Evaluation Natural Gas Demand in Residential Sector of Iran'sRegion7 (Consideration of Targeted Subsidies of Law)

Abstract

The Considerable Share of natural gas in the energy basket and the growing trend in the residential sector on one hand and the exhaustible resource of natural gas as a nonrenewable resource on the other hand, make necessary to optimize the consumption of natural gas. The government performed the targeted subsidies law in 18 December 2010 in Iran with the purpose of optimizing consumption of gas and the other energy carriers. According to this law, the government has increased the price of energy carriers (including natural gas) gradually and omitted the energy subsidies, but gives subsidies to some social groups in each month. The main question of this study is that" Has the targeted subsidies caused to economize the gas consumption in residential sector?" For answering the mentioned question, first, the demand of natural gas of residential sector in Iran's region7 (including provinces of Kurdistan, Hamedan, Kermanshah, Ilam, Lorestan and Markazi) is estimated during 2006-2013, using the quarterly based on FMOLS model. Then, the elasticities of price, income and cross of demand are calculated. second, the government performance based on targeted subsidies law on gas consumption in region7 is studied. The results show that the reaction of consumers of natural gas in economizing of gas is not tangible and the policy of targeted subsidies has not been more effective and it has been missing its impact in the residential behaviors for economizing of natural gas.

Keywords

• targeted subsidies law
• demand of natural gas
• iran's region7