The Impact of Gasoline Prices on Energy Intensity: a Comparative Study of Iran and Turkey

Abstract

It is common to use the criteria of Energy intensity in micro levels for showing the efficiency of manufacturing systems, and in macro levels for comparing the productivity level of energy between countries. Accordingly in this research we investigate the effect of gasoline price with the rest of macro-economic variables on energy intensity in Iran and Turkey in the period of 1980-2013, by using of both Johansen-Juselius and error correcting models. The estimated results show that the gasoline price has negative effect on Energy consuming intensity in both countries, so that increasing the gasoline price in Turkey has leaded to more decrease in energy consuming intensity in short- run and long-run. Although Technology had negative effect on energy intensity in both countries in long-run, but in Iranian economy, it had positive effect in short-run and shows that manufacturing technological change in the country couldn’t have led to improve efficiency. Also in both countries, the policy of reforming energy prices was effective through decreasing subsidy on energy carriers.