September 1, 2007 Inquiry & Analysis Series No. 382

The Gasoline Crisis in Iran

September 1, 2007 | By A. Savyon and Yossi Mansharof*
Iran | Inquiry & Analysis Series No. 382

In late June 2007, the Iranian government launched a comprehensive gasoline rationing policy, necessitated, in part, by the growing demand for gasoline in Iran's domestic market that could not be met by its oil production infrastructure.

Although Iran is among the world's major exporters of crude oil, it has limited processing and refining facilities, and thus must import most of its refined oil for domestic use. There has been no significant investment in developing its oil refining facilities since the Shah's era, and Iran depends entirely on imported gasoline.

It also appears that the gasoline rationing was launched in anticipation of additional sanctions against Iran, including a ban on oil imports and exports, which may be imposed in response to Iran's refusal to freeze its uranium enrichment.[1] Additionally, there have been recent reports that foreign companies are significantly curtailing their investment in developing Iran's oil fields, with the result that many projects have been suspended.[2] The reduced activity by foreign companies is probably the result of heavy pressure by the U.S., as part of the sanctions against Iran.

Iran was subjected to sanctions against oil trade as early as 1951, following the nationalization of oil resources by Iran's then-president Mohammad Mossadegh. Though the Iranian economy was able to withstand these sanctions, and the resulting oil crisis, they had a lasting psychological impact on Iranian society.[3]

Iran has recently extended the duration of the rationing. Originally, a monthly ration of 100 liters per private vehicle was imposed, for a period of four months. However, in July 2007, Iranian President Mahmoud Ahmadinejad's advisor Ali Akbar Mehrabian, the newly appointed minister of industries and mines who is in charge of implementing the rationing, announced that the new policy would remain in effect until March 2008.[4]

Despite the rationing, it seems that per-capita gasoline consumption has not falled. On August 19, 2007, the Iranian news agency Baztab reported that "most of the citizens, especially in the large cities and in areas with heavy traffic, exceed their monthly ration by about 100 liters."[5] Figures posted by the reformist online daily Rooz indicate that, during July 28-August 3, 2007, Iran's gasoline consumption reached 416.6 million liters, and in the following week, it rose even further, to 431.9 million liters.[6]

Nevertheless, the rationing system is impacting all areas of life in Iran,[7]and has led to the emergence of gasoline black market as well as to profiteering, which the authorities are trying to stamp out.

Following is a review of reactions to the gasoline rationing in Iran.

Public Protest and Official Reactions

The decision to ration gasoline sparked riots in Tehran, resulting in the arrest of 80 individuals. According to reports, over 40 gasoline pumps were torched, public facilities were severely damaged, and shops were looted. The conservative new agency Fars posted a video showing a mob looting a supermarket following the authorities' announcement of the rationing program

( ).[8] There were also unconfirmed reports that a number of people had been killed during the riots.[9]

By order of the authorities, the Iranian media is not permitted to cover the negative effects of the gasoline rationing, or to publish analyses or criticism on this issue. In a July 5, 2007 article in the reformist daily Rooz, dissident journalist Ahmad Zeidabadi condemned the government censorship, saying that "the restrictions have increased to such an extent that it is no longer possible to write or to publish [articles] on any issue that affects [life] in Iran. These days... in addition to the prohibition against [publishing] reports or op-eds on the nuclear crisis [or] on the possibility of an American [military] attack... there is a prohibition against writing [anything] serious about the gasoline rationing, about Ahmadinejad's visits [to the provinces], about the inflation – or, in short, about any important issue that affects the fate of our society..."[10]

While placing restrictions on the media, the authorities have been waging a propaganda campaign touting the benefits of the rationing, stating that it allows the channeling of resources into developing the country.[11] Ahmadinejad said that the program "is an opportunity to make great changes in Iran's economy and industry."[12] He also asked MPs to support the government on this issue and to refrain from discussing the option of permitting gasoline to be sold on the free market.[13]

