Iran’s rationing of gasoline prevents huge waste at time of sanctions: Experts

Experts say rationing fuel in Iran would prevent tens of millions of liters of gasoline being wasted each day in a country which still grapples with the economic impacts of a series of American sanctions.

According to Press TV, Iran increased the price of gasoline on Friday night while it imposed a cap on the use of the fuel with regular price of 15,000 rials ($0.12) per liter.

The government insisted it would go ahead with its plan to reduce subsidies paid for gasoline and instead spend them on handouts and other forms of assistance to the needy.

“We have to defend the policy of gasoline price hike as it help eradicate poverty in the short run,” said Ali Sarza’eim, a professor of economy at Tehran’s University of Allameh Tabatabyi.

The economist said fuel price hike would enable the Iranian government to increase the amount of cash it hands out to the needy across the country.

The government said right after announcing the new prices for gasoline that all the income generated from the new scheme, estimated around $2.7 billion, would be dedicated to plans for balancing the economic situation in Iran.

Iran, once a major importer of gasoline, produces around 110 million liters of the fuel each day, with bulk of the output serving a surging domestic consumption.

Reports in the media have suggested that gasoline is being increasingly smuggled outside of Iran, given the exorbitantly low price of the fuel in the country.

Rationing of gasoline come against various studies suggesting that domestic consumption of the fuel should not exceed 70 million liters each day.

That comes as Iran continues to suffer from a series of American sanctions that have specifically targeted its oil and gas industry since they were enacted in November last year.

That bans have deprived Iran of a bulk of revenues generated from direct sale of crude while prompting the government to engage in export of other energy products, including gasoline, to compensate the loss.

ME