Copy in clipboard...
Gov’t raises fuel prices for heavy users to curb consumption
The price adjustment was implemented in the wee hours of Saturday, under which most vehicles except ambulances must purchase fuel at a higher rate of 50,000 rials per liter (4 US cents under the free-market rate), according to government spokesperson Fatemeh Mohajerani speaking on state TV.
The higher rate will target consumers requiring more than 160 liters per month.
Other drivers can still buy up to 60 liters at 15,000 rials per liter and an additional 100 liters at 30,000 rials per liter.
Mohajerani said the increase aims to control fuel consumption and combat smuggling.
This is the first price hike since 2019 when such a move sparked nationwide protests during which over 200 people were reportedly killed.
At four gas stations in northern Tehran on Saturday morning, drivers seemed relaxed as they refueled in clear, cold weather. Single police vehicles were stationed nearby at times, but there were no long lines at the pumps or other visible problems.
Even at that new rate, Iranian gasoline prices remain among the lowest in the world.
The difference between the cost of production and delivering the fuel and the price at the pump is the subsidy paid by Iran’s government. The Paris-based International Energy Agency (IEA) ranked Iran as paying the world’s second-highest energy subsidy costs in 2022, behind only Russia. The IEA put Iran’s oil subsidies at $52 billion that year, with Iranian officials acknowledging tens of billions of dollars a year go toward artificially keeping energy prices low.
Critics say every single 10,000-rial increase in gasoline prices will lead to as much as a 5% increase in inflation. Currently, the nation is struggling with an annual inflation rate of some 40%.
But cheap gas provides an opportunity for employment for the country. There are 25 million vehicles, including 3 million public and government-affiliated cars, as well as 6 million motorbikes in Iran. Reportedly, more than 8 million Iranians work as taxi drivers through online platforms, nearly 10% of the population.
“It is a start for amending the trend of fuel consumption,” Oil Minister Mohsen Paknejad earlier told journalists.
Since taking office in July 2024, Iranian President Masoud Pezeshkian has repeatedly called for increase in gasoline price.