Pricing of domestically consumed oil in Iran
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The present study reviewed the domestic pricing policies for oil products in Iran and investigated the effects of these policies on the rapidly increasing demand for oil which has been experienced in the past few decades. The varying effects of these policies which have for a long time persisted on an artificially low domestic prices were examined in relation to the role of the world market structure for oil. Also, the alternative policies for optimal pricing of oil products based on the opportunity cost of the oil consumed in Iran were introduced in order to control and moderate the current rate of increase in demand for oil, thereby securing a longer availability of oil for both domestic consumption and export purposes. The opportunity cost of the oil was in turn analyzed under both competitive and non-competitive scenarios for the world oil market. In the non-competitive scenario, the role of OPEC policies and strategies which might restrict the total production and/or exports of oil from Iran were discussed and their impacts on the opportunity cost of the oil used in the internal market were examined. In another attempt, the opportunity cost of oil and the opportunity cost of foreign exchange were used to determine the amounts of real subsidies paid by the government on four main petroleum products induding gasoline, kerosene, gas oil, and fuel oil consumed in Iran every year. The real subsidies paid in the years surveyed in this research were derived by applying the appropriate exchange rate for dollar to the international price of each product in any given year. The results of this study revealed that the nation could increase its revenues and promote the overall welfare of the country by optimally pricing of its oil for the internal consumption.
- Masters Theses