Wednesday, November 01, 2006

Iran MPs add $2.5 bln to budget for fuel imports :: Reuters

Quote:
Iran’s parliament voted on Wednesday to add $2.5 billion to this year’s budget to finance more gasoline imports, staving off the threat of politically sensitive rationing.

Lawmakers in gas-guzzling Iran had originally slashed the budget for fuel imports to $2.5 billion from $4 billion for the financial year to March 2007, but high oil prices meant the amount approved was spent well before the end of the year.

Iran is the world’s fourth largest crude oil exporter but lacks refining capacity and has to import 40 percent of the 70 million litres of gasoline it burns each day. All fuel is then heavily subsidised at the pump for motorists.
. . .
If imports stopped, the government had suggested fuel rationing, a sensitive move in a country where cheap, abundant gasoline is considered a national right.

“There will be no rationing this Iranian year. Parliament will decide about rationing next year,” Iran’s Oil Ministry Web site SHANA reported after the vote.

Importing gasoline is costly for Iran because it subsidises fuel, whether produced domestically or abroad, so that drivers pay the equivalent of just 9 US cents a litre at the pump.

Such cheap fuel -- when international prices have been soaring -- encourages waste and a thriving trade in contraband fuel to Iran’s neighbours, economists say.
Yes, that's what economists say.

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1 Comments:

Anonymous Anonymous said...

That's why Sudan's government has done such a great job at stopping subsidies of all kinds. This happened a little before the oil started pumping. Now, even after oil, the government does not subsidize anything (wheat, petrol and other commonly subsidized items).

This open market policy has worked wonders and is the main reason why the Sudanese economy is growing.

Subsidies are bad.

12:28 AM  

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