Thursday, August 17, 2006

Iran resumes gasoline imports

Fuel-hungry Iran has bought several cargoes of gasoline for delivery in September, which oil traders say may mean Tehran is still financing imports, despite a threat to stop and impose politically risky fuel rationing.

Iran's reliance on imported gasoline could be a weak point were it subject to international sanctions in a dispute with the West over its nuclear programme.

Even without sanctions, the rising cost of the fuel drains away the OPEC nation's oil wealth.
. . .
Iran has been spending billions of dollars a year to feed a an expanding fleet of cars featuring many carefully maintained 1960's models that burn rapidly through the costly imported gasoline, lavishly subsidized at a price of 9 cents per litre."They cannot resist the demand," a trade source said.

Over the past two years, the republic has been one of the world's largest consumers of imported fuel, buying between 15 and 20 cargoes of gasoline per month, amounting to 189,000 barrels per day.

That is roughly 1/6 the volume imported by the biggest buyer of the world's excess gasoline, the United States.

But this year, Iran's government called a halt to the expensive subsidies and said Iran would have to get by on its own refining capacity, capable of satisfying only about 60 percent of its 70-million-litre-per-day gasoline needs.

The fuel import budget was capped at $2.5 billion in the year to March 2007, down from $4 billion the previous year.
. . .
Trade sources say Iran's imports have also varied recently with its success in combating smuggling.

The subsidies fuel a burgeoning black market, re-selling the imported gasoline to Iran's neighbours, which can run to a rate of 10 million litres per day, according to one estimate.

The fuel leaves for Iraq, Pakistan, the United Arab Emirates and other Gulf countries by all available means, including makeshift underwater tanks tied to vessels departing Iran, and even on camel back.
Iran is afraid of its own people. It would be so much wealthier if it had the trust of its people to rationalize gas prices, and redeploy the subsidies to money better spent. But it doesn't have that trust. So it uses continues to subsidize gasoline, a transfer that is easily seen and widely dispersed - and not so easily corrupted as would be other government spending. And create international tension to incite more fervent internal support.

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