Fuel Policy at a Crossroads: Navigating Gasoline Prices for the Coming Iranian Year
As the Iranian government prepares its budget for the upcoming year 1405, a significant political and economic debate is underway regarding the future of the country’s gasoline pricing structure. The discussion, involving various branches of government, centers on how to manage consumption and reform subsidies in a balanced manner.
A Look Back: The 2019 Precedent
The current two-tiered pricing system for gasoline, with subsidized quotas at 1500 and 3000 tomans per liter, was established six years ago in 2019. This policy was a major economic decision by the government at the time. Now, in the thirteenth government and parliament, whispers of revising these rates are growing louder, signaling a potential shift in national energy policy.
The Parliamentary Perspective
Members of parliament and officials have begun outlining various scenarios for fuel price reform. Some lawmakers have pointed to the significant disparity between the domestic price and the international FOB price in the Persian Gulf, suggesting that the current system represents a substantial cost to the nation. They argue that optimizing this subsidy could unlock billions of dollars in potential investment capacity for the country’s development. Proposed figures in these discussions have ranged from a new base price of 5,500 tomans per liter to more substantial adjustments.
Government’s Cautious and Strategic Approach
In response to these discussions, the government has maintained a measured stance. The official government spokesman has emphasized that any potential action regarding gasoline prices will be communicated transparently to the public. He further assured that the government would not permit its decisions to negatively impact vulnerable segments of society, highlighting a core principle of social justice in its policymaking.
Potential Policy Pathways
Analysis suggests the government is considering a multi-pronged strategy leading up to the 1405 budget bill, focusing on managing consumption before any potential price changes:
- Non-Price Measures: This could include further reducing the annual quota for non-subsidized gasoline, a continuation of the existing multi-tiered fuel system designed to curb usage without immediate price shocks.
- Expanding CNG Infrastructure: The government and the Ministry of Petroleum are actively pursuing the expansion of Compressed Natural Gas (CNG) infrastructure. The goal is to provide a cheaper, domestically abundant alternative to reduce gasoline consumption.
- Per-Capita Fuel Allocation: A proposal has been floated to create a more equitable distribution of the fuel subsidy. Under this scheme, every citizen, with or without a car, would receive a gasoline quota that they could either use or sell on the energy market at a free-market price.
- Promoting Electric Vehicles: A longer-term strategy involves facilitating the import and infrastructure for electric vehicles, a move that would require significant government support but would ultimately decrease dependence on gasoline.
The Budget Bill as a Key Signal
All these scenarios indicate the government’s intent to simultaneously manage both fuel consumption and its price. The upcoming 1405 budget bill, scheduled for presentation to the parliament soon, is expected to include concrete proposals for reforming the prices of gasoline and diesel. While some parliamentary sources cite a potential floor price of 5,500 tomans, other analyses suggest that adjusting the original 2019 price for official inflation would yield a significantly higher figure, providing a crucial metric for the government’s final decision. The outcome of this debate will be a critical indicator of the nation’s economic direction in the year ahead.