66 percent of respondents regarded the implementation of the subsidy reform as “good” or “very good,” against 22 percent who considered implementation “bad” or “very bad” (Amuzegar 2011).

Over time, these large price increases were accompanied by a downturn in the economy due to intensifying sanctions, sharp depreciation of the local currency, and high inflation. These factors invited much criticism from the parliament, which in 2012 amended the Reform Act and changed “no less than 90 percent” of FOB prices to “no more than 90 percent,” thereby turning price floors to price ceilings and entrenching price subsidies. The parliament also increased the allocation to cash transfers to families from 50 percent to 80 percent (Hassanzadeh 2012). The parliament rejected the proposal to increase prices in 2012, and depreciating currency meant that domestic prices were declining in real terms. The second round of price increases did not take place until April 2014. As a result, the savings from subsidy reform did not materialize nearly to the extent initially envisaged in 2010—world oil prices rose after December 2010 but retail prices were frozen, the local currency continued to fall sharply, and yet the near‐universal cash transfers continued—and the Targeted Subsidies Organization developed a large deficit, growing to as much as 1–2 percent of GDP (IMF 2014b).

Subsequent developments notwithstanding, it is significant that price increases as large and far‐reaching as the ones effected in December 2010 were not rolled back under political pressure. Although it is difficult to pinpoint the causes, the near‐universal, large cash transfers undoubtedly helped. Several other government actions—not all of which represent “good” practice—arguably also contributed. On December 18 and 19, 2010, all major filling stations, shopping malls, and the entire Tehran bazaar were closely watched by security forces, riot police, and special guards. Some 10,000 inspectors worked on three shifts a day to monitor and prevent accompanying retail price increases and mass protests. Media organizations, shops, and businesses were reportedly ordered not to criticize the program. Transportation workers were told that if they stopped work, their union membership cards would be cancelled or they would be fined. Shopkeepers were warned that they would be arrested and punished for price gouging. Government planners had reportedly placed some 35 key products on a watch list, and large stockpiles of essential items had been kept in storage facilities in order to prevent spot shortages and private speculation (Amuzegar 2011).

The fuel price increases in the second phase of the subsidy reform were not as large as in the first phase. Because of currency depreciation, despite the significant increases, the prices in U.S. dollars actually declined from December 2010 to April 2014. The prices of kerosene, furnace oil, and LPG for household use are especially low (Table 15). Because of continuing currency depreciation, the prices in U.S. dollars have fallen further since April 2014. The budget for the fiscal year ending in March 2016 approved an increase of 5 percent for petroleum product prices.

In August 2014, the governor of a province bordering Iraq was reported as having announced that the provincial government was raising the price of gasoline from Rsl 24,000 (US$0.92) per liter to Rsl 35,000 (US$1.34) to prevent out‐smuggling ( _Platts Commodity News_ 2014b).