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article1 - Rationing is putting a terrible strain on the...

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ECON 110 http://www.nytimes.com/2007/06/29/world/middleeast/29iran.html?ref=world Iran has been rationing gasoline throughout the country in preparation for future economic sanctions by the United Nations due to the country’s nuclear program defiance. Even though Iran is a large oil producer it has very old and inept refining equipment and must import about 40 percent of its gasoline. The amount of gasoline imported is seen in Iran as a national security risk and so the President of Iran has decided to implement rations as opposed to raising prices to reduce consumption. The country of Iran is having a serious issue with the rationing of gasoline. It is very interesting to note that even though the price of gasoline in Iran is less than 40 cents a gallon the populace is livid with anger about the current situation. The correct course of action would be to do what the Iranian parliament had voted to do, which is to raise the price of gasoline which would reduce consumption as opposed to rationing.
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Unformatted text preview: Rationing is putting a terrible strain on the population as they are only allowed to have 26 gallons of fuel a month. I can’t imagine having to use only 26 gallons every month, most people in the United States use that in just a week. A larger problem that is presenting Iran is now they are in a serious bind. The populace is upset and burning gas stations over the rationing but won’t be happy about a doubling of the cost of fuel either. The country is subsidizing gasoline heavily in most cases over 3 times the amount paid by the consumer. Iran needs more refineries, but it needs capital to build them, but all the capital is being spent subsidizing the current gasoline imports. It’s all a big confusing mess, Iran needs to talk some sense into the semi barbaric people that are taking to the streets and increase the price of gasoline closer to the subsidizing line otherwise the country will be stuck in an economic and security rut....
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