Role of Energy Supply and demand Fluctuations in Macroeconomic Development of Iran

Abstract

Energy plays an essential role in the economic and social development of all countries around the world, and its consumption is rising considerably due to the fast industrial development and increasing the standards of living. However, due to the high dependency on fossil fuel resources by all the developed and developing countries around the world to cover their energy supply needs, fluctuations in supply and demand of energy as well as the energy prices would definitely lead to considerable macro- and micro-economic effects for both the energy exporter and importer countries. Therefore, the necessity of stability of economy and its understanding is becoming more and more popular among policy-makers and researchers around the world. As many energy consuming industries in Iran such as services and products are highly dependent on energy prices, understanding the economic robustness relationships with the supply and demand fluctuations of fossil fuel resources is important for the researchers and also policy-makers. In this paper, the effect of oil price fluctuations on several macro-economic parameters as well as energy sector's resilience and electricity market as the main Iranian energy economics issues are discussed.