Gasoline Use in Iran Declines After 12 Years

EghtesadOnline: Following the abrupt government decision to raise gasoline prices and sell it at two rates from November 15, consumption fell by at least 20% over a 10-day period, the National Iranian Oil Products Distribution Company (NIOPDC) announced Tuesday.

News ID: ۷۴۹۰۴۸

27 November 2019

Prior to the implementation of the controversial plan, Iranians burnt 98 million liters of gasoline per day between March 22 and November 14. Since last week average consumption has plunged to 79 ml/d, ISNA quoted NIOPDC as saying.

According to the company, gasoline consumption on November 25 was 75 million liters.

Surprisingly, this is the first time since 2007 (when fuel quotas were introduced for the second time in Iran) that gasoline consumption has been of the downward order falling by a whopping 20%, according to Financial Tribune.

Fuel quotas (60 liters per car per month) were first introduced in 1981 one year after the start of the 1980-88 Iraq-Iran war and again in 2007 when consumption fell by 25 million liters in six months.

As per a NIOPDC directive (issued last week) private car owners can only buy 60 liters of subsidized gasoline every month with a fuel card at 15,000 rials (13 cents) a liter, up 50%. Additional purchases (maximum 250 liters a month) cost 30,000 rials (26 cents) per liter, up 300%.

Reports Denied

Dismissing incorrect reports carried by local news media about fuel consumption, NIOPDC stressed that all relevant information on the company’s site is credible and it is the only source from which the media can get reliable information related to the gasoline issues.

Some Farsi-language news outlets had quoted the national Traffic Police Chief General Kamal Hadianfar as saying that the newly-implemented rationing scheme had no effect on fuel consumption and it has been rising despite the higher prices.

“Daily consumption has exceeded 105 ml/d and the rationing plan is not working,” Hadianfar claimed.

Amir Vakilzadeh, head of NIOPDC has projected that consumption should decline by at least 10% in the next three months.

“Consumption is now 95 million liters per day and is expected to decline to 85 ml/d in less than 90 days,” he has been quoted as saying.

Referring to the remarkable decline (20%) on Nov 16 (one day after rationing came into effect,) compared to the same day the previous week, Fatemeh Kahi, head of public relations at NIORDC says more time is needed to have accurate figures.

Center Stage

Gasoline prices (up 200% overnight at the discretion of all executive bodies, including the three main branches of government) have taken center stage in the media over the last several days and both proponents and opponents have shared their views with the public.

Some strongly believe that higher prices means that people have to pay more at the pump, leaving less to spend on basic needs such as food, medical services, education, shelter and clothing, to name a few.

Moreover, retailers are further squeezed as they are forced to pass on the expenses associated with higher shipping costs to consumers, many of whom (low-income brackets) already have serious problems making ends meet.

Last but not least, high gasoline tariffs can slow down the economic growth by affecting the supply-demand chain for goods and services.  Increase in prices tend to depress the supply of goods because it raises the cost of production and end users may not be able to afford many things as time passes.

On the other hand, some positive economic experts hope the (sluggish state-run) auto industry responds appropriately to the rising fuel prices.

They say the carmakers with their poor quality gas-guzzlers must take this “opportunity” to reduce the high gasoline use by manufacturing smaller, more fuel-efficient cars, hybrids and electric cars.