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544 billion dollars in subsidies for petrol in the world in 2012

Discussion in 'Energy, Environment, and Policy' started by Tharo, Aug 4, 2014.

  1. Tharo

    Tharo Member

    Oct 13, 2012
    Madrid, Spain
    I read this in a German newspaper, I put here the link to the translation with google translate:

    Energy - especially gasoline - is subsidized world. In emerging markets, with up to a fifth of the state budget. The consequences for the climate are significant, the great social injustice.
    W hen Gas is cheaper to breastfeed as his thirst, something must be wrong.Converted costs less than a penny a gallon of gasoline in Venezuela. In order for a tank of gas is cheaper than a bottle of water and just about everything else in the Central American country with an inflation rate of around 50 percent. The reason for the low fuel costs: Huge subsidies, which the government relies for decades the price of gasoline, and designed to ensure that even the poor can afford a tank of gas.More than 20 billion euros can be the cost Venezuela a year, says the International Energy Agency (IEA).

    Other governments are digging deep into their pockets, so that gasoline remains cheap. From Nigeria to Saudi Arabia to Russia press countries around the world prices. A total of $ 544 billion in 2012 flowed into subsidies for fuel. This represented almost one percent of global economic output.
    An incredible waste of government money was that finds the economist Radek Stefanski from the University of Laval in Quebec, Canada. And an environmental catastrophe at that. When gasoline is so cheap, more people travel by car, and companies have little incentive to invest in efficient and clean production. According to Stefanski gasoline subsidies thus contribute blame for the threat of climate change. Around 36 percent of CO2 emissions 1980-2010 could have been prevented if oil and other fossil fuels would not have been subsidized, the economist has calculated in a recent study. Especially in populous emerging countries such as China and Russia have the subsidies, emissions may rise sharply. The IEA estimates that global CO2 emissions by 2020 could fall by six percent if subsidies for fossil fuels would be abolished.

    Previous reform attempts often ended in riots.

    However, this is not so easy. Fuel subsidies are available for many countries like a drug: In the beginning it feels good, but then one can not get away from it. Often, the subsidies will be introduced with good intentions: to help especially the poor who otherwise can not afford fuel itself. For a long time the well was not very expensive, because many subsidy schemes were set up when the oil price was still relatively low. But with every increase in oil prices was the promise to ensure low prices at the pump, more expensive. Nigeria are now almost 20 percent of its state budget for fuel subsidies. And this in a country where one in four children is malnourished under five. 2012 dared the Nigerian government an attempt to reduce the subsidies, however, ended in disaster. Through the reform, the gasoline prices doubled overnight. The result was violent mass protests that brought the government to quickly take back the law and introduce the old subsidies again.
    Other countries, it is the same experience. In Venezuela, it came to the last petrol price hike 15 years ago to street protests in which several people died. 28 attempts to abolish fuel subsidies, the International Monetary Fund (IMF) has analyzed in a study. More than half failed, mostly on the resistance of peasants and poor urban dwellers. Yet it is not the poor who benefit most from the subsidies in reality.According to the IMF low pump prices, especially the middle class and businesses benefit because they consume the most gasoline and diesel.

    India and Indonesia: steps in the right direction

    Instead of coverage to keep prices low, Governments should adopt in developing and emerging countries prefer targeted assistance programs for the poor, therefore calls for a group of IMF economists in a working paper. To avoid mass protests, could you people that are below a certain income level to compensate for the higher fuel prices with direct payments, the researchers suggest. That is not only just as subsidies, but also much cheaper. With the money that it left but the state could build hundreds of schools, hospitals and wells. They would help the poor at the end of more than a full tank.
    The seem to have recognized some politicians. The new Indonesian President Joko Widodo has promised in the election campaign, completely abolish the gasoline subsidies in the next four years. Before that time, surprisingly, no mass protests, but even won the election. And despite the fact that gasoline prices had risen by more than 40 percent last year. In India, where the gasoline subsidies have cost the state in the past year over 18 billion dollars, is the new Prime Minister Narendra Modi continues the reform begun by his predecessor Manmohan Singh. By 2016, the subsidies for diesel should be gradually abolished.
    Given the billions that are still spent on subsidies worldwide, are manageable progress. But even small steps in the right direction can make a big difference, according to economist Stefanski. "Even if fuel subsidies only to fall slightly, governments have more money, climate change is curbed and the economy can grow faster."

    Quelle: Handelsblatt Online

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