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116 comments on DrumBeat: September 26, 2007

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BrianT on September 26, 2007 - 9:05am Permalink | Subthread | Parent | Comments top

A lot of the exporting countries are subsidizing internal consumption of oil products. As an example, demand destruction is unlikely in Venezeula as long as Hugo is in charge.

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Marco on September 26, 2007 - 9:17am Permalink | Subthread | Parent | Comments top

I am laughing becuse I made this point to someone yesterday. Further; that these subsidies are slowly being removed as these countries feel the pinch on their revenues from exports. Iran is the classis case. others are folling suit. I googled 'opec oil subsidies' yesterday and was suprised at the amount of headlines about countries removing their subsideies to their own population. Try google it yourself.

Marco.

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BrianT on September 26, 2007 - 9:35am Permalink | Subthread | Parent | Comments top

I wouldn't laugh too loud. Internal subsidy is only part of the story-exporting countries' economies improve as oil prices rise-this improvement in the economy generates internal demand even without subsidy.

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Sunspot on September 26, 2007 - 11:48am Permalink | Subthread | Parent | Comments top

I'd add that at these high prices, which aren't going away, oil exporting countries are making boatloads of money, creating an expanding class of people who will be able to afford FFs regardless of subsidies. As with everyone else, it's supply that's the most important, and gov'ts that try to restrict supply to their own people to maintain the revenue stream from exports risk internal strife.

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Carbon waste Life form on September 26, 2007 - 10:19am Permalink | Subthread | Parent | Comments top

The BBC says the current crisis in Burma was precipitated by a hike in fuel prices. I don't think Burma is a producing nation but the government (junta) there is presumably reducing subsidies. Sign of the times. Interesting study for other countries who are export nations and thinking of reducing subsidies.

http://news.bbc.co.uk/1/hi/world/asia-pacific/7014570.stm

The protests were triggered by the government's decision to double the price of fuel last month, hitting people hard in the impoverished nation.

Carbon UK

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mcgowanmc on September 26, 2007 - 9:59am Permalink | Subthread | Parent | Comments top

A lot of the exporting countries are subsidizing internal consumption of oil products. As an example, demand destruction is unlikely in USA as long as Cheney is in charge.

Arkansaw of Samuel L Clemens

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ImSceptical on September 26, 2007 - 8:18pm Permalink | Subthread | Parent | Comments top

mcgowanmc -

A lot of the exporting countries are subsidizing internal consumption of oil products.

See my reply to BrianT above.

James Gervais

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ImSceptical on September 26, 2007 - 8:15pm Permalink | Subthread | Parent | Comments top

BrianT :-

A lot of the exporting countries are subsidizing internal consumption of oil products.

If a government of a country that exports oil and/or natural gas sets an internal price below the world price, it is NOT necessarily a subsidy, unless the price charged doesn't pay for the exploration, production, refining, transportation, and marketing. The price of any substance or object is whatever the holder wants, and there is no reason why a government shouldn't treat it's own people better than foreigners. Too many people have bought into the bs of "the market knows best".

James Gervais

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