TEHRAN, Iran (AP) 鈥� Iran introduced a new pricing tier Saturday for its nationally subsidized gasoline, attempting to rein in spiraling costs for the first time since a price hike in 2019 that sparked nationwide protests and a crackdown that reportedly killed over 300 people.
Cheap gasoline has been viewed for generations as a birthright in Iran, sparking mass demonstrations as far back as 1964 when a price increase forced the shah to put military vehicles on the streets to replace those of striking taxi drivers.
But Iran鈥檚 theocracy faces a growing squeeze from the country鈥檚 rapidly depreciating rial currency and economic sanctions imposed due to Tehran鈥檚 nuclear program.
That has made the cost of having some of the world鈥檚 cheapest gasoline at a few pennies per gallon that much more expensive. However, the government鈥檚 hesitant move toward increasing prices likely signals it wants to avoid any confrontation with the nation鈥檚 exhausted public after Israel launched a 12-day war on the country in June.
鈥淥ur discontent has no result,鈥� fumed Saeed Mohammadi, a teacher who works as a taxi driver in his spare time to make ends meet. 鈥淭he government does whatever it likes. They don鈥檛 ask people if they agree or not.鈥�
New rate is still pennies per gallon
At four gas stations in northern Tehran on Saturday morning, drivers seemed relaxed as they refueled in clear, cold weather. Single police vehicles were stationed nearby at times, but there were no long lines at the pumps or other visible problems.
The new pricing system implemented Saturday adds a third pricing level to the country鈥檚 long-running subsidy system. The revised structure allows motorists to continue receiving 60 liters (15 gallons) per month at the subsidized rate of 15,000 rials per liter, or 1.25 U.S. cents, and the next 100 liters (26 gallons) will remain at 30,000 rials a liter, or 2.5 cents.
Anything purchased beyond that falls under the new pricing scheme of 50,000 rials per liter, or about 4 cents. Iran introduced fuel rationing back in 2007, but that has yet to ease demand for the ultracheap gasoline.
Even at that new rate, Iranian gasoline prices remain among the lowest in the world.
The difference between the cost of production and delivering the fuel and the price at the pump is the subsidy paid by Iran鈥檚 government. The Paris-based International Energy Agency ranked Iran as paying the world鈥檚 second-highest energy subsidy costs in 2022, behind only Russia. The IEA put Iran鈥檚 oil subsidies at $52 billion that year, with Iranian officials acknowledging tens of billions of dollars a year go toward artificially keeping energy prices low.
Tehran-based economist Hossein Raghfar said that since 2009, the price of gasoline has grown 15-fold, offering a pessimistic view of the government鈥檚 subsidies.
鈥漀ot only did it fail in lessening the budget deficit, but it also trapped the country鈥檚 economy in a negative loop of inflation and budget deficit,鈥� he said.
Hamid Rezapour, a 35-year-old bank teller, said he believed Iran鈥檚 government had 鈥渘o choice except to increase the price to manage the country鈥檚 economy.鈥�
鈥淚t needs more money to pay for public needs.鈥� he said. 鈥淭o me, it is an indirect tax though in a messy economy it barely works.鈥�
First hike since 2019 protests
The move is the most significant change to Iran鈥檚 fuel-subsidy system since 2019, when a sudden 50% jump in subsidized prices and a 300% increase in the rate for purchases beyond quota sparked nationwide protests.
Security forces cracked down on , with some protesters burning down gas stations and banks. The crackdown that followed killed at least 321 people, according to Amnesty International. Thousands were detained.
Critics say every single 10,000-rial increase in gasoline prices will lead to as much as a 5% increase in inflation. Currently, the nation is struggling with an annual inflation rate of some 40%.
But cheap gas provides an opportunity for employment for the country. There are 25 million vehicles, including 3 million public and government-affiliated cars, as well as 6 million motorbikes in the Islamic Republic. Reportedly, more than 8 million Iranians work as taxi drivers through online platforms, nearly 10% of the population. Uber, meanwhile, has 8.8 million drivers and couriers worldwide.
鈥淚t is a start for amending the trend of fuel consumption,鈥� Oil Minister Mohsen Paknejad earlier told journalists.
Officials鈥� comments suggest Iran may seek steeper price increases in the future, as the government reviews prices every three months.
Mohammad Reza Assadi, a 60-year-old taxi driver, offered skepticism that any further protest would make a change.
People have poured into the streets over hikes in the gasoline price in the past, he said, 鈥渂ut they returned home tired and hopeless later at dusk.鈥�
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Gambrell reported from Dubai, United Arab Emirates. Amir Vahdat in Tehran, Iran, contributed to this report.
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