Stories tagged with "fuel subsidies"

Eliminating Subsidies Won't Cut It (Demand for Oil That Is)

Posted by jeffvail on June 13, 2008 - 10:00am
Topic: Demand/Consumption
Tags: domestic consumption, fuel subsidies, opportunity cost, peak oil [list all tags]

Cheap gas and diesel due to government fuel subsidies has become one of the favored whipping boys of late—a convenient way to blame high oil prices on the actions of some other government or faraway people (See 1 2 3 4 5 6 7 8). But how much can subsidies really be blamed for present oil demand? Would cutting a 30% gasoline subsidy reduce demand by 30%? Why not? I’ll stake out and defend a somewhat extreme position: reducing, or even eliminating fuel subsidies will not cause a significant, long-term reduction in demand and may even cause demand to increase more quickly than with subsidies in place. More importantly, we must not fall prey to claims that cutting fuel subsidies is an easy solution to our energy problems.



A Hummer dealership in Caracas, Venezuela, where consumers pay only pennies for a gallon of gasoline as reported by the New York Times

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Fun with Fuel Subsidies and Taxes

Posted by Prof. Goose on June 3, 2008 - 8:00am
Topic: Policy/Politics
Tags: economist, ft, fuel subsidies [list all tags]

This post was inspired by a post over at Paul Kedrosky's place entitled Fun with Fuel Subsidies, in which he put up these two graphics and said "Discuss." Now I am doing the same here.

Two figures (via the Economist and FT, respectively, click graphics to go the stories--at FT click the "view map" in the graphic once you get there to see the interactive map that this picture was taken from) that show the world of fuel subsidies worldwide:

ft-oil

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Iraq cuts fuel subsidies

Posted by Yankee on December 29, 2005 - 11:34am
Topic: Economics/Finance
Tags: fuel subsidies, iraq [list all tags]

Yesterday it was announced that Iraqi Prime Minister Ibrahim Jafari has cut subsidies for many types of fuel as part of a debt-forgiveness deal that was signed with the International Monetary Fund. Note that this doesn't only mean gasoline, but also kerosene and cooking gas. According to this article in the LA Times, there was pressure for Iraq to stop subsidizing fuel and start using that money to improve infrastructure, health resources, and education.

So how much were Iraqis paying, and how much will they have to pay now?

Over the summer, gas was selling for about 5 cents a gallon. Now it's about 65 cents, and at the end of the price increases, gasoline will cost about the same in Iraq as it does in other countries in the Persian Gulf, about $1 per gallon. The prices of kerosene, diesel and cooking gas have seen similar or steeper increases. Diesel costs about 38 cents per gallon.

Though that may seem cheap to Americans, wages in Iraq are far below those in the United States. Employees in government ministries, for example, earn about $130 a month on average, putting them among the top earners in Iraq. Millions of other Iraqis live in poverty, relying on food handouts from the government. About a fourth of all Iraqi households subsist on less than $1 a day.

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