The End of Gasoline Imports Does Not Mean the End of Price Increases

Mohammadreza Aref, First Vice President, has announced that the country no longer needs to import gasoline in 1405. The claim raises questions about the stability of fuel supply and the future of gasoline prices, given seasonal fluctuations in consumption. On what basis has the zero-import claim been made? Mohammadreza Aref has stated that […]

Mohammadreza Aref, the first vice president, has announced that the country does not need to import gasoline in 1405; A claim that raises questions about the sustainability of fuel supply and the future of gasoline prices due to the seasonal fluctuation of consumption.

Mohammad Reza Aref has announced that the government, by implementing reform decisions in the field of gasoline, has come to the conclusion that it will not need to import gasoline this year. According to him, the resources obtained from these measures will be spent on subsistence support and goods. To evaluate this claim, it should be determined how much of the reduction in the need for imports is the result of the increase in domestic production and how much is due to the decrease in consumption. It should also be clarified how long this balance will last and if there is an increase in consumption or a drop in production, what plan is there to meet the needs of the country;

If the country needs gasoline for any reason; Gasoline will not be imported and one of the scenarios of Saqab Esfahani about closing stations in case of lack of gasoline will be implemented?

Fatemeh Mohajerani, the spokesperson of the government, has announced that gasoline consumption has decreased by 7% from 17 September to 15 October 1405, compared to the same period last year. At the same time, the consumption of compressed natural gas or CNG has also increased by 12%. According to him, if the previous trend of consumption growth continued, the country would need more imports.

Mohammad Sadegh Azimifar, the CEO of the National Oil Products Distribution Company, also said that the annual growth of gasoline consumption, which was about 6% before, reached almost zero with management measures and became negative in September. According to him, the average production of gasoline has increased by 17% and four quality improvement projects have been put into operation. These projects have increased the production of oil products by about 3%. These statistics explain part of the basis of the government's statement, but are not sufficient to prove the need for imports throughout the year. Evaluation of this claim requires more complete information about production, consumption, reserves and demand forecast in the coming months.

Fuel consumption is not constant throughout the year. With the end of summer trips, the reduction in the use of car air conditioners and the colder weather, part of the factors that increase consumption in the hot months of the year will disappear. Therefore, the decrease in consumption in the coming months could be partially due to seasonal changes, not necessarily the result of a sustained increase in gasoline supply capacity. This pattern has another form in energy consumption: just as gas consumption decreases in the hot months of the year due to the reduction in the need for heating, gasoline consumption may also decrease in the cold season due to the end of summer trips and changes in commuting patterns and not using car air conditioners. Of course, in order to determine the share of these factors, monthly statistics should be compared with similar periods of previous years, unfortunately, these statistics are not publicly available to the public and the media.

Therefore, it would have been better for the government to specify the timeframe of its forecast more precisely, instead of declaring a general lack of import for the entire year; For example, it explained whether the estimate of zero imports is only valid for the second half of this year or whether it covers the entire year. Gasoline consumption during Nowruz holidays and next year's spring season, due to increased travel and changing weather conditions, may be significantly different from the last months of this year.

In addition to the amount of production and consumption, stable supply of gasoline also depends on the capacity of refineries, transmission network and reserves. Damage to refineries or energy infrastructure can reduce production and change the balance of supply and demand. This possibility does not mean predicting disruption; But in order to declare no need for imports, the government must explain how it will prevent fuel shortages in case of a drop in production or a sudden increase in consumption.

No need to import and determine the price of gasoline are two separate issues. Even if the country's needs are met from domestic production, this issue in itself does not mean that the price increase is ruled out; Just as without announcing the official decision, the price increase cannot be considered certain.

Aref's statements about zero imports do not give a clear answer about the future of prices. To evaluate this issue, it should be determined what relationship the government has considered between the cost of production, the resources resulting from price correction, the amount of consumption and the pricing policy in the coming months. Therefore, zero import cannot be seen as a guarantee of gasoline price stability.

It is not clear what is meant by no need to import, only the gasoline used in the normal fuel supply network, or the import of super gasoline is also included. Until the government clarifies the scope of this announcement, it cannot be concluded that the import of all types of gasoline will be stopped.

Exploitation of quality improvement projects can help to improve petroleum products, but the increase in production volume alone does not determine the quality of gasoline supplied at stations. In order to evaluate the results of these projects, specific information about the change in the quality of the products should also be published.

Finally, the claim that there is no need to import gasoline can be evaluated when the statistics of production, consumption and reserves are placed next to the demand forecast for the coming months. Without this information, declaring zero imports for the entire year alone cannot prove that the gasoline supply problem has been solved in a sustainable manner.

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