As long as gasoline demand is not managed efficiently, other strategies on the supply side such as importing the fuel, building new refineries or upgrading old facilities will not yield the desired result, a member of Majlis Energy Commission said.
“Not only do supply-oriented policies like increasing the number of crude processing firms require massive investment, but they are also long-term solutions and cannot address gasoline shortage in the short run,” Abdolali Rahimi Mozaffari was also quoted as saying by ILNA.
Supply-side management approaches, including plans to import the fuel, should be replaced with demand-oriented management plans, such as getting rid of dilapidated gas guzzlers that have outlived their usefulness, he added.
Mozaffari said the more refineries are constructed, the more demand will be created and the vicious cycle will never end.
On the other hand, focusing on the demand side, raising public awareness, promoting wise consumption patterns, taking advantage of advanced know-how to manufacture fuel-efficient cars, upgrading urban transportation systems, accelerating CNG conversion schemes and increasing fuel prices are more likely to help prevent the National Iranian Oil Company from importing gasoline.
According to the official, developing infrastructures to boost crude processing capacity is necessary but NIOC has neither the funding nor the time as gasoline demand will exceed demand in the near future, because of which unsustainable supply-oriented management policies can do very little to ease the growing gasoline crisis.
No matter how much gasoline is produced, as long as the fuel demand is not managed effectively, strategies on the supply side will not help tackle the problem, not at last in the short run, he added.
The state-run NIOC produces close to 105 million liters of gasoline per day, of which 95% are burnt locally and the demand is on the rise incessantly.
Although NIOC has announced that it has no plans to import fuel to meet the rising domestic demand, the firm will have to make the bitter choice sooner or later.
Iran put an end to dependence on the costly import of gasoline in 2019. Gasoline imports reached 12 million liters per day in 2016 when Iranians burnt almost 74 million liters of gasoline daily. Import quotas dwindled to 3 ml/d by mid-2018 and were completely stopped in 2019.
Global Average
Per capita gasoline consumption in Iran, with a population of 83 million, is above the global average.
According to data from the Oil Ministry and NIOC, daily consumption of gasoline in Iran has surpassed 98 million liters, i.e., 12 times more than Turkey with almost the same population.
Drawing a parallel between Iran and more populated countries like China, the NIOC data revealed that close to 450 million liters of gasoline are burnt in China daily and this is while its population is over 1.5 billion, meaning gasoline consumption in Iran is three times greater than that of China.
The National Iranian Oil Refining and Distribution Company, a subsidiary of NIOC, started to export the fuel to international markets, namely Iraq, Afghanistan, the Persian Gulf littoral states and the semi-autonomous region of Iraqi Kurdistan in 2019.
Nonetheless, the consumption growth rate has continued at a fast pace, forcing the company to stop selling gasoline and it may have to import it in the near future.
The more fuel is burnt domestically, the less can be sold and not only will the NIOC lose its market share, but also deprive Iran of a part of its foreign revenues.
Each liter of gasoline is sold at 5 cents in Iran whereas the same amount of fuel can generate 90 cents if it is exported.
Put it simply, if local consumption is reduced by 10 million liters per day, the company can earn close to $1.5 billion in revenues in one year.
Guinness World Record
Gasoline consumption between 2011 and 2017 shot up by 50% that was big enough to be registered in the Guinness World Record,” Alireza Sadeqabadi, NIORDC's former CEO, said.
"Such prohibitive consumption is simply not proportional to the number of cars in the country and is worthy of concern," he added.
Iranians used 73 million liters of gasoline per day in 2015, which rose by 8% to 80 ml/d in 2016.
Consumption continued upwards in 2017, when the figure amounted to 88 ml/d and NIORDC statistics show that in 2018, the level exceeded 95 ml/d or 1.18 liters per capita.
The official believes that it is high time the government starts putting the brakes on production of fuel-intensive cars.
Replacing gasoline with compressed natural gas is among other proposals to curb rising consumption. Hybrids are also appearing on Tehran’s roads, albeit at a very slow pace.
Sadeqabadi noted that officials have often warned about the strange consumption patterns, but because fuel is no longer imported, they care little about how much fuel is used.
