Fuel Rationing During the 2026 Iran War

One of the things I’m following during this Iran War are the policies that governments are putting in to place to alleviate the impacts of the crude oil shock from the closure of the Strait of Hormuz.

Of concern for programs like the California LCFS is whether the US will implement policy changes that either raise or lower gasoline demand (independent of the demand destruction from higher oil prices).

Below I have a table, that is current as of today (April 1st, 2026) of the policies being implemented around the world. I’ve ranked them from most to least impactful to the consumer. If we were to have full fuel rationing (as during the during the 1970s oil crises), the demand destruction would be far more significant but the consumer pain would be far higher than as if other policies were implemented, like temporarily suspending the gasoline excise tax.

So far no jurisdiction has proposed suspending their carbon program like the Low Carbon Fuel Standard, but if the shortages get worse, it could be on the table. I’m most closely watching which jurisdictions suspend fuel excise taxes, as I believe those moves are precedences to the possibility of suspending carbon programs. Both policies lower the price of fuel, and thereby increase demand for that fuel; during an oil crisis these policies are not designed to lower fossil fuel demand, but rather to lower the political backlash from higher fuel prices from the oil supply shock.

Of note is that some mitigation strategies (e.g. removing fuel taxes) alleviate pain for the consumer, but ultimately end up increasing oil demand by artificially lowering the price of fuel. Other measures (e.g. lower speed limits) lower fuel demand but are more politically unpopular.

When we look at the types of counties implementing different types of mitigation measures we see that the hardest hit countries (e.g. Bangladesh and Sri Lanka) are implementing emergency measures that reduce fuel demand the most, but at a very high cost to the consumer – measures such as fuel rationing, driving restrictions, and mandated work from home.

Countries like the United States and Australia are implementing measures that are more politically palatable – like relaxing fuel specs and releasing strategic petroleum reserves – but which ultimately dig the hole deeper by increasing fuel demand by artificially lowering fuel prices.

Perhaps most importantly is that many of these countries are following the playbook set out by the IEA. On March 20th the IEA issued a 10-point-plan of strategies to ease the impacts of the current oil shock. The plan includes things such as mandated work from home (reminiscent of the COVID lockdowns), lowering speed limits (as done during the 1970s via the National Maximum Speed Law, without which we wouldn’t have Sammy Hagar’s song “I Can’t Drive 55“), and alternating driving days (which we also saw in the US during the 1970s with “odd/even rationing“).

Interestingly, as you can see in the table below, the United States hasn’t followed a single recommendation from the IEA, and every single action the United States has taken so far (suspending the Jones Act, removing sanctions on Iranian and Russian oil, releasing the strategic petroleum reserve) are designed to lower the price of oil, which increases demand for oil.

