Azernews.Az

By Dalga Khatinoglu

Head of Persian News Service of Trend Agency

Official statistics show that gasoline consumption in Iran was nearly halved after a price hike on April 25.

Iran's government increased gasoline price from 7,000 rials per a liter to 10,000 rials.

Previously, when the Former President Mahmoud Ahmadinejad's administration increased gasoline prices as part of the fist phase of subsidy reform plan in December 2010, the officials talked about a considerable cut in the country's total consumption.

The subsidy reform plan is aimed at realizing energy carriers' prices in the country.

But does gasoline consumption really have anything to do with the prices?

Studying the statistics of 2010, also previous and subsequent years proves that the consumption rate has nothing to do with the price.

National Iranian Oil Refining & Distribution Company's (NIORDC) official statistics show that the country's gasoline consumption in the Iranian fiscal year to March 21, 2011 stood at 61.3 million liters per day, some 3.5 million liters less than its preceding year.

The falling trend continued in the next year, and Iran's consumption fell to 60 million liters per day in the fiscal year to March 20, 2012.

Ahmadinejad administration's officials then announced that gasoline consumption cut was the great achievement of increasing prices, but the fact is that the falling trend in Iran started in the fiscal year to March 20, 2008 due to the rise in the number of CNG-consuming cars.

Liquid gas consumption

NIORDC statistics suggest that Iran's CNG consumption in the fiscal year to March 2008 was around 5 million cubic meters per day. But the figure was tripled in the fiscal year to March 2010, and reached 19 million cubic meters in the fiscal year to March 2012.

LPG consumption has also been on the rise in the country, since it's cheaper than gasoline and CNG. Iran's LPG consumption was around 6,100 tons per day in 2008, but the figure reached 6,800 tons per day in the calendar year of 2010. This is while, the number of Iran's gas network subscribers (housing sector) rise each year, therefore the LPG consumption by housing sector was supposed to fall.

So, it's safe to say that the main reason behind gasoline consumption's decline in Iran between 2008 to 2011 was the considerable rise in liquid gas consumption, and not a gasoline price hike.

Currently there are some 2.8 million liquid-gas consuming cars in Iran.

Gasoline price differences in Iran and neighboring countries

Iran's gasoline consumption was once again increased by 3.5 million liters per day in the fiscal year to March 2013, reaching 63.5 million liters per day. The figure increased to 70 million liters per day in the previous fiscal year, ended on March 20.

The rising trend is not just due to an increase in the number of gasoline-consuming cars in the country. The main reason behind the consumption rise is fuel smuggling to neighboring states. A considerable price difference has motivated many people to smuggle gasoline out of Iran.

The value of Iran's currency - the Iranian Rial - has fallen considerably over the past two years. Each U.S. dollar was sold at the price of 13,000 rials just two year ago, but the figure reached 37,000 rials in mid-2013.

Iranian officials say that this has motivated some people to smuggle 8 million liters of gasoline and diesel oil daily to neighboring countries.

In the fiscal year 2010, the price of gasoline was increased by seven times and reached 63 cents from the previous figure of 9 cents. The reduction of price difference in Iran and neighbroing countries caused the fuel smuggling to ease. But as the rial lost its value considerably, the price difference was once again widened.

Most of Iran's smuggled gasoline goes to Pakistan, where a liter of gasoline is being sold at the price of over 108 rupees ($1.1), while the price in Iran is around 31 cents.

The rising trend in Iran's gasoline consumption in the previous year was also partly due to the shortage in distribution of liqiud gas. Iran's severe gas shortage last winter forced the contry to reduce liquid gas distribution to gas stations. Last year, only some 16 million cubic meters of CNG was consumed in Iran, while the figure was around 19 million cubic meters in the previous year.

Trips during the New Year holidays (March 20 to April 5) and the announcement of the second phase of the subsidy reform plan's implementation date increased Iran's gasoline consumption in the previous month. The figure stood at 94 million liters in the first calendar month of current fiscal year (March 21 to April 20). Hoarding of gasoline by people waiting for the announcement of new gasoline prices was another reason behind the rise.

Iranian officials say the country's gasoline consumption has now fallen to 53 million liters per day, but this surely is temporary. Once people consume their stored gasoline, the country's gasoline consumption will once again reach 70 million liters per day.

NIORDC's statistics show that Iran used to import 21 million liters of gasoline per day before the U.S.-generated sanctions against the country in 2009. The figure accounted for 40 per cent of domestic consumption.

The figure dropped to 10.34 million liters in the calendar year of 2010. Iran respectively imported 6.32, 1.75, and 3.5 million liters of gasoline per day in the past three years.