Iran jumped gasoline prices 25 percent Tuesday in a new blow to consumers already disgruntled over high inflation, and the government said it will begin rationing fuel in two weeks.
The moves are sure to increase public dissatisfaction with hard-line President Mahmoud Ahmadinejad, whose oil-rich nation faces the same quandary as the U.S. and its rising prices at the pump: A lack of refinery capacity forces it to buy gasoline on the world market.
Discontent has been growing in Iran in recent months over soaring prices. The cost of housing has doubled and prices for basic goods such as vegetables have tripled since last summer.
Portraying himself as a champion of the poor, Ahmadinejad was swept to power in 2005 on a populist agenda promising to spread oil revenues to every family, eradicate poverty and tackle unemployment, and he is facing increasingly fierce criticism for not delivering.
On Sunday, the government had said it would not increase fuel prices “at the moment.” So drivers were shocked Tuesday morning to find gasoline prices were raised overnight to the equivalent of 38 cents a gallon from 30 cents.
The increase is part of the government's efforts to reduce state subsidies on gasoline and to discourage smugglers who have been buying fuel at Iran's relatively low price and sneaking it out of the country to sell elsewhere.
The hike, which is likely to drive up costs of transportation and put more pressure on inflation, drew quick anger.
“People are under pressure from all sides,” complained taxi driver Mansour Ahmadi. “The youth are unemployed, women are punished in the streets under the pretext of not sufficiently being veiled, prices have skyrocked. A majority of the people can't make ends meet. Yet Ahmadinejad brazenly talks about justice.”
The government has angered many people with a recent police campaign in major cities to rebuke or even detain women not abiding by conservative Islamic dress required by law. Anger has also grown over foreign policy, with even some conservatives complaining the president's strident rhetoric has needlessly provoked the West in the standoff over Iran's nuclear program.
Despite the hike, gasoline is still far cheaper in Iran than in most of the West. In the U.S., the average price of self-serve regular gasoline hit a record high of $3.18 a gallon, up more than 11 cents over the past two weeks, according to a survey released Sunday.
But wages are much lower in Iran, where annual income averages $2,600 a person, compared to $43,500 in the United States, according to a 2005 World Bank survey.
Iran produces some 4.2 million barrels of crude oil a day and is the second biggest exporter in the Organization of Petroleum Exporting Countries.
But its refining facilities can produce only around 10.5 million gallons of gasoline a day, so it has to import gas to meet increasing demand. Last year, Iran consumed 19.7 million gallons daily, and the government has predicted 2007 consumption could exceed 21 million gallons.
Experts say Iran will have no oil to export within 15 years if growing domestic demand for fuel continues. Iran argues that is the reason for its nuclear program, which it says will generate electricity and reduce reliance on petroleum. The U.S. and other states fear Iran is seeking to develop atomic weapons, a charge Tehran denies.
Interior Minister Mostafa Pourmohammadi said in a statement carried by the state news agency IRNA that rationing would begin around June 5.
The delay apparently is due to problems in distributing electronic smart cards that drivers will use to buy fuel at the subsidized price of 38 cents a gallon. Consumers will be able to buy additional fuel at a higher price, but the government hasn't said how much or at what cost.
Not everyone was critical of the gas hike.
“The government can't continue paying subsidies for fuel. The price of gasoline in Iran is still cheaper than mineral water,” Houshang Mansouri, an engineer, said as he filled up his Iranian version of the Peugeot at a service station in north Tehran.
But Qasem Zeinali, a communications engineer, said the government would serve the nation better if it stopped financial donations to extremist Palestinian groups such as Hamas.
“Our money is being wasted because the government is donating it to Hamas and others while Iranians themselves hardly can make ends meet,” he said.
