Iraq Enjoys Some of World's Cheapest Gas

[struggle4progress]

By THOMAS WAGNER
Associated Press Writer

August 18, 2005, 7:40 AM EDT

LONDON -- When the IMF released its first assessment of the Iraqi economy in 25 years, few were surprised to see that it had slashed the country's predicted economic growth this year by more than three-quarters because of widespread attacks by insurgents.

But consumers in the United States and Europe might have been surprised by another part of the IMF's 62-page report Monday: drivers in Iraq pay as little as 5 cents a gallon for gasoline. <snip>

Even the many Iraqis who pay higher, black-market prices at the pump often make money by smuggling gasoline into neighboring countries such as Turkey, according to the IMF's report. <snip>

In 2004, gasoline subsidies alone cost the Iraqi government $3 billion, the IMF said. <snip>

http://www.newsday.com/news/nationworld/world/wire/sns-ap-britain-iraq-oil,0,1863112.story?coll=sns-ap-world-headlines

Isn't it nice to know that our tax dollars are helping keep Iraqi gas prices low enough to support the trans-border smuggling operations?

[TheFarseer]

1. wow

what the hell is going on over there? I bet the corruption would blow your mind!

[struggle4progress]

4. Old American oil company executive proverb: "It's OK if it's cheap ..

.. over there, we just never want to see it cheap over here!"

[evilqueen]

2. nationalized and subsidized

What the US and UK plan to do is privatize (oil, and everything else), and reap the profits, instead of the gov't of Iraq controlling those resources.

[struggle4progress]

7. Where do ya think that $3 billion subsidy in 2004 came from?

I really don't see a stand-alone government in place there with its own sources of revenue ...

[evilqueen]

11. Iraq was subsidizing their oil prices long before we invaded the country.

"According to former Oil Minister Issam Chalabi, Iraqi refineries currently are operating at only 50 percent-75 percent of capacity, forcing the country to import around 200,000 bbl/d of refined products, at a cost of $200-$250 million per month. This does not include the additional cost of steep government subsidies on the consumer price of gasoline, which runs at under 10 cents per gallon. It is estimated that, overall, direct and indirect oil subsidies cost Iraq $8 billion per year. Subsidies also encourage illegal smuggling of oil out of Iraq, and exacerbate shortages within the country. In order to reduce Iraq's need for oil product imports, significant investment will be needed to perform refinery upgrades (Iraq had identified dozens of such projects prior to the war) and possibly to build new refineries." - Source

[struggle4progress]

12. And where did the 2004 subsidy come from? There's no real government ..

.. there right now ...

[evilqueen]

15. well, 2004, the CPA was running things

You could say that was US gov't control, although even the country of Iraq still had a federal budget even without Iraqis in control of it. Then again, there's also the $8.8B that is unaccounted for. Rep. Louise Slaughter is circulating a petition for an Iraq Audit. If you haven't signed it, I'd urge you to do so. I'm currently running a public service ad on a couple of websites to call attention to that, although I am in no way affiliated with the Congresswoman and don't even reside in her state. :)

[struggle4progress]

19. So it's likely to be US tax dollars subsidizing cheap gas there. eom

[Canuckistanian]

3. Iraq has always had dirt-cheap oil

In fact, since the invasion and occupation, Iraqi gas has skyrocketed because of pipeline sabotages.

Yet another reason for Iraqis to hate Americans.

[reBel_gyrl]

5. 5 cents a gallon!?!?

Oh that is lovely. Our tax dollars at work. And what about the price of oil these days? We hear reports about it being $62+ a barrel, yet I know an ex-service man that says the price of oil in actuality is not that drastically affected, he says that it changes within fractions of cents, not multiple dollars. I don't really understand how all that works, but if it's true.. just another big lie from our administration to keep the public in check.

Does anyone know how oil prices work and change etc? Is there any truth to what my friend says?

[stillcool]

6. How much can they enjoy it?....

its not like they can go for a leisurely drive through Baghdad.

[Lisa]

8. too true!

I talked to someone who was on a relief mission to Baghdad a couple of years ago -- and she said that people would be happy to trade the gas for clean water, aspirin, school supplies -- and not having to stress out every time a family member was late coming home.

[annabanana]

9. How can I begrudge them cheap gas?

1) It's theirs
2) Their life is otherwise completely sucky
3) they have to risk their lives to wait on line to fill up.

[me b zola]

10. Well then

I encourage all repukes and others who support this war to move to Iraq. Then they can fill their hummers & suv's and blow kisses to chimp all at the sametime.

[OmmmSweetOmmm]

13. I recently heard that they were rationing gas in Iraq. Here goes.

http://www.chron.com/cs/CDA/ssistory.mpl/world/3291750

Aug. 2, 2005, 1:11AM

Iraq will ration gas to 'lessen suffering'
Party leaders will meet to work out deals on key constitution issues
By T. CHRISTIAN MILLER and ASHRAF KHALIL


BAGHDAD, IRAQ - Despite having the world's second-largest reserves of oil, Iraq announced Monday that it will begin rationing gasoline over the next few months to cope with an ongoing fuel shortage.

Continued at above link

[struggle4progress]

14. Must be enough money to be made smuggling that the supply ..

.. to ordinary citizens has to be limited ...

[NoSheep]

16. Am I ignorant as hell or don't they have oil as a local natural resource?

Do they truck the shit out and make gas out of it or what?
Cigarettes are cheap in NC. They grow 'em down the road.

[evilqueen]

17. the situation is complex

Yes, oil is a natural resource there, but production is not up to capacity due to the war going on and sabotage of pipelines and equipment.

They DO have to import some refined products (like gasoline) made from oil because their refining capabilities in-country are unable to keep up with demand, again, because of the war and because of sabotage to pipelines and equipment.

Because of the smuggling problem and the shortfall in supplies to meet demand, they have had to ration gasoline in Iraq. This has led to a growing black market for gas there. An AP item from last night's news stated that even with black market prices, many Iraqis find it profitable to smuggle gasoline for resale in Turkey and other places outside of Iraq.

Personally, I have no idea how much smuggling is going on, although without secure borders, it may not be as difficult as we'd at first think. Yes, there are landmines on the roads, but the situation over there has become so desperate for Iraqis, many who have not had jobs since the invasion began, that it is likely there are some who are willing to risk their lives to earn enough money to feed their families.

[NoSheep]

18. Thanks for the explaination. I really appreciate it. What was I thnking?

There's a damn war going on over there! ;(