Gasoline prices in Iran: Missing the point

Financial Tribune | Hamid Molazadeh: Officials including oil minister, Bijan Namdar Zanganeh, say fuel prices need to increase. Should that not happen, they claim, rampant smuggling (10 million liters/day!) as well as domestic consumption (95m liters/day) will persist and likely get worse

Drawing parallels between average annual income in Iran and the neighboring states, some energy experts insist, rather strongly but strangely, that gasoline is indeed cheap in the country. They may have a point, but prefer to focus on the periphery and shun some important facts.

Iranians on average earn $5,000 per annum. Gasoline is sold for 7 cents/liter, meaning 1.5% of car owners’ earnings is spent annually to buy 1,000 liters of fuel.

Statistics show the same figure ranges between 3% (in Saudi Arabia) and 50% (Pakistan and India) depending on annual income.

In Saudi Arabia, where gasoline is sold at 58 cents per liter, people on average earn $23,000 a year. In other words, barely 3% of their annual income is spent on 1,000 liters of fuel.

Although South Korea sells expensive gasoline (130 cents/liter), annual spending on fuel accounts for only 4% of the people’s earning. In South Kore yearly income is in the region of $32,000.