The rationing program is also supported by Iran's Supreme Leader Ali Khamenei. On June 30, 2007, he declared that "the present conditions in Iran are excellent... The decision to ration gasoline was one of the government's courageous steps. We must continue to implement it, while examining all its aspects..."[14] At the same time, Expediency Council Secretary Mohsen Rezai criticized the "unsatisfactory" way in which the program was being implemented, and proposed that citizens be allowed to buy high-priced gasoline on the free market to supplement the rations.[15]

Protest in the Majlis

Despite Ahmadinejad's demand, Majlis members have been protesting against the rationing program and against how it is being run. MP Sanati Mehrabani, who, following the rioting proposed a bill to cancel the rationing, said during a Majlis session to Iranian Interior Minister Mostafa Pour Mohammadi: "If the purpose of your gasoline rationing [policy] is to destroy the country – you have succeeded, and I congratulate you on your success. But if the purpose is to help the impoverished farmers, the government has not succeeded [in attaining this goal]."[16]

MP Hassan Shojaee asked, "Do you know what problems the people are forced to face in their daily lives because of the gasoline rationing?... Do you think that busing [companies] haven't stopped transporting tourists around the country because of the rationing, causing substantial losses to owners of hotels, rental houses, and shops catering to tourists? Do you know that after months of toil in the fields, the farmers need to use their vehicles to bring their produce to market, but [that since they are prevented from doing so] the crops remain in their possession, and they can find no one to buy them, even at a reduced price?... Ambulances have no fuel to carry the sick... Was it a courageous [step] to inflict all this damage and catastrophe upon the people?..."[17]

An article on the Iranian website Alef, which is affiliated with MP Ahmad Tavakkoli, head of the Majlis Strategic Research Center, criticized the fact that the implementation of the rationing program was entrusted to associates of Ahmadinejad who lacked the necessary experience: "Fifty days after the introduction of the rationing policy… the reports of its implementation… are worrying and despairing… It seems that the honorable president [Ahmadinejad] either does not assign enough importance to this issue or is unaware of how the program is being run. In light of the security and ethical ramifications [of the rationing program], and its [grave] ramifications in the lives of the people, the people's representatives in the Majlis should give the government a resounding slap [in the face]… Today, the honorable president must explain to the nation's representatives why he has entrusted the implementation of the gasoline rationing program… to individuals who lack experience."[18]

Iranian Website Warns of Impending Crisis

An analysis posted July 22, 2007 on the Alef website criticized the government propaganda, which is emphasizing the achievements of the rationing program while disregarding the hardships that the people are experiencing under it. The following are excerpts:

"The reports concerning the implementation of the gasoline rationing program and the policy which disregards [the difficulties faced by the population]... are becoming increasingly disturbing. If we liken the public transportation system and the [problem of] gasoline consumption to a [hospital] patient, and the gasoline rationing [program] to surgery, [we can say that] 24 days after this complicated surgery, the patient's condition is deteriorating. Instead of keeping watch at the patient's bedside around the clock and monitoring his vital signs, the medical team (the senior officials in charge of the rationing program)… have left him on his own, and are busy discussing the initial benefits of the surgery (i.e. the significant decrease in gasoline consumption, the elimination of smuggling, traffic improvements, and reduced air pollution). They do not realize that if the healing process does not continue rapidly and under close supervision, their patient will expire, and all those initial benefits of the surgery will be lost.

"During the past two or three weeks, confidential reports have given an alarming picture of the state of the urban and intercity public transportation: [Public] services are shutting down; some taxi drivers are trading in gasoline [rationing cards], while others do not [even] receive [the cards]; taxi services are gradually coming to a standstill; prices of intercity public transportation have significantly risen… The public is feeling the effects of this [crisis] directly.

