Gas is 5 Cents in Iraq and $2.50 in the U.S.

Gasoline costs 5 cents a gallon in Iraq thanks to U.S. taxpayers
Associated Press

BAGHDAD, Iraq - While Americans are shelling out record prices for fuel, Iraqis pay only about 5 cents a gallon for gasoline - a benefit of hundreds of millions of dollars subsidies bankrolled by American taxpayers.

Before the war, forecasters predicted that by invading Iraq and ousting Saddam Hussein, America would benefit from increased exports of oil from Iraq, which has the world's second largest petroleum reserves.

That would mean cheap gas for American motorists and a boost for the oil-dependent American economy.

Although Iraq is a major petroleum producer, the country has little capacity to refine its own gasoline. So the U.S. government pays about $1.50 a gallon to buy fuel in neighboring countries and deliver it to Iraqi stations. A three-month supply costs American taxpayers more than $500 million, not including the cost of military escorts to fend off attacks by Iraqi insurgents.

The arrangement keeps a fleet of 4,200 tank trucks constantly on the move, ferrying fuel to Iraq.

"We thank the Americans," Baghdad taxi driver Osama Hashim said. "They risked their lives to liberate us and now they are improving our lives," said Hashim, 26, topping up the tank on his beat-up 1983 Volkswagen.

The cheap fuel is spurring unsustainable demand, promoting wasteful use of energy and transportation, and squandering Iraq's oil output that might otherwise be exported, Cordesman said.

"You're leading people to buy cars that aren't affordable at normal costs," he said. "You need to move toward real market prices as quickly as you can without causing instability."

Iraqi drivers protest that the price difference between a gallon of gas in the United States and Iraq is fair, because the average Iraqi earns around $1,000 a year, a thirtieth of the average U.S. wage.

"If the price of gas goes up, we'll see lots of anger in the street," said cab driver Hashim, at a grimy filling station on Saadoun Street in central Baghdad.

Associated Press