Iraqis Paying 5 Cents a Gallon for Gas

[The1calledTKE]

BAGHDAD, Iraq - While Americans are shelling out record prices for fuel, Iraqis pay only about 5 cents a gallon for gasoline — a benefit of hundreds of millions of dollars subsidies bankrolled by American taxpayers.


Before the war, forecasters predicted that by invading Iraq (news - web sites) and ousting Saddam Hussein (news - web sites), America would benefit from increased exports of oil from Iraq, which has the world's second largest petroleum reserves.


That would mean cheap gas for American motorists and a boost for the oil-dependent American economy.


More than a year after the invasion, that logic has been flipped on its head. Now the average price for gasoline in the United States is running $2.05 a gallon — 50 cents more than the pre-invasion price.


Instead, the only people getting cheap gas as a result of the invasion are the Iraqis.


Filling a 22-gallon tank in Baghdad with low-grade fuel costs just $1.10, plus a 50-cent tip for the attendant. A tankful of high-test costs $2.75.


In Britain, by contrast, gasoline prices hit $5.79 per gallon last week — $127 for a tankful.

http://story.news.yahoo.com/news?tmp...iraq_cheap_gas


Thats just crazy. Only 5 cents? I mean it is gas from their country but still.

[AlphaSigOU]

Originally posted by The1calledTKE
Thats just crazy. Only 5 cents? I mean it is gas from their country but still.

Matter of national pride, too... They don't hafta deal with gas taxes either. Refining and other production, transportation and marketing costs are minimal as well.

Back when I was growing up in Venezuela thirty years ago, the price for a liter of gas was ridiculously cheap. My mother asked the gas station attendant to fill it up with the premium gas, which only cost (back then) 15 centimos a liter. (She also worked back then as an executive secretary at Shell Oil of Venezuela. When the oil industry was nationalized in 1976, the whole family packed up and moved to Atlanta - she did not want to jeopardize her naturalized U.S. citizenship by working for a foreign government.)

Gas is still dirt cheap down there, and Venezolanos like their gas-guzzling land yachts and SUVs.

[Kevin]

Although Iraq is a major petroleum producer, the country has little capacity to refine its own gasoline. So the U.S. government pays about $1.50 a gallon to buy fuel in neighboring countries and deliver it to Iraqi stations. A three-month supply costs American taxpayers more than $500 million, not including the cost of military escorts to fend off attacks by Iraqi insurgents.


The arrangement keeps a fleet of 4,200 tank trucks constantly on the move, ferrying fuel to Iraq.


"We thank the Americans," Baghdad taxi driver Osama Hashim said. "They risked their lives to liberate us and now they are improving our lives," said Hashim, 26, topping up the tank on his beat-up 1983 Volkswagen.


Iraq's fuel subsidies, which are intended to mollify drivers used to low-priced fuel under Saddam, have coupled with the opening of the borders to create an anarchic car culture in Baghdad.


Cheap used cars shipped from Europe and Asia are flooding into Iraq. A 10-year-old BMW in good condition costs just $5,000. Since gas is so cheap, anyone with a car can become a taxi driver. Drivers jam the streets, offering rides for as little as 250 dinars — about 17 cents.


Iraq has no sales tax, no registration, no license plates and no auto insurance. Some would argue there are no rules of the road. Cars barrel the wrong way on the highway. They swoop into surprise U-turns. They ignore traffic signals.


Analysts say the U.S. gas subsidies can't last forever — and Iraqis may be in for an unpleasant shock when they end. In the meantime, however, the American taxpayer continues to foot a huge bill.


"The U.S. taxpayer has a right to be indignant, and Iraqis have to be warned about the long-run damages of this," said Anthony Cordesman, an Iraq analyst with the Washington-based Center for Strategic and International Studies. "The minute the aid goes out, the party is over. And there's going to be a hell of a hangover."


The U.S. government paid even more last year for Iraqis' gasoline — between $1.59 and $1.70 per gallon — when the imports were contracted to Halliburton, the Texas oil services giant formerly headed by Vice President Dick Cheney (news - web sites).


The cheap fuel is spurring unsustainable demand, promoting wasteful use of energy and transportation, and squandering Iraq's oil output that might otherwise be exported, Cordesman said.





"You're leading people to buy cars that aren't affordable at normal costs," he said. "You need to move toward real market prices as quickly as you can without causing instability."

Iraqi drivers protest that the price difference between a gallon of gas in the United States and Iraq is fair, because the average Iraqi earns around $1,000 per year, a thirtieth of the average U.S. wage.

"If the price of gas goes up, we'll see lots of anger in the street," said cab driver Hashim, at a grimy filling station on Saadoun Street in central Baghdad.

Cheap gasoline is also needed to fuel the ubiquitous portable electric generators in Iraq, which power air conditioners during long daily electricity blackouts.

