State-owned energy in Iran is so cheap, it’s actually a problem
Under state ownership, Iranians pay so little for oil consumption it’s actually a problem. This is somewhat amusing given it shows that nationalisation can dramatically reduce people’s energy bills. Just in Iran’s situation, the price is too low, meaning the government should take more profit and invest it in industries such as education and healthcare.
As a disclaimer for those jumping the gun, this article focuses on only this aspect of Iranian policy, it’s not upholding the overall system of an authoritarian theocracy.
Why is energy so cheap in Iran?
State ownership combined with government subsidies means Iranians pay as little as £0.021 per litre of fuel. The average global price is £1.09, demonstrating how remarkably inexpensive Iranian oil is.
Of course, the cheap oil is also partly because Iran has the third largest reserves in the world.
The issue is that such cheap energy leads to overconsumption. It’s why even under public ownership, finite resources should not be free or too cheap.
Iran’s energy intensity index is one of the highest globally. Plus, 20% of Iran’s daily consumption is made up of oil smuggled abroad and sold to other countries because of the low price at home.
Low cost energy means reduced expenditure for agriculture, delivery and for businesses and people. It’s generally a good thing. But rather than making it too low, profit can be used for public investment in other areas.
Before privatisation, nationalised energy in the UK made significant profit for the public purse, meaning the government can spend more with less risk of inflation.
Green energy over oil
That said, it’s clear that renewable energy is not only cheaper to produce but addresses the climate crisis. We need to move away from oil, no matter what the corporate and state luddites say.
In 2025, Earth Overshoot Day landed on 25 July. That’s the day when, globally, we use the amount of resources that the planet can replenish for the next year — our ecological budget.
This is largely due to consumption of fossil fuels. If we changed to 100% renewables globally, which is entirely possible, it would bring the date back six months.
But Iran does show how much state (or common) ownership can reduce prices for individuals in a society. Amusingly, it’s actually too cheap.
Featured image via the Canary
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Price rationing hurts those whose class interests you seek to support, and adding tax to fuel to increase its price is regressive, something else you ought to know. Genuine rationing would be just, limiting individual use – no one needs more than a typical household user, so that those with giant houses, yachts, aeroplanes, swimming pools and so on, would no longer be able to burn through as much fuel as they can afford, which is the real cause of fossil fuel consumption and depletion. Once again, your understanding is inconsistent with your professed politics and contaminated by liberal, neoliberal capitalist bollocks. If everyone had an upoer consumption limit, super yachts and private jets would be rightly stranded. Wolfgang Streeck refers to unfettered consumption, the absence of democracy in “the economy” where the limit on consumption is what you can “afford”, which is a political limit, since the economy is politics in action. A democratic limit would recognise the adverse consequences of consumption and that no one has the right to adversely affect others. Unfortunately, liberalism assumes that “individuals” have no impact on one another, which is clearly delusional, assuming only that individuals need protection from the state, which deliberately ignores the power of wealth since liberalism (e.g. John Stuart Mill) was only ever a sales pitch to the wealthy. You need to up your game here, as you keep arguing in favour of those you rightly oppose. As long as you support price mechanisms, you’re attacking your own class interests. You get it right on housing – they should be provided at cost – and I’d argue further that governance should severely restrict any interest charges, limiting them to a reasonable charge, to cover costs, but not grasp profits, decided by a people’s assembly. There should also be a size/cost limit to housing, and plot size, again imposing a democratic limit, rather than a wealth limit on house size. None of this will happen, though, since there’s no mechanism to make any suggestions happen, since we all piss our power away by voting for centralised hierarchical govts that we laughably call democratic in contradiction to all the available evidence.
A well-argued comment that needed only paragraphing to make it more readable. How about coming out with your political orientation, too?