UNCLAS BAGHDAD 004335

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: EPET ENRG ECON EFIN KCOR PGOV IZ
SUBJECT: IRAQ FUEL PRICES - A SNAPSHOT

REF: A. BAGHDAD 4322 B. BAGHDAD 3988

SENSITIVE BUT UNCLASSIFIED - GOVERNMENT DISTRIBUTION ONLY
NOT FOR INTERNET DISTRIBUTION


1. (SBU) SUMMARY: Black market prices are far outstripping
the modest GOI efforts at price reform. "Unofficial" price
rises for gasoline begun in September (Ref B) have spread to
Basrah, Kirkuk and Mosul. END SUMMARY.

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BLACK-MARKET PRICES
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2. (SBU) Fuel shortages are having a direct impact on black
market prices for gasoline, particularly in Iraq's northern
provinces where the fuel situation has become serious (ref A
and septel). An informal price survey carried out by
Regional Embassy Offices (REOs) and State Embedded Teams
(SETs) around Iraq showed the following prices as of October
18 ($1.00 equals 1470 Iraqi dinar):

Baghdad $0.89/gallon
Basrah $0.76/gallon
Kirkuk $1.26/gallon
Tikrit $0.63/gallon
Najaf $1.77/gallon
Mosul $2.53/gallon

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PRICES REPORTED RISING AT GAS STATIONS
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3. (SBU) The "unofficial" price rise from $.05 to
$.13/gallon for regular octane gasoline that went into
effect in Baghdad in mid-September (Ref B) has been
introduced in government-owned gas stations in Kirkuk and
Mosul, according to reports from the REOs there. Basrah
reported prices as high as $.15/gallon. Reports from
smaller cities continue the old price or $.05/gallon at
service stations.


4. (SBU) Private stations and, to a lesser extent, state-
owned stations, reportedly apply government prices
sporadically. For example, the practice at service
stations, both government and privately-owned, is generally
that the price of fuel is open to negotiation for amounts
above the 50 liter/customer limit. The rise to $.13/gallon
appears to be as much an acknowledgement of that reality as
it is true price reform. It is unclear how much of the
increase actually makes it to the government's coffers. Any
amount exceeding the government's new price ceiling is
certainly going into the station-owner's pocket.

Satterfield