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Home Publications Blogs Beat the Press Does Iran Really Spend 30 Percent of Its GDP on Energy Subsidies?

Does Iran Really Spend 30 Percent of Its GDP on Energy Subsidies?

Monday, 20 December 2010 05:40
That doesn't seem quite right. But the NYT reported that Iran's president, Mahmoud Ahmadinejad, claimed that the country spends $114 billion a year on energy subsides. This would imply that the country spends almost one-third of its GDP on energy subsidies. That doesn't seem plausible.
Comments (9)Add Comment
Ahmadinejad westernized after all
written by frankenduf, December 20, 2010 8:07
duh- it gets hotter than a whore in church most of the year in the cradle of western civilization- no doubt they should privatize their energy industry...
written by izzatzo, December 20, 2010 8:50
At last, the cost of the Iraq war is finally vindicated, paid for itself as predicted by those who started it.

The only difference is that Iraq gets the payback rather than the USA. Reducing gasoline subsidies in Iran will result in a dramatic increase in oil prices paid by Iran to Iraq, which keeps the money instead of turning it over to the USA as socialist redistribution.

If only Palin had renounced oil subsidies in Alaska, this would have never happened since the additional oil output at higher prices under energy independence would have prevented the war in the first place ... at least that's what Alan Greenspan said ... it was about oil ... and subsidies ... let 'em eat gasoline ...
written by fuller schmidt, December 20, 2010 8:50
I disagree - oil should be common wealth.
Standards of Truth
written by ComradeAnon, December 20, 2010 8:56
From Ahmadinejad's mouth to the NYT.
Looks like it's true
written by David, December 20, 2010 10:31
Hey Dean. If you look at www.iran-daily.com at the government news website, in the lead article you find: "Officials say energy subsidies have been costing the state an estimated $100 billion a year."

A little exaggerated
written by Kevan Harris, December 20, 2010 10:39
100 B may have been the price back when the price of oil peaked in 2007-8. You must realize that Iranian politicians are still politicians, and they will utilize stats to justify their political agenda, which in this case is the elimination/liberalization of subsidy supports. But its usually estimated at much lower percentage, although still a hefty chunk of GDP: http://goo.gl/C6NbL
written by Mish, December 20, 2010 12:32
Most journalists seem comfortable accepting convoluted models that integrate disparate costs but fail to make mention of possible positive externalities, such as the effect of providing households with affordable electricity.

Energy subsidies are pricey, no matter how one looks at it. And it isn't unimaginable that the Iranian government will witness a significant increase in revenue as they are slashed. But the claim that Iran 'spends' $114 billion is ludicrous - the entire state budget amounts to but $93 billion. The inability to clarify the issue or notice the discrepancy is characteristic of the continual decline of the quality of our media and their lack of credibility.
written by Stephen, December 20, 2010 1:52
116B dollars is laughable. That is what the state-run agency CLAIMS. They claim it. That does not make it true! This is done for internal consumption, since Amadinejad's domestic political platform has been one of helping the poor, his political backbone. I've heard the number is 1/3 that or less.
written by zinc, December 23, 2010 4:22
30 Percent of GDP on Energy Subsidies

Now that's an idea ADM could get their arms around ! Screw the Blue Dog agricultural subsidies. Hey, we're gettin screwed.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.