With the viral outbreak spreading to more cities in Iran, the demand for gasoline has been dropping over the last two weeks, head of the Planning Department of the National Iranian Oil Refining and Distribution Company said.
“Motorists used an average of 75 million liters per day of gasoline between Feb. 20 and March 2 -- down 12% compared to the corresponding period in January,” Shahram Rezaie was quoted as saying by ISNA.
Following the government’s decision to raise prices at the pumps in November 2019 (consumption was 110 million liters per day), fuel sales declined 16% in December and reached 95 million liters/d, he said.
The downward trend continued and consumption declined to 85 million liters/d in January 2020.
Since Feb. 20 when cases of COVID-19 were detected in Qom, Tehran and Rasht, many families have self-quarantined at home either not to be infected or to see if they develop symptoms. This has resulted in declining gas sales.
Precautionary Measures
Referring to the company’s precautionary measures to help prevent the spread of the disease, he noted that filling station attendants themselves should fill up the cars or provide car owners with disposables gloves.
Rezaie said tariffs have not changed and gas station operators are not allowed to charge extra.
Private car owners can buy 60 liters of subsidized gasoline every month with a fuel card at 15,000 rials (10 cents) per liter. Additional purchases (250 liters a month) costs 30,000 rials (20 cents) per liter.
According to one report by the Majlis Research Center, despite the rise in tariffs, there is still a big difference between gasoline prices in Iran and the Persian Gulf FOB prices.
The Persian Gulf FOB cost of gasoline and diesel is around 6,000 rials (40 cents) and 7,000 rials (47 cents) respectively. The government is still paying 30 cents in subsidies for each liter of gasoline.
According to NIORDC data, diesel is sold at 3,000 rials (2 cents) in Iran. The subsidy for each liter of diesel amounts to 45 cents (compared to Persian Gulf FOB prices).
Many economic experts and consumers dismiss the comparison in gas prices with the Arab neighbors on the grounds that wages and purchasing power in those countries is way higher than in Iran. The comparison in prices is thus irrelevant and uncalled for, they insist.
Extra Gasoline
In related news, local news outlets announced on Monday that as per the parliament's Integrated Commission’s approval, car owners will be entitled to 120 liters of extra subsidized gasoline for the Norouz holiday (the Persian New Year) season that starts on March 20.
Energy experts say when implemented (under the current circumstances), the (extra gasoline) decision would spread the disease further.
Iran has confirmed 1,501 cases of infection with the new coronavirus, with 66 reported dead by Monday noon.
Moreover, as oil revenues have been lost due the US sanctions, allocating 120 liters of gasoline to about 21 million cars (2.5 billion liters) means colossal cost to the treasury.
Given the massive difference between selling the fuel in the energy bourse (40 cents) and the domestic 10-cent price, the specific Norouz gas quota will cost the government $266 million – a largesse it cannot afford.
If exported (sold on the Iran Energy Exchange at Persian Gulf FOB prices), the government can earn at least $700 million.
NIORDC started to offer gasoline on energy bourse in June 2019.