Action	Example	Effect	Consumer Pain (0-10)	Recommended by IEA[1]	Implemented
Fuel rationing	Weekly cap on number of liters per person	Lowers Demand	10		Bangladesh[2] Indonesia (50l/vehicle/day)[3] Kenya[4] Myanmar Slovakia (full tank + 10l)[5] Slovenia (50l/day/person 200l/day/business)[6] Sri Lanka (15l/week)[7]
Priority fuel allocation to essential sectors	Hospitals and government get fuel first	Lowers Demand	9
Alternate driving days	Odd/even license plate fill ups	Lowers Demand	9		Myanmar (odd/even rationing)[8] Sri Lanka (odd/even rationing)[9]
Driving restrictions	Car free Sundays / no-drive zones / congestion charges / parking restrictions / staggered start times	Lowers Demand	8		London (pre-war congestion charge)[10] Milan (pre-war congestion charge)[11] New York City (pre-war congestion charge)[12] Norway (pre-war congestion charge)[13] Singapore (pre-war congestion charge)[14] Stockholm (pre-war congestion charge)[15]
Lower speed limits	55 MPH highway speed limit	Lowers Demand	7		Pakistan (100 kph)[16]
Curfew	Restaurants closed by 9PM	Lowers Demand	7		Egypt (9pm restaurant curfew)[17]
4 day workweek mandate		Lowers Demand	7		Laos (4 day work week)[18] Pakistan (4 day work week, schools shut)[19] Philippines (4 day week for govt agencies)[20] Sri Lanka (4 day work and school)[21]
Work from home mandate	Work from home, remote schooling	Lowers Demand	6		BC Unions advocating[22] Bangladesh (universities closed)[23] Cambodia (public sector WFH)[24] Egypt (1 day/week mandated WFH)[25] Indonesia (1 day/week mandated WFH)[26] Pakistan (1/2 of public sector WFH)[27] Thailand (public sector WFH)[28] Vietnam[29]
Reduce business flights		Lowers Demand for Jet Fuel	6		Cambodia (public sector travel restrictions)[30] Egypt (public sector travel restrictions)[31] Indonesia (public sector travel restrictions)[32] Malaysia (public sector travel restrictions)[33] Nepal (public sector travel restrictions)[34] Pakistan (public sector travel restrictions) [35] Philippines (public sector travel restrictions) [36] Sri Lanka (public sector travel restrictions) [37] Thailand (public sector travel restrictions) [38] Vietnam (public sector travel restrictions) [39]
Encourage carpooling	More HOV lanes, subsidies for carpooling	Lowers Demand	6
Encourage commercial vehicle efficiency efforts	Freight consolidation, truck speed limits, shift freight to rail	Lowers Demand	6
Eliminate price caps / subsidies		Increases Demand	6		Thailand (eliminated diesel price cap)[40] UAE (reduced price subsidy)[41]
Implement Fuel price cap / subsidy		Increases Demand	5 (higher risk of shortages)		South Korea (gasoline price cap)[42] Spain (diesel fuel subsidy)[43]
Limit non-essential fuel use	Recreational boating, private aviation, motorsports	Lowers Demand	5		Pakistan (no cricket attendance in person)[44]
Encourage public transit	Free public transit, bus priority lanes	Lowers Demand	4		Philippines (free buses)[45] Tasmania Australia (free public transit)[46] Victoria Australia (free public transit)[47]
Anti-idling		Lowers Demand	4		New York City (pre-war program)[48]
Relax fuel specs	Suspend special blend requirements, relax ethanol limits	Increases Demand	4		Argentina (E15)[49] Australia (higher sulfur ppm)[50] Indonesia (B50)[51] Philippines (Euro II spec)[52] Thailand (B20)[53] USA (E15 year round)[54]
Export restrictions on fuels		Increases Demand	2		China[55] Russia[56] Serbia[57] South Korea (naphtha)[58] Thailand[59]
Tax reductions on fuels		Increases Demand	2 (budget shorfalls)		Albania[60] Argentina[61] Australia[62] Austria[63] Barbados[64] Brazil[65] Cambodia[66] Chile[67] Croatia[68] India[69] Ireland[70] Italy[71] Laos[72] Latvia[73] Namibia[74] Philippines[75] Poland[76] Portugal[77] Serbia[78] Slovenia[79] Spain[80] Sweden[81] Turkey[82] Vietnam[83]
Suspending carbon programs for fuels	Suspend LCFS	Increases Demand	2 (higher pollution)
SPR	Releasing strategic petroleum reserves	Increases Demand	2		Australia[84] Japan[85] USA[86]
Eliminating sanctions on oil		Increases Demand	1		Bangladesh (Russia)[87] Indonesia (Russia)[88] Philippines (Russia)[89] Sri Lanka (Russia)[90] South Korea (Russian naphtha)[91] Thailand (Russia)[92] USA (Iran, Russia)[93] Vietnam (Russia)[94]
Cut tariffs on fuel imports		Increases Demand	1		Vietnam[95]
Suspending cabotage	Suspend Jones Act	Increases Demand	1		USA (Jones Act)[96]
Shift multi-fuel vehicles from LPG to gasoline		Increases Demand for LPG, Raises demand for gasoline	1		India (diverting LPG from industry to households)[97]
Encourage petrochemical feedstock switching		Lowers demand for LPG, raises demand for other feedstocks	1
Encourage electric cooking versus LPG		Lowers Demand for LPG	1
Encourage EVs	EV subsidies	Lowers Demand	1		Cambodia (Reduced EV tariffs)[98]

Fuel Rationing During the 2026 Iran War

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