INSUBCONTINENT EXCLUSIVE:
TEHRAN - Inexpert decisions coupled with populist policies have led to alarming energy consumption at the cost of the environment, public
health, waste of natural resources, and drain of national wealth.Now it has become more and more difficult to address problems resulting
from inexpert and populist policies in energy consumption
Unfortunately, energy consumption is under the influence of politics rather than economics.Some decision-makers, including former and
current parliamentarians and presidents, were and are still proud of themselves for standing against reducing, not cutting, energy
subsidies, especially petrol
They were and are still ignorant of the fact that the harms of subsidized energy far outweigh its benefits.Successive parliaments are more
responsible for the current situation
For example, the sixth parliament (2000-2004) voted for a legislation according to which the petrol price had to rise to the international
market level within five years
However, the next parliament rescinded the legislation and boasted of its move.This anti-justice energy subsidy system, which has been going
on for decades, goes against the principles that the Islamic Republic claims it stands for
The subsidy is mostly going to those who consume more petrol, natural gas, electricity or other types of energy.Houshang Falahatiyan, the
deputy oil minister for planning, said in January 2024 that Iran annually pays between 80 to 100 billion dollars in energy subsidies.Among
the energy commodities petrol and diesel are heavily subsidized
Subsidizing diesel is somehow justified because it is important for transportation
But subsidizing petrol and natural gas is simply wrong and detrimental which has caused back-to-back problems.Keeping petrol prices
unreasonably low while the annual inflation rate has been around 40 percent has wreaked havoc on the economy.Now petrol is much cheaper than
drinking bottled water.On August 27, 2024, just a few weeks after Masoud Pezeshkian took over as president, he said his government did not
have enough money to pay for wheat bought from farmers, pay pensions for retirees, etc
Still, energy, especially petrol, is subsidized heavily.President Pezeshkian has said producing one liter of petrol costs 8,000 tomans
(around 12 cents) without computing the oil price.Now, 60 liters of petrol are sold to each car at a price of 1500 tomans (around 2 cents)
per liter and more than that 3,000 tomans (around 4 cents)
Some citizens who own more than one car are now benefiting much more from this unlimited subsidy system and the poor classes of society who
have no car are deprived of it.This wrong policy has led the use of petrol to reach the astonishing level of 122 million liters per day and
is still increasing.Pezeshkian said this year we must allocate 90,000 billion tomans (around 1.3 billion dollars) for importing petrol.After
petrol, the extravagant use of natural gas comes second in draining national wealth
Director of National Iranian Oil Company Saeed Tavakoli said in Dec
2024 that Iranians consume natural gas 3.3 times more than the global average.In terms of natural gas consumption, Iran comes after the
commoditiesNow the prices of basic commodities such as cooking oil, rice, meat, beans, etc
are increasing in parallel with the inflation rate, which is about 40 percent
However, some officials raise eyebrows whenever there is talk of decreasing the petrol subsidy.At a time when an important percentage of
families live under the poverty line and are forced to deal with rising prices paying tens of billions of dollars to energy commodities is
international markets, and the cars produced by local auto companies are fuel-inefficient
by saying many jobs will be lost
But, the billions of dollars that are being wasted for subsidizing petrol can create hundreds of thousands of jobs.Summarily speaking, auto
lower the fuel consumption of their products or improve the quality of their products.Junking old cars as one of the main sources of air
pollution is also done at a low speed.Health effectsThe harmful environmental effects of this destructive subsidy system must not be
underestimated or ignored.Abbas Shahsavani, the chief of the air quality of the health ministry, said on January 18 that more than 30,000
people died from air pollution during the calendar year 1402 (March 2022-March 2023), Tasnim reported.This figure may not be precise but the
number of citizens who fall victim to air pollution is high
Shahsavani also said the cost of air pollution in 1402 was 600,000 billion tomans (around 9 billion dollars).This energy policy is first and
foremost self-defeating.Cheap petrol prices have led to wasteful consumption and production of fuel-inefficient passenger cars.In January
2024, Falahatiyan said about 1 million cars are added to the transportation fleet per year and their fuel consumption is 40 percent higher
than cars produced in the world.Whenever there is talk of a change in petrol price many decision-makers immediately react and say it leads
to price rises in other commodities, including transportation
However, without any rise in petrol prices since November 15, 2019, which led to protests prices have kept regularly increasing.Nasser
Ashouri, the secretary of the Employer Association in the Refining Industry, told a press briefing in May 2024 that Iran imported about 3
billion dollars of petrol in the national calendar year 1402 (March 2022-March 2023)
Ashouri said Iran, a country with the third largest proven oil reserves, is forced to import petrol due to wasteful consumption.Ashouri also
true earlier as the country is now grappling with the shortage of electricity and natural gas with the onset of the cold season.Iran has
again resorted to importing petrol while it inaugurated the Setareh Khalij Fars Refinery in Feb
Pezeshkian who was a strong critic of the rising petrol consumption and its price made no changes in petrol price when he presented the
national budget bill to parliament for the new Iranian calendar year that begins on March 20.The parliament is also relinquishing its
responsibility in this regard and says it is up to the government to decide about the price.The ever-increasing energy consumption,
especially petrol, is like an iceberg that is becoming more destructive over time if a remedy is not found.There is a concern that if the
price of petrol is increased it may lead to an unrest similar to Nov
But there are solutions to this potential problem:Provide a situation in which customers would buy standard cars with prices at the level of
the international market; import electric vehicles; improve the public transport fleet; sign contracts with foreign companies to produce
importantly convince people about the health and economic costs of the current subsidy system and assure people that the dividends from
petrol prices will benefit the society.*(Calculation is based on 68,000 tomans per dollar)
