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Author Topic: U.S. subsidy keeps gas price low in Iraq $.05 a gallon  (Read 3527 times)
BigRog
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« on: June 06, 2004, 10:45:03 PM »

U.S. subsidy keeps gas price low in Iraq

By Jim Krane
The Associated Press




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

Before the war, some forecasters predicted that by invading Iraq and ousting Saddam Hussein, America would benefit from increased exports of oil from Iraq, which has the world's second-largest petroleum reserves. The result, according to those forecasts, would be cheaper 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 price for gasoline in the United States is averaging $2.05 a gallon — 50 cents more than the pre-invasion price.

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.

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, 26, said as he topped off the tank on his beat-up 1983 Volkswagen. "They risked their lives to liberate us and now they are improving our lives."

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, D.C.-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 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 U.S. 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, which power air conditioners during long daily electricity blackouts in Iraq.

Hashim and another driver, convinced, like many Iraqis, that the U.S. 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, filling up his 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 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.





Copyright © 2004 The Seattle Times Company
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BigRog
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« Reply #1 on: June 07, 2004, 06:27:58 PM »

I am so furius about this that I was actually speechless.
I could see some subsidies boy $1.45 out of 1.50?
Besides the fact that they should be taking care of their own, there is the issue of why they are doing this. I really think that the real prob is that either we continue this $2,000,000,000.00 a year handout. The prob is how much we will be hated when and if we stop it.
Ever let a friend stay wit you wj\hile they "get on their feet"
Enough time goes by and you tell them it's time to move on.
Seldom are they appreciaitve. They generally are resentfull.
We are kicking a beehive here.

I posted this everywhere I go, and emailed to everyone who has ever sent me a email. I am going to foward it to all my elected officials demanding to know whose idea this was and why haven't they been properly tortured and killed.
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Rand
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« Reply #2 on: June 10, 2004, 06:44:40 PM »

Rog, don't hold it in, how do you really feel about this??? Smiley

If they lowered the price of gas it would confirm my belief that the only reason we went over there was for the ^%#@^%$#& OIL!

Have I mentioned lately that I hate all politicians!??

We should round them up at gunpoint (while we still have the 2nd amendment) and force them to go "save" the dam Iraqi's for a while.
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Rand Carrothers
BigRog
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« Reply #3 on: June 11, 2004, 05:59:55 PM »

What have the Iraqi's done to deserve that?
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« Reply #4 on: June 11, 2004, 07:30:41 PM »

I've noticed locally that gasoline prices have dropped that $.05 cents Rog is talking about - lol. I guess some people would say that Iraq is now SUBSIDIZING our gasoline costs by "Chipping in" and buckling down and paying their whopping prices at the pump.

I don't know what $0.05 in Iraqy currency is equal to in US dollars - or is that already converted using some minimum wage/cost of living thingy. Either way, I don't now, nor never will feel sorry for the Iraqies who would rather live in a uncertain limbo of existance than to accept the chance of freedom.

That is the difference, we are willing to give our lives for them to experience freedom and they would rather see us dead than try to understand what freedom is. We now have 5 present and past presidents, with Ronnie gone we are an election away from having a 6th. I'm no fan of Kerry, I think he is a terrible speaker, but I don't like Bush's religious agenda either.

As Ex-Philadelpia Mayor Frank Rizzo said "We will be voting for the Evil of two Lessers!" What a shame in the 21st Century man hasn't evolved ONE really good candidate for the office of President. I guess that's why I have so much faith in the youth of the country: it's are only hope at another SuperStar in the Oval Office.

God Bless Ronnie and Nancy Reagan - I thought she was amazing to watch, her strength as she winds down this stage of her life is a tribute to a generation of Americans who selfishly helped save the world from domination 6 decades ago. A time my father-In-Law remembers so very well to this day, a time when the world was VERY different and a time filled with enimies that NO ONE would ever imagine being an ally again. Our Vets and those of all free countries have paved the way for all of us to live as well as we do in a world where NO PROMISES are guarenteed.
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