Gas prices in Iran. (Maybe not what you think)

There is of course a direct relationship between the price of motor gasoline and its consumption. (Demand curves are still negative no matter what it is or where you are on this planet.) Common knowledge outside of Iran has it that the price of gas there is very low. Well not quite. Let’s have a look

Let’s start by having a look at an article of 26 April from the independent Fiscal Times news service out of New York, reporting on cheap gas prices worldwide.

The 15 Cheapest Places in the World to Buy Gas

You may be paying over $4 a gallon for gas in the U.S., or even more in Europe, but there are some corners of the world where gas costs less than a dollar a gallon.

But they all have in common is something the U.S. and Europe don’t have: easy and abundant access to domestically or locally produced oil. On top of that, many of these governments provide large gas subsidies to keep prices down. Some of these gas cheapskates are OPEC members, but others are just close to the source. But easy access to the raw material and heavy government subsidies should keep costs low in these countries for some time.

Note: This data from Deutsche Gesellschaft für Internationale Zusammenarbeit (GTZ), a German research firm , is from November 2010, and does not reflect the impact of recent instability in the Middle East on prices.

#1 Venezuela
Price per gallon for gas: $0.09
OPEC member: Yes
Current status: Hugo Chavez’s government provides steep gas price subsidies, but is considering cutting them.

#2 Iran
Price per gallon for gas: $0.37
OPEC member: Yes
Current status: Iran’s latest budget has been approved based on an $80 oil price, well below current prices.

#3 Saudi Arabia
Price per gallon for gas:
 $0.61
OPEC member: Yes
Current status: Saudi oil chiefs are worried about rising oil prices and their impact on the global economy.

#4 Libya
Price per gallon for gas:
 $0.64
OPEC member: Yes
Current status: Libya is currently in the midst of a civil war, which is limiting oil production and exports.

#5 Qatar
Price per gallon for gas: 
$0.72
OPEC member: Yes
Current status: Qatar is selling a significant amount of natural gas to the UK, and is supporting the Spanish economy by investing in the country’s banks and companies.

#6 Bahrain
Price per gallon for gas:
 $0.79
OPEC member: No
Current status: Bahrain has experienced fierce protests, which have been quelled by GCC troops. The country’s leadership recently expelled several Iranian diplomats.

#7 Turkmenistan
Price per gallon for gas:
 $0.83
OPEC member: No
Current status: Iran and Turkmenistan are working on pipeline projects.

#8 Kuwait
Price per gallon for gas:
 $0.87
OPEC member: No
Current status: Protests in Kuwait have been limited and weak. The country is supporting the Libyan rebel movement.

#9 Oman
Price per gallon for gas:
 $1.17
OPEC member: No
Current status: Oman has experienced limited protests since the start of Middle East instability.

#10 Algeria
Price per gallon for gas: 
$1.21
OPEC member: Yes
Current status: Algeria has experienced minor protests, compared to its other North African neighbors. A halt to Algerian oil exports would send world crude prices spiking, according to Nomura.

#11 Yemen
Price per gallon for gas:
 $1.32
OPEC member: No
Current status: Yemen looks close to a political solution to ongoing instability, in which its president will receive immunity.

#12 Brunei
Price per gallon for gas:
 $1.47
OPEC member: No
Current status: The country’s biggest oil producer, Brunei Shell Petroleum Co, just raised crude oil prices to a 31-month high.

#13 Nigeria
Price per gallon for gas:
 $1.67
OPEC member: Yes
Current status: Nigeria may experience slightly higher gas prices if the recent election’s violent fallout continues

#14 United Arab Emirates
Price per gallon for gas:
 $1.78
OPEC member: Yes
Current status: The United Arab Emirates, which include Dubai and Abu Dhabi, have remained stable while many gulf countries have experienced instability.

#15 Egypt
Price per gallon for gas:
 $1.82
OPEC member: No
Current status: Egypt is in the midst of a domestic revolution that may be limiting consumer access to fuel supplies. This November number may, therefore, be a little misleading.

# # # (End of Fiscal Times article.)

Fair enough, but is that really the picture  in Iran today?

In fact the current price of motor gasoline in Iran is 700 Toman per liter ($0.7 per liter, $2.49 per gallon). This is because the Iranian government has completely removed the gasoline and gasoil subsidy in January of 2011. This was done gradually and in three different phases over the period of four years.

But strange as it may seen, even at the much higher prices the demand fo gasoline continues to grow.   Thus currently the average daily motor gasoline consumption is 58 million 400 thousand liters. It is important to note that there are over  2 Million-liter increase in gasoline consumption by residents of Tehran in the last weeks. Here is an article from Asreh Iran, published on May 09, 2011:

Tehran residents gasoline consumption increased by about 2 million liters per day

Source: Aftab News Agency:

In the first week of May 2011, average daily gasoline consumption of the country slightly increased and reached 58 million 400 thousand liters. According to official statistics, National Iranian petroleum products distribution, the total gasoline consumption in the country in between May 1 to May 7, has reached 409 million and 100 thousand liters, which to compare with the week before (404 million 800 thousand L) has increased 4 million and 300 thousand liters (approximately 1 percent).

In the week in review, the average daily consumption of gasoline has reached 58 million and 400 thousand liters per day, with an increase of 400 thousand liters per day to compare with the week before. Within these days, the highest demand for gasoline was on Thursday (May 3) with 67 million and 500 thousand liters and the lowest on Sunday (May 1) with 54 million and 300 thousand liters.

Super gasoline consumption in the country
The country’s total super gasoline consumption with an average daily of two million and 100 thousand liters decreased from 14 million 600 thousand liters (7 thousand liters) to compare with last week.

Tehran residents gasoline consumption increased by about 2 million liters

According to National Iranian Oil Products Distribution, total gasoline consumption in Tehran has reached 85 million 100 thousand liters between May 1 and 7, one million 900 thousand liters increase to compare with the week before (83 million and 200 thousand liters). That puts the average daily consumption of gasoline in Tehran at 12 million 100 thousand liters.

# # #  (End of Asreh Iran Article)

Editor’s note: It might still be too early to find any changes in gasoline consumption based on the new pricing but so far the price doesn’t seem to be very influential. This could suggest that the transportation system is addicted to the use of private cars and many people are still not ready to make a change in the way they use their private vehicle.

We will look back in a few months or so and re-evaluate gasoline consumption in Iran to get a better sense of how price can affect consumption. at one point of courses it will. But what will be that point? Stay tuned.

_________________________________________________

About Kourosh Rad, Managing Editor

Born and raised in Iran, Kourosh moved to Canada in 2007, where he completed a BA in Urban Design Studies at Dalhousie University, Halifax. Passionate about sustainable transport, he focused his thesis on Public Bicycle Implementation in the City of Halifax. He then started Streets of Iran in collaboration with Eric Britton and World Streets in order to promote and support sustainable transport in Iranian cities.
View all posts by Kourosh Rad, Managing Editor _________________________________________________

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One response to “Gas prices in Iran. (Maybe not what you think)

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