The Summer of Iran's Discontent
In one of the world's most oil-rich countries, gas is being rationed and Iranians are angry. Despite 2005 election promises, President Mahmoud Ahmadinejad decreased gas subsidies in May, causing the price of gasoline to increase 25% to 38 cents a gallon. On Tuesday, after weeks of planning, the government implemented a rationing program that limits Iranians to 26 gallons of subsidized gas a month. Additional fuel can be purchased, but at a higher price yet to be announced. In protest, incensed Iranians rioted, smashing shop windows and setting fire to gas stations. Read the full article here.
Iran is the second largest OPEC exporter but lacks the refineries needed to process its lucrative natural resource. Unbelievably, Iran must import 50% of its gasoline to satisfy the growing needs of its citizens. Because Iranians like their gas cheap and plentiful, the government subsidizes gas sales to keep the price low. This has put a significant strain on the nation's economy. Proponents of the new measures hope that price increases and rationing will curb oil use and make funds available for government investment in oil and gas production.
Ahmadinejad could easily find himself in hot water with his fellow citizens. He was elected on the promise that he would share Iran's oil wealth with the nation's poor. Going back on that promise, even to bolster a seriously failing economy, could be political suicide.
Iran is the second largest OPEC exporter but lacks the refineries needed to process its lucrative natural resource. Unbelievably, Iran must import 50% of its gasoline to satisfy the growing needs of its citizens. Because Iranians like their gas cheap and plentiful, the government subsidizes gas sales to keep the price low. This has put a significant strain on the nation's economy. Proponents of the new measures hope that price increases and rationing will curb oil use and make funds available for government investment in oil and gas production.
Ahmadinejad could easily find himself in hot water with his fellow citizens. He was elected on the promise that he would share Iran's oil wealth with the nation's poor. Going back on that promise, even to bolster a seriously failing economy, could be political suicide.
"Ahmadinejad promised paradise," a Tehran resident railed, "but his government has made life hell for Iranians."
Labels: economy, fuel prices, gas rationing, Mahmoud Ahmadinejad
