2007 Gas Rationing Plan in Iran

2007 Gas Rationing Plan in Iran was launched by president Mahmoud Ahmadinejad's cabinet to reduce that country's fuel consumption. Although Iran is one of the world's largest producers of petroleum, rapid increases in demand and limited refining capacity has forced the country to import about 40% of its gasoline, at an annual cost of up to $7 billion.cite news|title = Q&A: Petrol rationing in Iran|work = BBC News|date = 2007-06-27|accessdate = 2007-07-02|url=http://news.bbc.co.uk/2/hi/middle_east/6244574.stm] cite news|title = Iran bans negative petrol stories|work = BBC News|date = 2007-06-28|accessdate = 2007-07-02|url = http://news.bbc.co.uk/2/hi/middle_east/6249222.stm]

The fuel rationing has triggered widespread discontent in Iran, but, according to analysts quoted in the Western news media, the Iranian government is hoping that reducing gasoline imports will help insulate the country from international pressure related to its nuclear program. "We will greatly suffer if they (foreign countries) suddenly decide not to sell us fuel," said Iranian political analyst Saeed Leylaz. "Fuel rationing is a security-economic decision to reduce fuel consumption." [cite news|url = http://hosted.ap.org/dynamic/stories/I/IRAN_AHMADINEJADS_WOES?SITE=WSPATV&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2007-06-29-15-16-19 |title = Iranians Angered by Fuel Rationing|last = Dareini|first = Ali Akbar|work = Associated Press|date = 2007-06-29|accessdate = 2007-07-02|format = reprint] In an interview Iranian president Mahmoud Ahmadinejad said: "They [Americans] had a plan and idea that is neutralized. They don't know our nation. They think if they refuse to provide us with gasoline, our nation would say we don't want nuclear energy." [ [http://www.president.ir/fa/ Iranian President's official website] ]

Background

An increase in population since 1980 from 40 to 68 million people has pushed Iran’s gasoline consumption up by nearly 13 percent annually over the past five years. As a result the country consumes far more gasoline than its refineries can provide.Production stands at 10.5 million gallons a day, compared with daily demand standing at 18.5 million gallons. With 43 percent of its gasoline imported, Iran is the world’s second largest gasoline importer.

Iran's petrol is heavily subsidised, sold at about a fifth of its real cost. The price of 1,000 rials ($0.11) per litre makes Iran one of the cheapest countries in the world for motorists. [http://news.bbc.co.uk/2/hi/middle_east/6243644.stm BBC NEWS | Middle East | Iran fuel rations spark violence ] ]

Gas Rationing Plan

Iran took action to reduce its dependence on foreign gasoline through a three-pronged strategy which includes:
* Significant expansion of Iran’s refining capacity
* Securing gasoline imports from friendly allies
* Reducing the use of gasoline
* Development of the public transport systemA special committee set up by the government came up with a four-pointprogram which includes:
*Conversion of most existing cars to run on natural gas within five years at a rate of 1.2 million annually. This will begin with conversion of 600,000 public and governmental cars to NGV.
* Phase out of very old cars (approximately 1.2 million) by 2010.
* As of June 2007, most of the newly manufactured cars will have to be able to run on natural gas.
* Within five years most of Iran’s 10,000 refueling stations will be retrofitted to serve natural gas.

The Iranian government provides incentives to CNG car buyers and has meanwhile decreased the gasoline subsides. It must be noted that Iran is the Middle East's leading car manufacturer. In 2005 Iranian automakers produced nearly one million vehicles including 884,000 passenger cars and 104,000 heavy vehicles, altogether worth $11.6 billion. The Iranian government aims to have most of Iran’s cars running on natural gas by 2015.

The restrictions began at midnight local time on Wednesday 27th of June (2030 GMT Tuesday) and are set to continue for four months. The rationing system, allows private drivers only 100 liters (26 gallons) of fuel per month at the subsidized price. Taxis get 800 liters (211 gallons) a month. Anything more than that will have to be bought at a higher price, which officials say will be announced within the next two months. The fuel rationing has triggered widespread discontent in Iran, but if it succeeds in reducing the amount of imported gasoline, it could help insulate the country from international pressure related to its nuclear program. [ [http://www.iht.com/articles/ap/2007/06/29/africa/ME-GEN-Iran-Ahmadinejads-Woes.php Public resentment with Ahmadinejad grows over fuel rationing, rising prices - International Herald Tribune ] ]

Immediate Reactions to gas rationing plan

Some lawmakers were urgently drafting a bill to stop rationing. Private cars will get 100 litres of gasoline a month but less if they also burn compressed natural gas, state TV said. Drivers have complained that the amount is too little. All gasoline is already sold using electronic "smart" cards, but some drivers have not received them. Officials say the cards will reduce the possibility of a black market in fuel. [ [http://www.stuff.co.nz/4110421a12.html] ]

Iranians were given only two hours' notice of the move that limits private drivers to 100 litres of fuel a month. There is anger that the government did not give people more notice. At least 12 petrol stations have been torched in the Iranian capital, Tehran. "Guns, fireworks, tanks, [President] Ahmadinejad should be killed," chanted angry youths, throwing stones at police.

Long Term Reactions to gas rationing plan

As of mid 2008 the Gas Rationing Plan was regarded as a total failure, due to the reasons below:
* Investment of millions of dollars in infrastructure.
* Infrastructure that is unsecured, open to theft, and slow creating bottle necks at petrol stations.
* Creation of a black market for petrol - to bypass limitations on purchasable liters.
* Increase in price of petrol.
* Not reducing traffic due to lack of public transport.
* Cause of general inflation due to cost of living.

References

*"Ahmadinejad’s Gas Revolution: A Plan to Defeat Economic Sanctions" by Anne Korin and Gal Luft December 2006

ee also

*The Iran Sanctions Enhancement Act of 2007
*Ministry of Petroleum of Iran (Gasoline subsidies)
*Iran's nuclear program
*United States oil politics
*2007 Iranian petrol rationing riots