Oil shortgage in Iran

Fuel Rationing in Iran

This is something to look at later, but this is probably the supreme irony of a an economy where the government is heavily involved in both the production and subsidizing of a basic commodity.

The key problem here seems to be that although Iran produces the oil and subsidizes gasoline prices, the country does not actually refine the oil into gasoline.

The government apparently subsidizes the gasoline as a way to garner popularity (the problem being that most people do not see one dime of the country's oil wealth). Not surprisingly, the fuel is wasted far more than necessary since it so heavily subsidized and people in Iran now think of it as an entitlement. That is why they are burning down gasoline stations.

We tend to get the impression that Iranians live in mortal fear of their government and that criticism from the press is dealt with sternly. This crisis seems to indicate otherwise or that at least it is not as bad as we are normally led to believe. The economic situation though is the much more interesting thing.

A similar situation appears to be taking hold in the west where all of the government interference in pushing ethanol has raised food prices since so many food commodities, including grain for animals, comes from corn. The restrictions on sugar-cane based ethanol (based purely on the politics of the Iowa caucuses) are the other contributing factor to this problem. Our leadership in Washington, however, consists of so many cowards and people who want to run for president, that this will never be repealed.