🔶 The price of gasoline has doubled for the third tier; crisis management or shifting costs onto the public

🔶 The price of gasoline has doubled for the third tier; crisis management or shifting costs onto the public

🔻A report by Murad Rahmati

Fatemeh Moghajerani, the spokesperson of the 14th government, announced that the price of gasoline sold via fuel station cards starting from dawn on Tuesday, 17 Shahrivar (8 September), will increase from 5,000 toman per liter to 10,000 toman per liter, and the rate of the third tier will double.

The spokesperson said that the monthly ration of 60 liters of gasoline at a rate of 1,500 toman and 50 liters at a rate of 3,000 toman would remain unchanged, and the price increase would apply only to refueling with a fuel station card.

The government described this decision as, among other things, “an action to manage supply and demand,” and promised to spend the revenue from it to provide for people’s livelihoods. However, it is still unclear how the limited revenue from this price increase is supposed to simultaneously reduce the government’s financial pressure, curb consumption, and lead to livelihood support for citizens.

The decision is being taken while the government is facing budget shortfalls, declining oil revenues, restrictions on fuel imports, pressure from sanctions, and growth in domestic consumption. The main question is whether doubling the third-tier price will reduce the gasoline crisis or only impose more costs on the public.

Dalgha Khatinoglu, an oil and energy expert, and Omid Shekari, an energy strategist and geopolitics expert, examined the economic and social consequences of this decision in an interview with Deutsche Welle.

Khatinoglu estimates that increasing the third-tier price over a year will provide the government with roughly half a billion dollars in additional revenue, and that this figure is negligible compared with last year’s $2.9 billion cost of gasoline imports and the tens of billions of dollars in losses resulting from oil-related sanctions.

Omid Shekari sees a sustainable solution in implementing, at the same time, a set of reforms: “increasing the capacity and efficiency of refineries, modernizing the transport fleet, removing worn-out vehicles, tightening fuel-consumption standards, and developing low-consumption vehicles, hybrid and electric” among other steps, which, according to him, should be prioritized.

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