Free Market, Please

Iraq the Model:

The government made a decision to cut back on subsidizing fuel for the domestic consumption. According to the announced plan, super gasoline price will rise from 50 to 150 dinars/liter, regular gasoline will rise from 20 to 50/liter also and kerosene will rise from 5 to 10 dinars/liter while the cost of refilling a propane canister usually used at homes for cooking and heating will increase from 250 to 500 dinars.

Although the prices will be at least doubled, this will not be enough to discourage smuggling activities that cost the economy billions of dollars a year.
The price of one liter of gasoline in neighboring countries will still be twice-five times as much as in Iraq and this will still encourage smugglers to continue their activities unless further decisions to increase the prices are made in future steps.

[Emphasis mine]

Why is the Iraqi government subsidising, and thus artificially inflating the demand of, oil in their country? This is a terrible policy. Americans in Iraq have to import fuel and often there are electricity shortages in that nation. Yet, the simple, and efficient, method of a free floating price is not allowed to work. I agree with Omar; the Iraqi government has to move forward and change this policy and explain the situation to their countrymen.