raised. One person was killed and dozens were injured. But the possibility that the UN Security Council will impose economic sanctions on Iran over its refusal to freeze its nuclear activities has added a new pressure on the government to stop imports and raise prices.
"The government has no choice now to stop the import both because of the uncontrollable domestic consumption and because of security issues," said Saeed Leylaz, an economist and political analyst in Tehran.
"The government wants to voluntarily bring the consumption under control in case economic sanctions are imposed," he said.
Some fear that the mere idea of rationing gasoline will lead to higher transportation fares.
Some worry that if, as has been suggested, cabdrivers get relatively large rations, they might sell the gas illegally, creating a black market and causing rapid inflation.
Taqi Rashidi, 62, a cabdriver in Tehran, said the government risked protests.
"Passengers are already complaining about high prices," he said. "They won't remain quiet if taxi fares increase too."
RSS