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Petroleum Product Usage Plummets Post-Subsidy Paring

by FINANCIAL CORRESPONDENT in Tehran

29 Dec 2010 01:091 Comment
604876_orig.jpgAhmadinejad cheers drop in consumption, 'kisses hands' of entire nation.

[ business ] Statistics released by the Petroleum Distribution Company of Iran indicate that during the nine days that the targeted subsidies laws have been in effect, December 19 through 27 (28 Azar to 6 Dey), consumption of four petroleum products -- diesel fuel, gasoline, fuel oil number 4, and kerosene -- has dropped an average of 38 percent.

According to reports, consumption of diesel fuel, indicative of activity in the transportation, industrial, and distribution sectors, has stabilized in the range of 80 to 90 million liters per day.

On the first day of the targeted subsidies law's implementation, diesel fuel consumption dropped precipitously from 138 million liters the previous day to 37 million liters. The 73 percent decline prompted concerns over faltering business activity, but in the following days consumption made a partial rebound.

On December 20, the second day of implementation, diesel fuel consumption reached 55 million liters. Then, from December 21 to 27, after the government declared that it would provide half of the fuel used for transportation at a subsidized rate of 150 tomans per liter, there was a gradual upward trend, with daily consumption figures of 96, 72, 86, 72, 122, 91, and 94 million liters.

Daily gasoline consumption -- more indicative of private automobile, taxi, and rental car usage -- dropped from 64 million to 53 million liters on the day the law went into effect, a 17 percent reduction. Daily consumption between December 21 and 27 was reported at 61, 69, 71, 53, 58, 56, and 58 million liters -- a marked downward trend influenced by the announcement of a 50-liter per car allocation for the month of Dey (December 22 through January 20).

Consumption of heavy fuel oil, which correlates with industrial activity, fell from 84 to 40 million liters on December 19, a drop of more than 50 percent. Over the following eight days, consumption fluctuated erratically in a range between 83 and 32 million liters, again with a generally downward trend.

The consumption of kerosene, which is mostly used in villages, industrial centers, and regions lacking natural gas supplies, dropped from 21 million to 2 million liters in a single day when the law was implemented. Wide swings in consumption followed: 2, 6, 7, 10, 7, 13, 20, and 21 million liters daily between December 20 and 27. This appears to indicate that a significant portion of kerosene use had gone to illegal substitution for other fuels and that the price rise has had a major impact on the black market in the product.

President Mahmoud Ahmadinejad, appearing at a rally in Karaj, Alborz province, on Tuesday, hailed the early effects of the plan: "I announce with pride that in the past ten days, since the implementation of this law, we have been witness to a 38 percent drop in consumption just in the diesel fuel and heating oil sector."

Ahmadinejad declared to the Karaj crowd, "I sincerely thank the entire nation and kiss everyone's hands. I proudly declare to the whole world that Iranians have achieved the most beautiful sympathy, trust, and understanding in their cooperation with this law."

Copyright © 2010 Tehran Bureau

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1 Comment

Good to see an article that just gives numbers and spares us self gratifying opinions. Thanks to the correspondent.

Anonymous / January 5, 2011 12:15 PM