Go to Iraq! http://www.chron.com/cs/CDA/ssistory.mpl/headline/world/3314599 Want gas for 6 cents a gallon? Try Iraq Associated Press LONDON — Motorists struggling with high gas prices in the United States and Europe may be surprised to learn that consumers in Iraq pay as little as 6 cents a gallon, according to the International Monetary Fund's first assessment of the Iraqi economy in 25 years. Thanks to generous government subsidies on petroleum products — which the IMF criticized as a threat to the country's fragile economy — Iraq has some of the cheapest gas in the world. By contrast, Americans pay about $2.55 a gallon and Britons pay $6.24. Even Iraqis who pay higher, black-market prices often make money by smuggling gasoline into neighboring countries such as Turkey, according to the IMF's 62-page report released Monday. The IMF said Iraq's government hasn't been able to fulfill its promise to slash the massive subsidies, given how the public would react in a country suffering from violence by insurgents, high unemployment and inflation, and poor electricity, water and sewage services. As a result, the IMF said it was cutting its forecast for Iraq's gross domestic product growth this year from 17 percent to 4 percent. The IMF said oil production was likely to reach only 2 million barrels a day over the year, down from its earlier estimate of 2.4 million barrels a day "because of the continuing sabotage of oil installations and the resulting halting of oil exports from the north." The IMF said the government was likely to run short of money in the second half of this year because of lower oil exports and a shortfall in revenue largely caused by the subsidies. Iraq's proven oil reserves, estimated at about 115 billion barrels, are the world's third largest. The potential development of the oil sector is considerable, given that a large portion of the country remains unexplored. That's why oil analysts closely watch Iraq's oil production and export figures to see if they will affect the world's skyrocketing oil prices, now hovering at about $66 a barrel. "Because of the tight situation of the oil market, any increase in Iraqi production will have a positive affect on the supply side," said Muhammad-Ali Zainy, a senior energy economist at the London-based Centre for Global Energy Studies. Iraq's economy has benefited from today's oil prices. But widespread attacks by insurgents limit its oil exports. Also, the government doesn't have the money it needs to rehabilitate and upgrade an oil industry infrastructure that has fallen apart during two decades of wars, misuse by Saddam Hussein's government and international trade sanctions. Zainy said few changes are expected in Iraq's current oil exports of about 1.6 million barrels a day, mostly through its southern ports, which have suffered far fewer insurgent attacks than the main pipeline to Turkey in the north. "The problem is that the Iraqi economy is in a shambles and non-oil income is trivial, so the government is almost completely dependent on oil income and whatever the international community can contribute," Zainy said. Issam al-Chalabi, who served as Iraq's oil minister in the late 1980s, agreed. "It's doubtful the government will be able to do anything of significance regarding its oil market this year," al-Chalabi said in a telephone interview from Jordan, where he now works as an oil consultant. He said the insurgent attacks mean none of the world's major oil companies are willing to invest in the country. Al-Chalabi said these companies also don't want to sign significant contracts in a country that is currently drafting a new constitution that could affect the oil industry and that plans to elect a new national government later this year. "BP and Shell are not planning to go into Iraq any time soon. Until you get a new elected government and much better security, forget it," al-Chalabi said.
