by Robert Stacy McCain | December 31, 2008 9:10 am
The collapse of oil prices has created trouble for Iran’s petroleum-dependent economy:
Iran’s president presented parliament with a sweeping economic package Tuesday that calls for scrapping costly state subsidies for fuel, water and electricity and raising taxes to make up for the steep slide in world oil prices.
The move is a risky one for President Mahmoud Ahmadinejad, who already is facing public disenchantment over Iran’s economic problems as he heads into June elections. . . .
The government budget is largely financed by foreign oil sales and his spending plans have been undercut by the plunge in price from $147 a barrel in July to under $40.
Ahmadinejad says Iran has no alternative but to end government subsidies that keep prices for gasoline, water and electricity artificially low.
(Hat-tip: Meryl Yourish.) The same problem is also impacting Venezuela’s Hugo Chavez.
Hey, am I the only one who remembers how liberals kept telling us that no amount of drilling could have an effect on oil prices for 10 years? But even the suggestion of new drilling was enough to knock the bottom out of the market. Oil went over $145 a barrel in July, then Bush announced he was lifting the executive ban on offshore drilling. Within a month, the price fell to $112 a barrel. In September, Congress decided not to renew its own offshore drilling ban, which expired Oct. 1, and now world oil prices are barely a quarter of their July peak and expected to continue falling.
The only reason OPEC has been able to hold America hostage is because of their environmentalist allies, who put America’s resources off-limits and thereby shovel money into the pockets of people like Chavez and Ahmadinejad.
(Cross-posted at The Other McCain.)
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