Iraq's fuel price surge ignites public outcry
Shafaq News/ The Iraqi Cabinet's recent decision to raise fuel prices for cars, with premium gasoline seeing a 30% increase and super quality gasoline facing a 25% hike, has sent shockwaves across the nation.
This move, intended to address traffic congestion as part of a larger government strategy, has instead sparked widespread anger and discontent among drivers, notably taxi operators, and the general populace.
In January 2024, Iraq advanced globally to become the 13th country with the most affordable gasoline prices. Iran topped the list with the lowest price at $0.029 per liter.
Data from "Global Petrol Prices," accessed by Shafaq News Agency, revealed Iraq's position at 13th place, with a price of $0.572 per liter. Qatar followed closely in 14th place with a cost of $0.577 per liter, while Oman ranked 17th at $0.621 per liter. Colombia held the 42nd position with a price of $1.052 per liter.
Monaco and Hong Kong were noted as having the lowest gasoline prices globally.
During its recent session chaired by PM Mohammed Shia Al-Sudani, the Cabinet approved the hike in premium petrol ( 95 octane) prices from 650 dinars (0.46$) per liter to 850 dinars (0.65$) per liter and super petrol ( 98 octane) from 1000 dinars (0.76$) to 1250 dinars (0.96$) per liter, effective from May 1st.
This decision follows a previous move by Mustafa Al-Kadhimi's government in 2020 to lower the price of premium high-octane gasoline from 850 dinars to 650 dinars per liter.
Concerns are mounting over the potential economic repercussions, including the looming threat of a broader price surge impacting various sectors throughout the country.
Taxi Drivers Bear Brunt of Impact from Decision
Taxi driver Ali Mohammed from Baghdad said, "Taxi owners already struggle with high taxes and frequent traffic fines, coupled with deteriorating roads that damage our vehicles…the sudden 200 dinar increase in gasoline prices is the final blow, exacerbating our hardships in trying to earn a livelihood."
Mohammed, speaking to Shafaq News Agency, emphasizes, "Taxi owners will face significant challenges due to the increased gasoline expenses, which will also burden employees as their salaries have not been adjusted to account for this price hike. The Ministry of Oil must find a solution by reconsidering the gasoline price."
Meanwhile, employee Hussein Sajjad from Karbala tells Shafaq News, "The rising cost of gasoline will have a detrimental effect on citizens in general and employees in particular, as it adds to their expenses without a corresponding increase in income. This situation highlights the ongoing struggle with the rising cost of living."
Some observers downplay the impact of the increase in "premium petrol" prices on overall transportation costs, citing that the prices of "regular" gasoline remain unchanged, according to a government source.
In response, a car driver, Ammar Qasim, points out that most citizens opt for premium gasoline (high-octane) over regular petrol due to its better quality.
He explains to Shafaq News that using regular gasoline can lead to vehicle breakdowns and costly repairs, especially since many vehicles are not designed to run smoothly on this "inferior" gasoline, as he describes it.
After Halving Imports: A Surprise Decision
On March 20th, the Oil Products Distribution Company confirmed a significant 50% reduction in gasoline imports following the successful operation of the Karbala refinery. The Ministry of Oil's strategic plan to eliminate gasoline imports is progressing as scheduled.
Hussein Taleb, the company's General Manager, informed Shafaq News that "the Ministry of Oil has established a timeline to phase out the importation of petroleum products, with a particular focus on gasoline." adding, "Since the Karbala refinery commenced operations, gasoline imports have plummeted from 14 million liters to just 7 million liters."
Taleb explained that "once the northern refinery is operational, gasoline imports will plummet even further to 4 million liters," emphasizing that "the expansion of domestic refineries' production capacities will effectively replace the remaining gasoline imports."
Additionally, Taleb highlighted that "Iraq has successfully ceased the importation of other products such as gas and white oil, achieving self-sufficiency through enhanced local production capabilities."
Citizen Mohammed Youssef voiced his concerns, highlighting that the surge in gasoline prices will directly impact transportation expenses, ultimately resulting in an uptick in the prices of essential goods. He emphasized the strain this price hike places on citizens, particularly those with limited incomes and honest employees who do not engage in bribery.
Youssef questioned the government's awareness of the market dynamics, stating, "Have you considered the market conditions and its implications? In a nation abundant in oil, why are gasoline prices being raised when people anticipate a reduction in the cost of living?"
Youssef urged the Prime Minister to "rethink this decision as it adversely affects the populace."
Quiet Starvation Policy
Citizen Adel Al-Wadi rejected the Iraqi Cabinet's decision to increase gasoline prices, viewing it as an "unjust action and a blatant exploitation of the citizens."
Al-Wadi described as a covert policy of causing hardship, particularly considering the additional taxes on the horizon.
"we call upon the elected representatives to fulfill their duty in opposing this decision and advocating for the people's interests."
Misguided Move: Expert Critiques Price Hike
Economic expert Abdulrahman Al-Sheikhly expressed concern over Iraq's recent gasoline price hike.
He emphasized that as an oil-rich nation relying on its oil reserves, exports, and production facilities, activating multiple oil refining stations and previously dormant refineries should have led to a decrease in gasoline prices, aiming to alleviate the burden on citizens rather than exacerbate it.
Al-Sheikhly cautioned, "The government should refrain from comparing gasoline prices with those in neighboring and European countries, as Iraq's situation is unique and distinct from theirs."
"Al-Sudani's government should recall the massive protests and general strike in the 1960s triggered by a mere 10-fils increase in gasoline prices, which paralyzed Iraq."
Al-Sheikhly emphasized that "implementing such a decision without considering the people's conditions and struggles is inappropriate. It should have been debated in parliament, where representatives understand the citizens' situation."
He further highlighted, "The decision's economic impact will increase food and service prices, citing higher transportation costs and taxi fares. This will diminish citizens' purchasing power, necessitating a reevaluation within the one-month implementation period set for May 1st."
Decision Straining Citizen-Government Relationship
In turn, Economic expert Dhargham Mohammed Ali warned of the delicate state of the Iraqi market, particularly with high inflation rates stemming from a strong dollar and limited domestic output, stressing that any current increase is unjustified and worsens market challenges without valid justifications.
Ali further elaborated that this decision coincides with the new government's focus on raising taxes on citizens without prioritizing genuine development and expanding tax revenues.
"These price hikes would stress the public and strain the positive relationship between citizens and the government, which is the first administration tasked with representing and addressing their concerns. Ali expressed hope for reconsidering these impulsive decisions, stressing the importance of supporting electronic payment culture, promoting actual development, improving the investment climate, and avoiding measures that deter investment.
Iraq's Losses Linked to Gasoline Prices
Economic expert Nabil Al-Marsoumi highlights the close connection between gasoline and crude oil prices. He notes that in 2021, the cost of premium gasoline surged to around 1000 dinars per liter, resulting in Iraq sustaining an annual loss of over one billion dollars to maintain the domestic price of premium gasoline.
Al-Sulaymaniyah Cuts Gasoline Prices
Bahman Abdulqadir, the spokesperson for fuel stations in Sulaymaniyah, announced a noteworthy development on March 14th: a reduction in gasoline prices across all three types by 25 dinars.
Abdulqadir informed Shafaq News Agency that "the price of super gasoline will now be 1200 dinars, premium gasoline will be 1050 dinars per liter, and regular gasoline will be 825 dinars."
He attributed the price reduction to "a decrease in demand and an increase in supply in the market."
Bahman further highlighted that "since the beginning of the year, gasoline prices for all three types have seen a reduction of approximately 100 dinars."
