A reflection on the gasoline conundrum: what reform is not doomed to failure?

This study investigates the perceptions of Iranians regarding energy subsidies, specifically exploring the key obstacles to reforming gasoline subsidies. Through a mixed-methods approach combining focus groups and two social surveys, this research identifies the primary concerns of the general public regarding subsidy reforms. The results reveal that individuals' resistance to subsidy reform is rooted in uncertainty about the government's motivations for the gasoline subsidy reform and the way in which benefits would be distributed. Notably, the central obstacle to successful reform is the government's dominant role in setting prices and redistributing resources, leading to a price shock. To address this challenge, this study proposes a policy recommendation: establishing an exchange market with a floating price for gasoline, while allocating a tradable quota to diminish the government's central role in the reform process. By democratizing the reform process and redistributing benefits, this approach aims to increase public acceptance and support for gasoline subsidy reforms in Iran.