Developing a Dynamic Model of Energy Policy Making in the Oil and Gas Industry: Scenario Planning Based on Energy Reform

This study develops a dynamic model to evaluate various distinctive policies in the oil and gas industries of Iran. This model takes into account some key variables including oil and gas exports as well as the injection of additional gas into the oil reservoirs. These variables are particularly essential in determining the equilibrium quantities and prices in the supply and demand functions. Therefore، the impacts of various oil and gas policy initiatives are evaluated on the performance of various sectors of the Iranian economy. Furthermore، the impact of energy consumption on oil revenues and vice versa is thoroughly examined. In order to determine the future trends of major relevant variables، such as the rate of gas consumption in the household، commercial، and public sectors and total gas consumption rate، three scenarios are developed. According to the energy subsidy reform plan، these scenarios are as following: gas price hike، an increase in the gas injection into the oil reservoirs and concurrent increase of OPEC’s share and gas injection into the oil reservoirs. The results indicate that gas price hike will likely lead to a decline in the total gas consumption in the country and that the gas injection into the oil reservoirs will create more value for the country when the share of country in the OPEC goes up.