effect of subsidy reform on natural gas consumption in the residential and commercial sectors in iran: a panel data approach

the natural gas consumption in iran has been continuously increasing due to several reasons including low prices of natural gas, development of gas supply networks, people’s salary increase, incorrect consumption culture and the increase of national economy growth.  although, the global natural gas consumption has increased by 38% since 2001, the national consumption in iran has increased by 118% (iea, 2013). the subsidy paid by the iranian government for natural gas is worth 25.5 billion dollars which is the highest in the world according to iea reports. with regard to the social and economical benefits and drawbacks of subsidy reform plan, it was implemented in iran in december 2010. since the residential and commercial sectors are considered as the major natural gas consumers in the final consumption (over 46% in 2012), reducing the consumption in these sectors can play a key role in the total consumption. thus, in this research the impacts of the subsidy reform plan on the natural gas consumption in residential and commercial sectors are examined and compared.  for this purpose, a panel data is used for all iranian provinces to examine and compare the impacts of the plan on different provinces. to examine the impact of the subsidy reform plan, a dummy variable is added, which equals zero for the seasons before implementation of the plan and equals 1 for the seasons after the implementation. the consistency of this variable in the residential sector indicates that the plan affects the household natural gas consumption. jel classification: c23, c51, q41, h20