News / Middle East

Iran Thirst for Fuel Slackens on Subsidy Slash

A four-fold rise in gasoline prices is slashing demand for fuel across Iran.

Iranian officials said Wednesday gasoline consumption has fallen by 20 percent since the government cut its fuel-subsidy program earlier this month.

The government raised gasoline prices December 19 as part of a bigger plan to boost the country's economy, saying it could no longer afford to pay for the subsidies.

Under the plan, the cost of gasoline jumped from 10 cents a liter to 40 cents a liter, for up to 60 liters of fuel each month.  For any amount above that, the cost rises to about 70 cents per liter.

The plan also eliminates government subsidies for bread.

Opposition leaders criticized the cuts last week, warning a "dark future" awaits Iran's economy.

Former presidential candidates Mehdi Karroubi and Mir Hossein Moussavi said enforcing the plan will be a burden on middle and lower class families.  

Both said the subsidy cuts were necessary, but criticized the timing given Iran faces international sanctions because of its controversial nuclear program.

President Mahmoud Ahmadinejad has defended the cuts, saying his government can no longer afford to spend $114 billion per year on energy subsidies.

Some information for this report was provided by AP.

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