Many oil producers keep domestic oil product prices artificially low as a way to keep their populations from storming the palaces. That results in an enormous amount of waste and lost revenue. Case in point: Iran.
“Iran said Friday that it would stop importing gasoline in September and begin rationing it, ironic for a country that is OPEC’s number-two exporter of crude oil [...] Gasoline is extremely cheap in Iran thanks to massive subsidies. A liter of regular gasoline costs just 800 rials ($0.09). Super costs 1,100 rials ( $0.12). An explosion in car ownership and gasoline smuggling to Iran’s neighbors, where prices are far higher, has caused an explosion in demand. Iran loses more than $1 billion a year because of the smuggling. The shortfall has up to now been met by spending billions of dollars each year on imported gasoline.”