Gas Rationing in Iran

A few days ago I came back from a four week trip to Iran. The weather was wonderful, as usual. But many other things are out of order.

Quite recently, the government decided to ration petrol. A private car gets around 3 liters of petrol a day, a taxi 30 liters, and so on. In fact rationing the petrol is not such a bad idea since it is subsidized by the tax money. Iran buys petrol from outside and sells it cheap at the petrol stations. Apparenly, many people in the border states of Iran used to buy a lot of subsidized petrol and sell it in the neighbouring countries and making a lot of money. These people are out of business right now.

Another group of people that are out of business right now are the taxi drivers who used to use their private cars as taxi. This group can be divided into two sub-groups: 1) the unregistered drivers, 2) the drivers who operated through a so called "agent" (âzhâns). They are all out of jobs, unless they somehow manage to buy petrol at the "market price" (about 400% more expensive compared to the subsidized price).

Given the fact that petrol in Iran is subsidized and the air pollution in many big cities is a major problem, petrol rationing is a positive action. At the same time, however, the government needs to increase the availability of the public transport system and drastically improve the quality of such services. In many cities where the private taxis were an important part of the transporation system, there is no public transport available to replace all the âzhâns taxis that can not operate anymore. People are not so happy.

Finally, rationing anything in Iran opens a new black market for the rationed goods and new actors enter the market and start earning loads of black/grey money. One taxi driver told me that his friend had sold his ration for the month of Mordâd (around 900 litres of bensin) for 300000 Tumans.

Once upon a time, the foreign currency was rationed in Iran. Twenty years ago there were two different rates of exchange for the American Dollar, for example. The market price was about 300% more than the rate at the bank. Nowadays, you can buy as much Dollar as you can afford both at the bank and at the black market and the rate of exchange of the banks in Iran and the black market is almost the same. Maybe, the same will apply to the price of petrol sooner or later. However, since the cost of transportation usually has a direct impact on the rate of inflation, it would be wise to avoid market prices for the petrol. A 100% increase in price of petrol (or gas) could probably increase the general inflation by more than 5% and increase the pressure on a rather stretched patience.