"Right now, in mid-summer, when the demands on urban public transportation are minimal, [these] reports may appear negligible. However, each one of them is a piece of a puzzle which, if put together, would present an alarming picture of impending crisis: torched buses, looted banks and shops, gas stations set on fire by people fed up with the inflation, apartment shortages, and interminable lines of [standing] buses, trains and taxis – [and all this] by mid-September 2007 (when the demands on public transportation will be at their peak)."[19]

* Y. Mansharof is a Research Fellow at MEMRI; A. Savyon is Director of MEMRI's Iranian Media Project.


[1] Rooz (Iran), July 19, 2007. In early August, Ahmadinejad declared that "Iran would not relinquish even an iota of its nuclear rights." Jomhouri-ye Eslami (Iran), August 8, 2007; see also MEMRI TV Clip #1526 from July 25, 2007, U.N. Security Council discussions on Iran's nuclear dossier are slated to resume in early September 2007. For more on Iran's refusal to freeze its nuclear activities, see MEMRI Inquiry and Analysis No. 377, "Iran Determined to Continue Nuclear Program Despite International Pressures," July 23, 2007,

An Arab Diplomat on the Need to Replace Jihad With Social Development.

[2] For example, the Japanese oil company Inpex has cut back its participation in the oil field development project in Azadegan in southern Iran to only 10%. According to the Inpex representative in Iran, this limited participation will permit it to cooperate with Iran in the future. Rooz (Iran), August 14, 2007.

[3] Mossadegh's nationalization of Iran's oil led to the 1953 coup and to the return of the Shah – planned and assisted by the U.K. and the U.S.

[4] Aftab-e Yazd (Iran), June 27, 2007; Fars (Iran), June 16.

[5] Baztab (Iran), August 19, 2007. It was also reported that, for about $22, many citizens have their cards illegally recharged on the black market. Ham-Mihan (Iran), July 3, 2007; Aftab (Iran), June 30, 2007.

[6] Rooz (Iran), August 13, 2007.

[7] See, for example, Rooz reports from July 19, 2007 and Sharq reports from July 21, 2007.

[8] Fars (Iran), August 14, 2007.

[9] Rooz (Iran), June 28, 2007.

[10] Rooz (Iran), July 5, 2007.

[11] For example, Ahmadinejad stated recently that "by building oil refineries [in Iran] and [manufacturing] hybrid vehicles, Iran will soon become an exporter of [refined] fuel... Within five years, we will be able to export 150 million liters of [refined] fuel a day." (Kayhan, Iran, July 10, 2007). On July 2, 2007, Kayhan reported that, in the first five days of the rationing, Iran saved 50 million liters of gasoline.

[12] IRNA (Iran), July, 1, 2007.

[13] Rooz (Iran), July 23, 2007. Kayhan wrote on August 19, 2007 that the gasoline rationing program was "a national and moral duty incumbent upon the media, and upon [all] circles, figures and institutions" in Iran.

[14] Aftab, June 30, 2007.

[15] Jomhouri-ye Eslami (Iran), July 19, 2007.

[16] Sharq (Iran), July 23, 2007. Majlis Economic Committee member Arslan Fathi Pour said, "If the [rationing] program continues in its present format, there will be considerable damage to all the accomplishments of the government and of the regime." Aftab-e Yazd (Iran), August 22, 2007.

[17] Aftab-e Yazd (Iran), August 6, 2007.

[18] Alef (Iran), July 18, 2007.

[19] Alef (Iran), July 22, 2007. The July 25, 2007 editorial of the Iranian daily Jomhouri-ye Eslami, which supports Expediency Council Chairman Hashemi Rafsanjani, criticized how Ahmadinejad's government was managing the program, as well as its attitude towards the difficulties and the public dissatisfaction it has caused: "…The efforts on the part of some of the propaganda apparatuses to show that life is continuing as usual will definitely not benefit either the government or anyone else involved in the gasoline rationing program… The main weakness of Ahmadinejad's government is that it does not acknowledge the need [to learn from] past experience…"

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