Iran raises gasoline prices for the first time since 2019 | AP News
TEHRAN, Iran — Iran rolled out a new tiered pricing scheme for its nationally subsidized gasoline on Saturday, marking the first adjustment in years as the government seeks to curb ballooning costs after a price increase in 2019 that led to widespread protests and a harsh crackdown reportedly killing more than 300 people.
For generations, Iranians have treated cheap gasoline as a birthright, a sentiment that has sparked mass demonstrations dating back to 1964 when a price rise forced the shah to deploy military vehicles to replace taxi drivers’ cars.
Today, Tehran’s theocratic regime is navigating the pressures of a rapidly devaluing rial and ongoing sanctions tied to its nuclear program. Those factors have made ultra-cheap fuel—priced in pennies per gallon—seem increasingly unsustainable. Yet the government’s cautious move to raise prices appears aimed at avoiding further friction with a fatigued public, especially after Israel’s 12-day conflict with Iran in June.
“Iranians’ discontent yields no result,” complained Saeed Mohammadi, a taxi driver and teacher who scraps by on part-time work. “The government does whatever it wants. They don’t ask for our input.”
New pricing structure remains only modestly above the old levels
The Saturday rollout introduces a three-tier subsidy framework. Under the revised system, drivers can continue to purchase up to 60 liters (about 15 gallons) per month at a subsidized rate of 15,000 rials per liter, roughly 1.25 U.S. cents, while the next 100 liters (about 26 gallons) stay at 30,000 rials per liter, around 2.5 cents.
Anything beyond these quotas falls under the new tier at 50,000 rials per liter, about 4 cents. Iran already implemented fuel rationing in 2007, but demand for the ultra-cheap fuel remains high.
Even with the increase, Iran’s gasoline remains among the world’s cheapest. The gap between production and distribution costs and the pump price is financed by subsidies. In 2022, the Paris-based International Energy Agency ranked Iran as the world’s second-largest energy subsidy emitter, behind only Russia. The IEA estimated Iran’s oil subsidies at about $52 billion that year, with Iranian officials acknowledging tens of billions annually are spent to keep energy prices low.
Economist Hossein Raghfar in Tehran warned that gasoline prices have risen roughly 15-fold since 2009, painting a bleak view of the subsidy regime. “Not only did it fail to reduce the budget deficit, but it trapped the economy in a negative loop of inflation and deficit,” he said.
Bank teller Hamid Rezapour, 35, said the government had “no choice” but to raise prices to manage the economy, arguing that more money is needed for public services. “To me, it’s an indirect tax, though in a chaotic economy it barely functions.”
First major reform since 2019 protests
This move represents the most significant change to Iran’s fuel-subsidy system since 2019, when a sudden 50% price rise for subsidized gasoline and a 300% jump for purchases beyond the subsidy triggered nationwide demonstrations. Security forces cracked down on protests in more than 100 towns and cities, with some demonstrators setting gas stations and banks on fire. Amnesty International later reported at least 321 deaths and thousands detained.
Critics warn that every 10,000-rial rise could push inflation higher—estimates suggest a 5% increase per such hike—while Iran battles roughly 40% annual inflation.
Nevertheless, cheap fuel has created employment opportunities: Iran has about 25 million vehicles, including 3 million public or government vehicles and 6 million motorcycles, with reports of more than 8 million Iranians working as taxi drivers through online platforms, close to 10% of the population. By comparison, Uber alone markets about 8.8 million drivers and couriers globally.
“Today marks a start toward changing fuel consumption trends,” Oil Minister Mohsen Paknejad told reporters.
Officials suggest future, steeper price adjustments may follow as prices are reviewed quarterly.
Taxi driver Mohammad Reza Assadi, 60, doubted that further protests would alter the course, recalling past demonstrations that ended with exhaustion and disappointment.
Gambrell reported from Dubai; Amir Vahdat contributed from Tehran.
