Gasoline Use Down 30%

EghtesadOnline: Gasoline consumption in Iran in the first seven months of the current Persian calendar year (March 20-Oct 2020) declined 30% compared to the same period last year.

News ID: ۷۵۱۴۳۲

08 November 2020

While motorists used 97 million liters per day of gasoline from March to October 2019, the figure decreased to 75 million liters a day in the first seven months of this year, IRNA reported.

The plunge is said to be due the rationing of the fuel last fall, increase in the use of CNG and travel warnings/restrictions after the coronavirus struck in February.

Following the government’s decision to raise prices at the pumps last November (consumption then was 110 million liters per day), fuel sales declined to 95 ml/d.

The downward spiral continued and consumption declined further to 85 million liters/d in January. Sales were 75 ml/d, 65 ml/d and 50 ml/d in February, March and April, respectively, as the infectious disease peaked in and outside Iran locking up hundreds of millions people inside their homes as strict universal lockdowns came into effect.

Covid-19 struck in the harshest manner possible, halting economies, cutting short hundreds and thousands of lives and wiping out livelihoods and businesses.

More than 49.80 million people have been diagnosed with Covid-19 worldwide and the death toll has surpassed 1.25 million. In Iran, up until Saturday, health officials confirmed almost 673,250 cases of infection and 37,832 deaths.

In 2019 the National Iranian Oil Products Distribution Company raised the price of gasoline but not compressed natural gas.

Each cubic meter of CNG is sold for 5,000 rials (1.6 cents) while a liter of subsidized gasoline costs 15,000 rials (5 cents) and non-subsidized fuel 30,000 rials (10 cents).

As CNG is much cheaper than unsubsidized gasoline, many car owners last year converted their engines to hybrid CNG. Of the total 19 million vehicles in Iran, five million plus now use hybrid CNG engines accounting for 20% of overall CNG consumption.

CNG consumption is growing and is projected to exceed 24 mcm/d by the end of November as more vehicles are being retrofitted. Iran’s daily gasoline production is 115 million liters while CNG output is 40 million cubic meters.

Unlike gasoline, eco-friendly CNG minimizes harmful carbon deposits when combusted. This helps engines run more efficiently and increases the life of spark plugs. Iran has extensive natural gas resources and an efficient network of pipelines. Globally it is 5th in CNG consumption.

Global fuel demand has dropped by 50% in some key markets as western economies struggle in response to the coronavirus pandemic.

Oil refineries worldwide have slashed processing rates as gasoline became the next part of the oil market to become distressed, with traders particularly concerned about the US, the world’s largest market.

FGE, an energy consultancy, said petrol demand in the US alone would fall almost 5m barrels a day next month, equivalent to a 5 per cent drop in global oil demand. World oil demand is forecast to fall by an unprecedented 20m-25m barrels a day, a quarter of normal daily consumption.

“It’s like the entirety of Europe, Africa and the Middle East combined stopped driving,” said Cuneyt Kazokoglu, FGE’s head of oil demand, about the drop in gasoline use in the US.