Abstract for: Gasoline Rationing Plan in Iran: A Symptomatic Solution

Iran is a resource-based country and these resources have brought advantages and disadvantages for the country. It seems that disadvantages are results of mismanagement of the resources and not the existence of resources. Fuel subsidy is an example of such mismanagements. Actually while fuel subsidies are common in the Middle East, the oil-richest place of the world, Iranian domestic fuel prices are among the lowest in the world. The low fuel prices, population and urbanization growth caused growth of fuel consumption and consequently growth of subsidies. But because nothing can grow forever, two years ago the government had to start rationing plan to reduce the growth of consumption due to budget and gasoline stock limitations. In this paper we are going to model the dynamics of the problem and answer why the government had to execute the rationing plan. In addition, we try to show that this solution is not a fundamental solution. It is a symptomatic solution and after a while ration of each car will decrease. In the end, we offer two policies to limit the demand naturally, not by force of rationing plan, and try to offer a fundamental solution to manage the fuel consumption.