Gov't: The burning of gas stations in Iran shows that sanctions are working.
By YAAKOV KATZ, APjp.services1(photo credit: )
Defense officials expressed satisfaction Thursday with reports emerging from Teheran claiming that Iranians had set fire to a dozen gas stations in the capital on Wednesday angered by the sudden start of fuel rationing.
The fuel rationing, which was announced by President Mahmoud Ahmadinejad on Wednesday, is part of a government attempt to reduce billions of dollars in subsidies it pays to keep gas prices low.
Iran is one of the world's biggest oil producers, but it is sorely lacking in refineries - meaning it has to import more than 50 percent of its gasoline needs.
The government says money saved from subsidies can go to building refineries, improving public transportation and job creation.
Defense officials noted that while the violence was localized, it showed the tremendous potential impact tough sanctions could have on the Iranian economy.
One potential sanction that has been raised by Israel is stopping the flow of refined fuel to Iran.
"If the refined fuel were to come to a stop, the Iranian people, as shown by Wednesday night's riots, might completely turn against their president," one defense official predicted.
While Iran claimed that the fuel rationing had been in the planning for a year, defense officials said that it could have to do with the threat of stronger economic sanctions by the United Nations.
Iranians are accustomed to gasoline at rock bottom prices. After a 25 percent hike in prices imposed May 21, gas sells at 1,000 rials per liter (38 US cents/gallon).
But to maintain those prices, the government must heavily subsidize gas. To reduce its payments, the new rationing allows private drivers only 100 liters of fuel per month at the subsidized price. Taxis can get 800 liters a month. Anything above that must be bought at a higher price, as yet undefined.
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