TEHRAN, Iran — Iran introduced a new pricing tier Saturday for its nationally subsidized gasoline, attempting to rein in spiraling costs for the first time since a price hike in 2019 that sparked nationwide protests and a crackdown that reportedly killed over 300 people.<\/p>\n
Cheap gasoline has been viewed for generations as a birthright in Iran, sparking mass demonstrations as far back as 1964 when a price increase forced the shah to put military vehicles on the streets to replace those of striking taxi drivers. <\/p>\n
But Iran\u2019s theocracy faces a growing squeeze from the country\u2019s rapidly depreciating rial currency and economic sanctions imposed due to Tehran\u2019s nuclear program. <\/p>\n
That has made the cost of having some of the world\u2019s cheapest gasoline at a few pennies per gallon that much more expensive. However, the government\u2019s hesitant move toward increasing prices likely signals it wants to avoid any confrontation with the nation\u2019s exhausted public after Israel launched a 12-day war on the country in June. <\/p>\n
\u201cOur discontent has no result,\u201d fumed Saeed Mohammadi, a teacher who works as a taxi driver in his spare time to make ends meet. \u201cThe government does whatever it likes. They don\u2019t ask people if they agree or not.\u201d<\/p>\n
The new pricing system implemented Saturday adds a third pricing level to the country\u2019s long-running subsidy system. The revised structure allows motorists to continue receiving 60 liters (15 gallons) per month at the subsidized rate of 15,000 rials per liter, or 1.25 U.S. cents, and the next 100 liters (26 gallons) will remain at 30,000 rials a liter, or 2.5 cents.<\/p>\n
Anything purchased beyond that falls under the new pricing scheme of 50,000 rials per liter, or about 4 cents. Iran introduced fuel rationing back in 2007, but that has yet to ease demand for the ultracheap gasoline.<\/p>\n
Even at that new rate, Iranian gasoline prices remain among the lowest in the world. <\/p>\n
The difference between the cost of production and delivering the fuel and the price at the pump is the subsidy paid by Iran\u2019s government. The Paris-based International Energy Agency ranked Iran as paying the world\u2019s second-highest energy subsidy costs in 2022, behind only Russia. The IEA put Iran\u2019s 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. <\/p>\n
Tehran-based economist Hossein Raghfar said that since 2009, the price of gasoline has grown 15-fold, offering a pessimistic view of the government\u2019s subsidies.<\/p>\n
\u201dNot only did it fail in lessening the budget deficit, but it also trapped the country\u2019s economy in a negative loop of inflation and budget deficit,\u201d he said. <\/p>\n
Hamid Rezapour, a 35-year-old bank teller, said he believed Iran\u2019s government had \u201cno choice except to increase the price to manage the country\u2019s economy.\u201d<\/p>\n
\u201cIt needs more money to pay for public needs.\u201d he said. \u201cTo me, it is an indirect tax though in a messy economy it barely works.\u201d<\/p>\n
The move is the most significant change to Iran\u2019s fuel-subsidy system since 2019, when a sudden 50% jump in subsidized prices and a 300% increase in the rate for purchases beyond quota sparked nationwide protests.<\/p>\n