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Ex-Minister: Iran Needs Higher Fuel Price to Cut Use - ASHARQ AL-AWSAT English Archive
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TEHRAN (Reuters) – Former Iranian Oil Minister Kazem Vaziri-Hamaneh said that Iran’s high fuel consumption cannot be curbed if its gasoline prices remain among the lowest in the world, a news agency reported on Sunday.

Iran started rationing fuel in June in an effort to curb consumption and cut the expensive gasoline imports that the second biggest oil producer in OPEC needs because it lacks refining capacity to meet domestic demand.

Vaziri-Hamaneh was replaced last week and a caretaker minister, Gholamhossein Nozari, was appointed in his place. No official reason was given for the change.

“If fuel consumption continues as currently, we will be faced with an energy crisis in the future. Consumption cannot be controlled with low prices,” ISNA news agency quoted

Vaziri-Hamaneh as saying at a ceremony to mark his departure from the ministry.

One oil official, requesting anonymity, has said some senior managers in the Oil Ministry backed efforts to curb demand but preferred higher prices rather than quotas.

President Mahmoud Ahmadinejad’s government opposed a big hike in prices.

Private drivers in Iran now receive 100 litres of fuel a month at the heavily subsidised price of 1,000 rials (11 U.S. cents). Many have complained quotas are not enough and want the chance to buy more fuel, even if prices are higher.

Some analysts say the president replaced Vaziri-Hamaneh to assert greater control over a ministry which is in charge of an industry that generates most of Iran’s export earnings.

Ahmadinejad’s government has opposed a big price hike, preferring to impose rationing, to avoid pushing up inflation, already running at around 16 percent. But analysts say a new black market in higher priced fuel will have the same effect.

Oil officials say gasoline consumption has dropped and imports will be reduced but anecdotal evidence suggests there has been no big drop in car use in the capital, with traffic jams almost as bad as before rationing was imposed.

The Islamic state imports 40 percent of its fuel needs, costing it $5 billion last year. Drivers can currently buy their quota up to six months in advance, which some analysts say is delaying the day when the impact of rationing will be felt.

Caretaker minister Nozari said on Wednesday that rationing would continue without changes.

In remarks published by IRNA news agency on Sunday, Nozari said: “Boosting the oil production ceiling, increasing the share of gas in the country’s energy basket and expanding international cooperation are top priorities at the Oil Ministry.”

Analysts have said they do not expect the ministerial change to herald a shift in Iran’s policy on OPEC issues.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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