Thu, August 18, 2005
http://www.edmontonsun.com/Business/News/2005/08/18/1177945-sun.html
Iraqis pay less than two cents a litre for gas
By AP
LONDON -- Drivers struggling with high gas prices may be surprised to learn that consumers in Iraq pay little more than six cents US a gallon, or less than two cents a litre, according to the International Monetary Fund's first assessment of the Iraqi economy in 25 years.
By contrast, Canadians on average are paying more than $1 a litre for regular gasoline, which is equivalent to $3.15 US a gallon, while Americans pay about $2.55 US a gallon and Britons pay $6.24 US.
Thanks to generous government subsidies on petroleum products - which the IMF criticized as a threat to the country's fragile economy - Iraq has some of the cheapest gas in the world.
Even Iraqis who pay higher, black-market prices often make money by smuggling gasoline into neighbouring countries such as Turkey, according to the IMF's 62-page report released Monday.
The IMF said Iraq's government hasn't been able to fulfil its promise to slash the massive subsidies, given how the public would react in a country suffering from violence by insurgents, high unemployment and inflation, and poor electricity, water and sewage services.
As a result, the IMF said it was cutting its forecast for Iraq's gross domestic product growth this year from 17% to 4%.
The IMF said oil production was likely to reach only two million barrels a day over the year, down from its earlier estimate of 2.4 million barrels a day, "because of the continuing sabotage of oil installations and the resulting halting of oil exports from the north."
The IMF said the government was likely to run short of money in the second half of this year because of lower oil exports and a shortfall in revenue largely caused by the subsidies.
Iraq's proven oil reserves, estimated at about 115 billion barrels, are the world's third largest. The potential development of the oil sector is considerable, given that a large portion of the country remains unexplored.
That's why oil analysts closely watch Iraq's oil production and export figures to see if they will affect the world's skyrocketing oil prices, now hovering at about $66 US a barrel.