The Iranian regime is grappling with a chain of energy deficits in managing the country, a crisis it prefers to label as “energy imbalance.”
On Tuesday night, November 19, Mohammad Jafar Qaem Panah, the Executive Deputy to the Iranian regime’s president, admitted during a news program aired on state television to the existence of “imbalances” in the fuel, gas, and electricity sectors. He stated, “The president is planning to resolve these problems in the shortest time possible or by next year so that we do not witness blackouts that disturb people’s lives.”
The roots of Iran’s energy crisis date back several years, but its signs began to emerge notably in the second half of the 2010s. A chain of crises has emerged, affecting all sectors in the Iranian regime.
Masoud Pezeshkian, the president of the regime, claims that the Iranian regime spends $5 billion annually on gasoline imports. However, Tasnim News Agency, affiliated with the Islamic Revolutionary Guard Corps (IRGC), refuted this claim, reporting that $2 billion worth of gasoline was imported last year.
Additionally, Pezeshkian stated that a subsidy of 65,000 rials (approximately $0.09) per liter is provided for domestically produced gasoline.
Regardless of the exact figures, it is evident that the Iranian regime is preparing for a fuel price increase.
When the Iranian regime altered fuel prices in November 2019, it faced one of the most widespread protests in its history.
Iran now not only struggles to sell its oil like a normal country but also, due to sanctions and financial restrictions, is unable to procure gasoline in a regular manner.
On the one hand, according to regime officials, Iran must subsidize fuel, and on the other, it has to circumvent sanctions to purchase gasoline.
Nevertheless, a gasoline price increase, which past experiences show is typically accompanied by a diesel price hike, will directly and immediately affect general price levels due to its significance in the transportation sector, triggering a chain of changes.
Iran, which possesses the world’s second-largest known natural gas reserves, faced challenges in 2024 in supplying gas to households, industries, and power plants.
The issue is that merely having sufficient gas reserves is not enough; extracting and transporting it requires continuous investment.
According to regime officials, Iran needs $250 billion in investment to revitalize its oil and gas industry—a goal that has not yet been achieved and may now require even more funding.
Although the financial situation of the Iranian regime is far from ideal, in past administrations, substantial oil revenues were spent on other sectors, and adequate investment was not made in the gas industry.
As a result, the country is facing a severe gas shortage at the onset of the cold season, and it is anticipated that this trend will exponentially worsen as temperatures drop.
On November 18, Iran’s Supreme Audit Court, the oversight arm of the regime’s Majlis (parliament), announced that its technical and specialized reviews indicate that the gas imbalance in 2023 reached 63.9 billion cubic meters, while 18 billion cubic meters were wasted as flare gas.
In the summer of 2024, amid widespread nationwide blackouts, regime officials suggested that citizens could prevent power outages by reducing air conditioner usage. However, the reality is that the country’s aging power production and distribution network requires $19 billion in repairs, a problem that cannot be resolved by merely setting air conditioners to low power.
Now, in November, with citizens no longer using air conditioners, the government tells people they must choose: burning heavy fuel oil (mazut) or enduring blackouts.
According to some observers, the discussion of burning mazut is a new misleading tactic by the Iranian regime during the cold season. Eighty percent of electricity in Iran is generated by thermal power plants, which predominantly rely on natural gas. Out of the country’s 140 major power plants, only 14 are capable of burning mazut.
Fars News Agency, affiliated with the Islamic Revolutionary Guard Corps (IRGC), reported, citing data from the Ministry of Energy, that since September 2024, the process of replenishing liquid fuel reserves at power plants has stopped, and over time, the volume of these reserves has fallen to one-third.
In reality, power plants lack the fuel to operate. As a result, the government’s initial response was to announce a nationwide blackout schedule under the pretext of halting mazut burning.
In addition to the blackouts, a quiet increase in electricity prices has also been put on the agenda.
The state-run Khorasan newspaper, on November 20, compared electricity bills for an industrial unit and reported that while its actual electricity usage cost about 66 million rials (approximately $96), a “transit tariff” of 500 million rials (approximately $724) was also included in the bill.
This means the unit is required to pay approximately 7.5 times the cost of its actual electricity consumption in transit tariffs to the electricity authority.
On Tuesday, November 19, Abbas Aliabadi, the Minister of Energy, during a meeting with the Russian Energy Minister, called for connecting Iran’s electricity grid to Russia’s in hopes of compensating for the energy deficit.
It seems that despite Iran’s abundant energy resources, the regime lacks any short- or long-term solutions to address the energy deficit. Instead, the clerics channel the country’s revenues into fueling wars in the region.
