Thursday, February 21, 2008

Total confusion in relation to Petrol in Iran

It is reported here that Iranian parliament would strongly support free market in petrol and would like to see petrol being supplied via market without any subsidy. I am not aware what happens next that the chief of Majlis Committee on Energy adds that the government sector could pay 500 tomans/ liter for petrol and the same petrol would be offered to the public at large at 250 tomans/liter! This dual pricing does not look to me to be determined by the"free market"! This said, you can read here that the minister for Economic Affairs does appear to be supporting this policy, and believes that supplying petrol via the free market would " fuel inflation" in the economy. He then goes on to add that what the government should do- as we are not able to subsidise petrol any longer- is to try to minimise the impact of freely priced petrol on the rate of inflation. I am not sure what the price of petrol is likely to be when this policy is implemented? Would it be sold at 500 tomans a liter or 250 tomans a liter? If the lower price is the free market set price, then, why others are to be overcharged? If the higher price is the free market set price, and the government cannot subsidise any more, how can this price be halved to 250 tomans for the public at large? The Minister, however, did not explain what these measures are likely to be. Let us just wait and hope that someone from some where, perhaps another planet, would come down and succeed in controlling this seemingly uncontrollable inflationary pressure in Iran. Let us hope and pray!
Amen!!

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