Investigating the Effect of Oil and Gas Resources Abundance on Energy Efficiency in Rentier States

Energy is a driver and essential input of most production processes. In Iran and other oil rentier states, the bulk of energy consumption is from non-renewable resources (due to its abundance and cheapness). It seems that the low price of non-renewable energies in these countries lessens the incentive for increasing energy efficiency in these countries. The empirical proof of this hypothesis can clarify another dimension of the resource curse. To study the effect of resource abundance on energy efficiency, we use the sample of rentier and non-rentier countries, based on unbalanced panel data for the period 1998-2012. Our results indicate that there is a positive relationship between the ratio of natural resource rent to GDP and energy intensity, implying that higher resource rents lead to lower energy efficiency. The results also show that there is a negative relationship between energy price and energy intensity, indicating that higher fuel prices lead to higher energy efficiency.