Iran would likely need to impose stricter rationing of gasoline: U.S. expert

Azerbaijan, Baku, January 25 / Trend , A.Badalova /

To cover the shortage of gasoline, Iran would likely need to impose stricter rationing of gasoline, said Rick Mueller, head of oil markets department of the U.S. analytical company Energy Security Analysis (ESAI).

According to the expert, Iran could cover some of the loss in exports through increased use of their petrochemical plants to make gasoline instead, but this wouldn't meet all their demand.

"Iran would likely need to impose stricter rationing of gasoline, which would only add to the government's growing unpopularity," Mueller wrote to Trend in an e-mail.

Today, gasoline in Iran is sold through a card system, which envisages sale of limited volumes of fuel in subsidized prices. The cost of gasoline via card system, which is referred to both private car owners and drivers of buses, is $0.1 per liter. In case of exceeding the limit, one liter of gasoline costs $0.4.

The 2010-2011 budget, the execution of which will begin in March, envisages the previous price of locally produced gasoline via card system - $0.1 per liter, and import - $0.4 per liter.

Thus, the cost of thousand liters of gasoline in Iran is $400 today. For comparison, the lowest price for Euro-super 95 gasoline in 27 countries of Europe exceeds 900 euros per thousand liters.

Today, Iran has to import up to 40 percent of the total domestic demand for fuel because of the weak development in the country's processing industry. The situation with shortages of gasoline in the country worsened after the House of Representatives (lower house of Congress) approved the bill to impose new sanctions against Iran on order to stop Iran's nuclear program. Initiated by U.S. President Barack Obama, the measure implies a ban on doing business in the United States by all foreign companies that supply oil products to Iran. This measure extends the law, under which will be punished any company investing over $20 million in Iran's energy sector.

The first results of sanctions were Swiss Glencore's cessation of (the world's largest raw material producer and trader) the supply of gasoline to the country, which amounted to 17,000 barrels per day.

According to Mueller, certainly other companies may come under similar pressure to cease their
gasoline exports, particularly if the UN Security Council increases their sanctions on Iran in response to Iranian uncooperativeness.

Today, a major supplier of gasoline to the Islamic Republic of Iran is China, which accounts for one third of Iran's imports of gasoline.

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