Hashim and another driver, convinced, like many Iraqis, that the United States reaps huge amounts of cheap Iraqi oil, said subsidized gasoline was the least Americans could provide in return.

"The United States controls all Iraqi resources now," said Jenan Jabro, 50, tanking up his black Opel. "So what if they have to pay a little bit for gasoline? That's nothing compared to what they get in return."

Analysts say there never was a good case — either before the war or afterward — that a U.S. invasion would pay dividends in cheap oil.

"Some of the neo-conservatives might've been saying that, but no energy analysts were walking around saying that," Cordesman said.

Iraq's current exports of just under 2 million barrels of oil a day aren't enough to dent the world market price. It will take up to three years to bring Iraq back just to 1991 export levels, said Rachel Bronson of the Council on Foreign Relations. The country is still too unstable for most oil companies, she said.


***

As for my personal commentary, the reporter seems to go almost out of his way to paint a gloom and doom picture. The actual quotes of your Iraqi citizens seem to paint a picture of people that are truly thankful for what they are now receiving.

All in all, I think reports like this one are going to be a little less than a footnote in how history views this war. I think this war will be viewed historically by events yet to come.

[preciousjeni]

Originally posted by ktsnake
Iraqi drivers protest that the price difference between a gallon of gas in the United States and Iraq is fair, because the average Iraqi earns around $1,000 per year, a thirtieth of the average U.S. wage.

I was actually going to point this out, but you posted it!! Thanx!!

ETA: A thirtieth of the current U.S. gasoline average is about $.06 - sounds logical to me!

[Pike1483]

Exactly-- I think the earnings difference in the U.S. and Iraq has a big part to play in gas prices. And our money is generally worth a lot more in other places.

[Kevin]

Originally posted by Pike1483
Exactly-- I think the earnings difference in the U.S. and Iraq has a big part to play in gas prices. And our money is generally worth a lot more in other places.

Well, not exactly

Gas costs equivelent to $40US/barrell right now, regardless of where you are. The Iraqi economy is definitely being propped up by American dollars. Hopefully, soon, this will help them land on their feet -- that's the plan anyway.

[AlphaSigOU]

Originally posted by ktsnake
Well, not exactly

Gas costs equivelent to $40US/barrell right now, regardless of where you are.

Actually, the $40+ barrel price is for crude oil, the benchmark being usually West Texas Intermediate Crude. A barrel of gasoline would cost much more.

[Kevin]

Originally posted by AlphaSigOU
Actually, the $40+ barrel price is for crude oil, the benchmark being usually West Texas Intermediate Crude. A barrel of gasoline would cost much more.

I stand corrected.

[PhiPsiRuss]

I have no problem with us subsidizing their economic revival. Remember WWI and reperations? You don't leave a defeated nation with a shattered economy if you want a lasting peace. WWII was followed by the Marshall Plan, and that's what is needed if Iraq is going to become a stable democracy.

[Kevin]

Originally posted by PhiPsiRuss
I have no problem with us subsidizing their economic revival. Remember WWI and reperations? You don't leave a defeated nation with a shattered economy if you want a lasting peace. WWII was followed by the Marshall Plan, and that's what is needed if Iraq is going to become a stable democracy.

And it should be added that stability does not happen overnight. It's only been one year since the war occured. Germany was not so different. The 24 hour news cycle, coupled with a media that (because of its nature, not necessarily its politics) focuses on the negative and ignores the positive have just changed perceptions of reality, that's all.

We lost soldiers in the occupation of Germany as well. I don't know the statistics, but I'd be willing to bet that it was on a larger scale than we're seeing today.

[preciousjeni]

Originally posted by PhiPsiRuss
I have no problem with us subsidizing their economic revival. Remember WWI and reperations? You don't leave a defeated nation with a shattered economy if you want a lasting peace. WWII was followed by the Marshall Plan, and that's what is needed if Iraq is going to become a stable democracy.

I don't think they could handle a democracy. We can't, so why could they?

[PhiPsiRuss]

Originally posted by preciousjeni
I don't think they could handle a democracy. We can't, so why could they?

You should move there for a year, move back,and then post that again.

[mrblonde]

Originally posted by preciousjeni
I don't think they could handle a democracy. We can't, so why could they?

Sigh

[preciousjeni]

I don't even understand the responses to my statement. I make it a point to correct people *somehow* when they call ours a "democracy" when it isn't. If it were, slavery and other terrors would still exist.

ETA: I'm with PhiPsiRuss Michael Badnarik for President!!!!

[Kevin]

Originally posted by preciousjeni
I don't even understand the responses to my statement. I make it a point to correct people *somehow* when they call ours a "democracy" when it isn't. If it were, slavery and other terrors would still exist.

OH NO!

The semantics police!