Under the new system, each personal car receives 60 liters (16 gallons) of subsidized fuel a month costing 40 cents a liter ($1.50 a gallon) – up from the just 10 cents a liter. Further purchases of gas would run 70 cents a liter ($2.69 a gallon), up from just 40 cents.

 Tehran says it is paying some $100 billion in subsidies annually, although experts believe the amount is far lower, closer to $30 billion. Iran had planned to slash subsidies before the latest round of sanctions took effect – Ahmadinejad and his allies have long insisted the country’s oil-based economy could no longer afford the largesse.

 But the latest rounds of sanctions have targeted the core of Iran’s economy. Some top European and Asian companies have pulled out of the Iranian market. American embargoes also seek to block the import of pump-ready fuel to Iran – a weak point in a country with vast oil riches but a shortfall in refineries.

 Angry taxi drivers complained as the price of fuel rose fourfold overnight.

 ”I don’t know what to do,” said one frustrated cab driver, who did not want to be identified for fear of retribution by authorities. “I am not allowed to increase price of my service while I am paying five times more than yesterday.”

 A truck driver, Mansour Abbasi, said he paid 10 times more on Sunday for natural gas to fuel his vehicle – and complained he could not compensate by hiking his own transport fees.

 ”If I raise my prices, people will not be able to afford it. Or they may report me,” said Abbasi, 43.

 Despite the grumbling, there were no reports of clashes in Tehran or other major cities such as Tabriz, Kermanshah, Bandar Abbas, Kerman and Ahvaz. One resident of Ahvaz said some taxi fares doubled.

 Economists say the unpopular plan to slash subsidies could stoke inflation already estimated to be more than 20 percent.

 One lawmaker said he had expected the extent of price rises overnight to happen gradually over five years.

 ”I am surprised. We do not know what happened,” the lawmaker told The Associated Press on condition of anonymity because he was not authorized to comment. “The price of fuel was supposed to reach about international prices within the next five years and not this year.”

 Ahmadinejad also said his government was paying $4 billion in bread subsidies, which will also gradually be phased out.

 Ahmad Bakhshayesh, a Tehran University professor of politics, said it was too soon to gauge the public reaction to the cuts, and popular unrest could still erupt.

 ”We have to wait and see how inflation will affect their lives,” he told AP.

 Opposition websites reported an economic analyst, Fariborz Raeis Dana, was detained after claiming the subsidy cuts were intended to allow Islamic leaders to spend more money on the military and security forces. The reports could not be independently confirmed.

 After Ahmadinejad announced the cuts Saturday night – calling it the “biggest surgery” on Iran’s economy in 50 years – long lines of cars formed at gas stations in Tehran as Iranians rushed to fill their tanks at subsidized prices before the new ones took effect at midnight. By Sunday, the lines were gone.

 Economic analyst Saeed Laylaz said the cuts were in theory a positive move since they would reduce energy consumption, which is currently costing the country a quarter of its Gross National Product.

 ”However it is being implemented in an incomplete fashion because it’s not accompanied by a greater liberalization of the economy,” he said, adding that the cuts would probably not have much positive effect.

 The government says it will return part of the money obtained from increased prices to the people through cash payments. It has already paid into accounts of some 20 million families as compensation ahead of the cuts.

 Every family member will now receive $80 for to help them over the next two months.