“How much money do you think Iran makes off of oil sales?” Keivan asked me.
“I don’t know… $16 billion?”
“Actually, $40 billion. They spend $16 billion on gasoline subsidies.”
“That’s a lot.”
The thing is, the proposed rationing idea sucks.
In the rationing card scheme, each car receives a rationing card. This means that owning more cars means receiving more subsidized petrol, not less. It’s a bad idea all around. There is no reward for real conservation. It simply continues to reward the wiley and the wealthy. The wealthy because they have more cars and cars that get better mileage and the wiley because buying up old gas-guzzling paykans means getting more cheap gasoline.
Iran does need price reform. Rationing, however, is a recipe for disaster. Instead, the price should go up, contracts should be renegotiated, and salaries should also increase.
The price of gas will make everything more expensive. The price of doing nothing, however, increases every year.
That said, I cannot believe that the card will go into effect this year. There is still hearty debate in Iran’s parliament and there is fear of disrupting the economy further right now.
Iranian Energy Subsidies
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Intelligent Analysis about Iran