Reuters reports that Iranian state television has quoted Iranian Oil Minister Massoud Mirkazemi as saying that the quota of subsidized gasoline in Iran would be reduced from 100 liters to 55 liters per month under a plan to be considered next week by the Iranian Parliament.
Iran imports around 25-33% percent of its gasoline requirements which it then sells at a subsidized price, despite being the fifth-largest crude oil exporter in the world. The Ahmadinejad regime has often been criticized for misuse of Iran’s oil revenue and subsequent destabilization of its economy. Protests erupted in 2007 in response to fuel rationing proposals under which rationed fuel is purchased for 1,000 rials per liter. Larger amounts would be four times as expensive.
Congress has long been considering cutting off Iran’s foreign supply of refined petroleum as a way to impose “crippling” sanctions. Unsurprisingly, Iran has taken steps to inoculate themselves against just such a move, including making significant investments in their domestic refining capacity, as well as today’s announcement that would limit consumption.
Congress also just recently passed an amendment to an Energy and Water Appropriations Bill stipulating that any foreign company that sells gasoline to Iran will be barred from selling gasoline to the US for its Strategic Petroleum Reserve. As Iran makes progress in adapting to Western pressure, measures such as these will be increasingly less effective in making Iran actually feel any financial pinch.
October 8, 2009