Cheap gas in Tehran
Like Nigeria, also a major oil-producing OPEC member, Iran imports gasoline and the government subsidizes it. Are Iran and Nigeria more similar than they appear at first glance?
What are the politics and policy goals behind those actions? What policy choices does the government face? What are the limitations on its actions? Are there comparable politics and policy decisions in other countries?
This New York Times article outlines the Iranian situation.
Iran, an Oil Giant, in a Gasoline Squeeze
"As the threat of economic sanctions over Iran's nuclear activities has helped push the price of crude over $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 50 cents a liter (about $2 a gallon) and sells it at the pump for about 8 cents a liter (less than 40 cents a gallon), the highest subsidies in the region...
"Parliament and the government ... are still discussing options, including rationing domestically produced gasoline and selling imported gasoline at its regional price...
"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...
"As in other countries dependent on automobiles, traffic and pollution are major problems, and public transport is slow and insufficient. The government’s efforts to bar private cars from driving into downtown Tehran has done little to ease traffic or clean the air..."
posted by Ken Wedding @ 10:40 AM
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