According to local papers, economists believe a gas price increase is absolutely necessary for Iran's economic health, and it can also relieve some of the traffic congestion that more than 7 million drivers cause on a daily basis. Gas is so cheap, that a liter of water sells for over 300% more than a liter of fuel. Another problem with this is that carmakers are less likely to produce fuel efficient vehicles, which creates even more consumption and pollution (the air is difficult to breathe as it is).
The government is hesitant to raise the cost of fuel, despite the prognosis of economic experts. Besides the obvious problem of eliciting a negative reaction from the public, officials worry that such a move may create a sudden boost in inflation rates, making transportation and overall purchasing of goods less affordable for average citizens. A few years ago, 800 tomans = US$1; now the figure has grown to about 900 tomans/dollar. A sudden increase, even if small, could send the toman into serious devaluation--maybe over 1,000 to a dollar.
There are many risks involved. On one hand, an increase may create an atmosphere of responsibility, where citizens make fewer unnecessary road trips; public transportation (with over 1 million vehicles offering service) would continue to be subsidized, and may experience an increase in business. On the other hand, inflation may affect food prices, creating problems for middle and lower classes, while also encouraging capital flight.
The fuel pricing dilemma is definitely a hot issue here. Clearly, any move would have to be approached with the utmost caution, particularly because the risks can be crippling on Iran's economy. When I asked a young taxi driver about his views on the issue, he thought a price hike was a good idea, and mentioned that he'd pay up to 250 tomans/liter. His idea was that people would take greater responsibility in driving, which would alleviate the traffic jams occurring around the clock.