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Scary stuff.
Iran spends more money than any other country in the world subsidizing gasoline. It is one of the ways in which the government buys off its people.
That it cannot continue subsidizing gasoline has been apparent to every economist in the world, save Mr. Amedinejad himself.
As the story suggests, ending these subsidies will almost certainly not be popular.
http://www.dailytimes.com.pk/default...12-2010_pg5_29
Iran gasoline price rises 700%
TEHRAN: The price of gasoline in Iran will rise by 700 percent when subsidies are cut, the economy minister was reported as saying on Wednesday, revealing for the first time the cost to motorists of a huge economic overhaul.
President Mahmoud Ahmadinejad hopes to save up to $100 billion a year by phasing out subsidies on gasoline, natural gas, electricity, water and food. But the policy risks upsetting consumers who fear huge price rises.
Riots erupted when the state started rationing subsidised fuel, which can still be bought for 1,000 rials (around $0.10) per litre, and gasoline is one of the most politically sensitive products of all those affected by the subsidy reform.
“The gasoline price will be 7,000 rials (around $0.70) after the implementation of the subsidy reform plan,” Economy and Finance Minister Shamseddin Hosseini was quoted as saying by Kayhan daily. He did not say when the new price would take effect.
Under a rationing scheme, introduced in 2007, a motorist can buy 60 litres of subsidised fuel per month for just 1,000 rials per litre (around $0.11), and beyond that amount they have to pay a “semi-subsidised” price of 4,000 rials. “If we successfully manage to reach our goals by implementing subsidy reform, then there would be no more social class differences, unemployment and investment problems in future,” said Hosseini.
Previously another Iranian official said the final price of gasoline would be “much less” than 10,000 rials (about $1).
Critics of the bill, say it will stoke inflation, which now is running officially at around 10 percent, and might revive the popular street-protest that followed Ahmadinejad’s disputed re-election in 2009. Opposition leaders say the election was rigged, something the authorities deny. The Iranian economy is under pressure from international sanctions imposed on the Islamic state over its disputed nuclear activities.
The United States and its allies fear Iran is secretly developing nuclear weapons under the cover of civilian use. Iran denies the charge and says it needs the nuclear energy to meet its booming demand. reuters
Scary stuff.
http://www.nydailynews.com/news/worl...k_.html?r=newsThe source, a non-Iranian businessman based in Central Asia and traveling often to Tehran, "has learned from one of his contacts that (former president Ali Akbar) Rafsanjani told him Supreme Leader Ali Khamenei has terminal stage leukemia and could die in a few months."
The Iranian government has been convulsing with internal power struggles, since the failed election.
The death of Ali Khamenei, and the proposed cutting of subsidies will act to make that worse.
so instead of 10 cents a litre, it will be 70 cents a litre?
I honestly don't know........will that be more than the average Iranian can handle? Will the cost of goods also go up that much more?
Article in the OP says they will cut subsidies for everything else as well. The amount of giveaways was very clearly unsustainable.
To answer your question:
It will be more than the average person would like to, but they have little choice.
Economically, inflation like that is not exactly a bad thing. It will direct money to producers of goods, and spur investment in production.
Well, considering the citizens per capita income is about 10.3% of ours, that becomes a huge chunk of their income.
That 70 cents a liter becomes $2.65 a gallon. If we were to divide that by 0.103, it would be like us paying $25.73 a gallon.
Extremely doubtful.
what is extremely doubtful?
Extremely doubtful.
That Iranians paying 70 cents a litre would feel to us like paying $25.73 per gallon.
It could be true, but considering the source, I'm very skeptical.
His numbers are off, but it is still pretty bad.
3.78 liters to a gallon * .70 = 2.65
Iran (2008 est) per capita income: 11,490
US (2008 est) per capita income: 46,730
11490/46730 = 24.6%
2.65/0.246=$10.77 per gallon equivalent.
here in chile it's USD$1.40 a liter, so 5.29 a gallon
Last edited by diego; 12-03-2010 at 05:37 PM.
that is true, but what WC was trying to get across was that since the average person makes less in Iran than in the US it is like they are paying an exorbitant sum of money for each gallon.
There would probably be a similar effect if the average Chilean makes less than the average American (I think this is the case, but I don't want to assume).
Well, I used 2010 estimates and didn't use the PPP number, which it appears you did. I used $4,777 vs. $46,381.
Excel file fron the International Monetary Fund
Last edited by Wild Cobra; 12-04-2010 at 11:59 AM.
yeah, i understood that, and the average chilean definitely makes less than the average american, but i dont know where to get that info (preferably from the same source you did) to make a similar comparison; my point was more that non-oil producing countries have it much worse than Iran or the US when it comes to gasoline prices
American fuel policy is decided by the US oilcos in the direction of what's best for the oilcos and s everybody and everything else.
eg, watch the corporate-controlled govt fail to resist the legal onslaught of BP lawyers saying the oil spill was much smaller, and therefore the BP fine should be much smaller than $20b+
Thanks diego, I was sure that was the case, but since I had already closed my source and didn't feel like re-finding it, I just decided to go with the clueless approach. LOL.
The funny thing about Iran is the reason it is so expensive for them is that they have ZERO refining capacity. So all of that oil that they sit on top of has to be shipped out of the country, refined, then shipped back in. Lame planning.
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