Iran: Holiday Season Gasoline Sales Exceed 1.8b Liters

EghtesadOnline: Gasoline consumption between March 20 and April 5 -- marking the Norouz (Persian New Year) holiday season -- hit a new record at 1.85 billion liters, showing a 1.9% rise compared to the same period last year.

News ID: ۷۴۷۰۰۲

08 April 2019

Motorists burnt an average of 109 million liters of gasoline per day in the period, the Persian-language Donya-e-Eqtesad newspaper reported Sunday.

The highest and lowest consumption rates belonged to March 20 and April 2 with 136 and 76 million liters respectively.

The highest daily gasoline consumption figure in the past was on July 22, 2018 when demand rose to 121 million liters, according to Financial Tribune.

"Daily consumption is expected to reach 97 ml/d over the next 12 months," Mohammad Reza Mousavikhah, managing director of the National Iranian Oil Products Distribution Company said.

In the past 11 months on average 90 ml/d of gasoline was sold daily.

NIOPDC produces an estimated 105 million liters of gasoline per day, of which 79 million liters is compatible with Euro-5 emission standards.

Although most roads across the country were deluged with water due to unprecedented rainfall in the past three weeks, gasoline sales were still of the upward order.

Energy experts including Mousavikhah say overconsumption is largely due to cheap gasoline prices. However, others dispute the claim saying that consumption would hardly decrease even if fuel prices rise. Locally-made cars are notorious for poor mileage and infamous as gas-guzzlers contributing terribly to the air pollution.

Fixed Prices

During the past four years gasoline has sold for 10,000 rials (10 cents) a liter while tariffs for water, power and natural gas have been increased by the government on a regular basis.

According to the NIOPDC chief, there are no plans to import gasoline in 2019. Past experience shows that it is a bit too optimistic to assume that daily consumption of gasoline will be close to and not jump over 97 ml/d over the next 12 months as Mousavikhah said.

Moreover, lack of informed policies and stringent border controls have given rise to rampant smuggling of fuel (gasoline and diesel) for the past several years.

According to Hassan Khosrojerdi, a member of Iran's Oil Product Exporters' Association, the discrepancy in fuel prices in Iran (10 cents/liter)  and the neighboring countries (75 cents) have turned fuel smuggling into a lucrative and highly tempting business.

Even the government’s anti-smuggling regulations, such as heavy fines, have done little if anything to curb the illegal fuel trade and discourage the avaricious smugglers.

“National Iranian Oil Refining and Distribution Company data show that Iranians burn close to 100 million liters of gasoline per day. It is highly unlikely that all of it is used domestically. Large volumes are sold in border regions,” he said.

Rationing System

Introducing the previous gasoline rationing system and raising fuel prices have been suggested as an effective measure to cut consumption. Neither has been implemented yet.

The oil official said the latter cannot be implemented due to the almost certain inflationary impact on people's lives. “But the former should be reactivated.”

Mahmoud Ahmadinejad, the former president, started the plan in 2007 to monthly sell 60 liters of subsidized gasoline to each private car via smart fuel cards at the rate of 7,000 rials per liter. Rules and quotas for cabs, vans and public vehicles were different.

In 2015, the government stopped allocating subsidized gasoline to passenger vehicles and gasoline was sold without any limit at the single price of 10,000 rials (10 cents).