TEHRAN, Iran (AP) — Iran's government introduced higher gasoline prices for its heaviest consumers on Tuesday, the latest measure to address economic pressures exacerbated by ongoing conflict.
This is the second increase in gasoline prices since December. Such adjustments are historically sensitive in Iran and can fuel inflation. A price hike in 2019 led to widespread protests and a government crackdown that resulted in hundreds of reported deaths.
The government's announcement cited the "current situation" without directly referencing the war with the United States. It stated that revenue generated from the price increase will be distributed to households.
Under the revised system, consumers who exceed a monthly quota of 110 liters (approximately 29 gallons) of gasoline will now pay 100,000 rials per liter, doubling the price they have paid since December. This translates to about 7 cents per liter.
Despite the increase, Iran's gasoline prices remain among the lowest globally. However, the hike adds to the daily financial burdens for many of Iran's over 90 million residents. The national currency has been falling to record lows, significantly weakening purchasing power. On Monday, the U.S. dollar was valued at 2.22 million rials.
According to Keramat Veis Karami, CEO of the state oil distribution company, the new gasoline rate will impact approximately 15% of consumers, as reported by the official IRNA news agency.
Karami also stated that gasoline consumption reached a record 145 million liters (38 million gallons) daily in August. Domestic production capacity stands at 122 million liters per day, with the remainder being imported.
Experts suggest that raising prices could help curb high consumption, which they attribute to aging vehicles, a scarcity of spare parts, and inadequate public transportation.
However, analysts warn that gasoline price increases are likely to drive up inflation in a country already experiencing an annual inflation rate of about 67%, according to Iran's statistics center.
Historically, subsidized gasoline has been a significant benefit for Iranians, a practice dating back to 1964 when a price increase prompted the shah to deploy military vehicles to replace striking taxi drivers.
An hour after the new pricing took effect, two of eight gas stations visited by The Associated Press were closed for price regulation. The remaining six stations were operational, each with a dozen cars in line. Security personnel, including uniformed and plainclothes officers, were visible around the filling stations.
Residents expressed concerns about the potential economic fallout. Asghar Rahimi, a 34-year-old Tehran resident, voiced skepticism that the modest increase would significantly alleviate issues like poverty and unemployment, suggesting it was merely a first step. Ali Salari, 55, feared the rise would lead to increased prices for other essential goods, such as bread and meat.
Another Tehran resident, Hamid Mirzei, 43, highlighted the rising cost of groceries, noting that a basic shopping trip for staples like beans and lentils could now cost up to 100 million rials ($73). He stated that life has become increasingly difficult, with even essential food items becoming unaffordable. Mirzei added that a gasoline price increase would further worsen the situation.