Iran’s energy imbalance is no longer limited to gasoline. New official figures suggest that the country is now facing one of the most severe natural gas shortages in its history, creating mounting pressure on energy security, industrial activity and public finances. Against this backdrop, the government has announced that it has no immediate plans to raise energy prices and will instead seek to manage demand through a new system that rewards consumers for reducing their energy use.
According to Esmail Saqab Esfahani, vice president and head of Iran’s Energy Optimization and Strategic Management Organization, the country has reached a point where the continuation of current consumption patterns could impose significant economic costs. While energy price increases have long been viewed as a key tool for reducing demand, the government believes current economic and social conditions make such a policy difficult to implement. Instead, it intends to offer direct financial incentives to households that lower their energy consumption.
The shift in policy comes as the scale of Iran’s energy imbalance extends beyond gasoline and increasingly affects the natural gas sector. Official data show that under normal conditions Iran produces around 297 billion cubic meters of natural gas annually. Of that amount, about 13 billion cubic meters are exported and nearly 40 billion cubic meters are consumed within the gas industry itself, leaving roughly 243 billion cubic meters available for domestic use. Yet annual demand is estimated at around 285 billion cubic meters, indicating that even under normal circumstances supply falls short of national needs.
Recent damage to energy infrastructure has widened the gap further. According to official estimates, the country’s gas production capacity has declined by approximately 55 billion cubic meters annually, reducing actual production from 297 billion cubic meters to around 242 billion cubic meters.
Structural Issue
When gas and electricity shortages experienced by industries during the past year are included, Iran’s overall gas imbalance is estimated at nearly 100 billion cubic meters. The figures suggest that the country’s energy challenges are no longer temporary or seasonal but have become a structural issue requiring long-term solutions. Similar pressures are visible in the gasoline market. Daily gasoline production, which stood at roughly 115 million liters last year, has reportedly fallen to about 110 million liters per day, while consumption has reached nearly 140 million liters, creating a deficit of around 30 million liters each day.
The growing gap has increased reliance on fuel imports. Iran spent approximately $5.5 billion on gasoline imports last year, and estimates suggest that annual import costs could rise to nearly $8 billion if current trends continue. Such expenditures place additional strain on foreign exchange resources that could otherwise be directed toward infrastructure development, medicine imports or other essential needs.
Notable Shift
Rather than relying on price increases, the government hopes that financial incentives will encourage households to adopt more efficient consumption habits. The proposed “saving reward” program represents a notable shift in energy policymaking by linking personal income directly to lower energy use. The objective is to make conservation economically attractive rather than simply making consumption more expensive.
However, analysts argue that the effectiveness of the initiative will depend on several factors. Accurate monitoring systems will be required to measure actual savings, while funding sources for reward payments must remain reliable over time. Without these foundations, the program could face implementation challenges.
Experts also stress that incentives alone cannot resolve Iran’s energy imbalance. Broader structural reforms remain necessary, including improving energy efficiency in buildings, modernizing heating equipment, reducing energy intensity in industry, expanding public transportation and lowering losses across distribution networks. Research on Iran’s energy sector has repeatedly highlighted that inefficiency, underinvestment and structural weaknesses are major drivers of recurring shortages, underscoring the need for comprehensive reforms alongside demand-management measures.
Practical Solution
In the gasoline sector, many specialists continue to view compressed natural gas as one of the most practical short-term solutions. Abbas Maleki, a professor at Sharif University of Technology, estimates that Iran has the capacity to utilize around 20 million cubic meters of CNG per day. Expanding the use of this existing infrastructure could reduce pressure on gasoline demand more quickly than large-scale electric vehicle deployment.
Ultimately, Iran’s widening energy deficit reflects a combination of rising demand, infrastructure constraints and policy challenges. The government’s new incentive-based approach may help moderate consumption, but its long-term success will depend on whether it is accompanied by deeper reforms aimed at improving efficiency and strengthening the country’s energy infrastructure.
