The three-tier gasoline pricing plan was implemented across Iran starting early Saturday, December 13. Under this plan, subsidized gasoline continues to be offered at rates of 15,000 and 30,000 rials, while excess consumption, as well as gasoline for government vehicles, imported cars, and some high-priced vehicles, will be charged at a rate of 50,000 rials.
With the implementation of the new cabinet resolution, gasoline pricing in Iran has entered a new phase. Fereydoun Yasemi, head of the Tehran branch of the National Iranian Oil Products Distribution Company, said in an interview with the state broadcaster of Iran’s regime that as of this date, gasoline is being sold at three rates of 15,000, 30,000, and 50,000 rials.
The government of Iran’s regime cites the sharp rise in gasoline consumption and the imbalance between production and consumption as the main reasons for implementing this plan. According to official statistics, daily gasoline consumption in Iran has reached about 135 million liters, while domestic production is estimated at around 110 million liters at best.
This gap has forced the government to spend billions of dollars annually on gasoline imports, a figure that, according to regime officials, has placed significant pressure on the country’s foreign exchange resources.
According to government officials, the value of each liter of imported gasoline is about 660,000 rials, and the cost of domestic production is close to 100,000 rials—an argument they use to claim that even at the 50,000-rial rate, the majority of fuel costs are still covered by the government.
Under this government resolution, the new rate is equivalent to 10% of the price at which gasoline is purchased from refineries.
Officials of Iran’s regime say the government buys each liter of gasoline for 340,000 rials, but previous independent assessments show this amount to be 250,000 rials, of which only about 35,000 rials is the cost of gasoline production excluding feedstock—around 90% less than the figure announced by the government.
From policymakers’ perspective, the continued imbalance in fuel products not only worsens the budget deficit but also increases fuel smuggling and excessive consumption.
Another key pillar of this new policy is reducing reliance on station fuel cards and encouraging drivers to use their personal fuel cards. The government says that by limiting cheap gasoline and setting a higher rate for excess consumption, it will be possible to more accurately monitor consumption patterns and combat smuggling.
Regarding consequences, the government insists that implementing this plan will have a limited inflationary effect. Official estimates put the inflationary impact of the three-tier gasoline system at about 0.2%, and government officials say more than 80% of vehicles meet their needs with the same monthly quota of 160 liters.
It has also been announced that the revenue generated from selling gasoline at 50,000 rials will be used to distribute vouchers and support lower-income deciles.
However, past experiences continue to loom over the public atmosphere. The last major gasoline price hike in November 2019, which was accompanied by a sudden announcement of new rates, led to nationwide protests and widespread unrest.
Following that event, Iran’s regime approached fuel price reform with greater caution. Since then, gasoline price increases have remained among the most sensitive economic and social issues.
Masoud Pezeshkian, the president of Iran’s regime, had previously said that raising gasoline prices is not an “overnight decision” and should be carried out gradually with consideration for people’s livelihoods. He also emphasized the limitations of foreign exchange resources and the unfair distribution of fuel subsidies.
Iran’s regime presents the implementation of the three-tier gasoline system as a combination of “preserving the existing support model” and a gradual move toward reforming the energy consumption structure.
Despite government officials’ claims that they had planned and prepared for the implementation of this plan, images received by Iran International from the final hours of Friday night show long lines at some gas stations.
