Why the world needs to ban fuel subsidies

[FLPanhandle]

http://www.theglobeandmail.com/report-on-business/rob-magazine/pump-price-insanity/article24639235/

Dozens of countries, many of them poor and running hefty budget deficits, seem bent on bankrupting themselves so that consumers can buy gasoline, diesel, propane and other fuels for the price of a pack of cigarettes or less. Venezuela is hurtling toward insolvency because oil, its main export, trades about 40% below its mid-2014 price. Yet it is still the champion subsidizer. According to the Financial Times, one U.S. dollar—at black market exchange rates—will buy more than 1,000 litres of gas. The notion of conserving fuel is absurd—the hybrid Toyota Prius is not a big seller in Venezuela. The government spends about $12 billion a year on gasoline subsidies.

There is nothing commendable about fuel subsidies, unless you are a vote-buying politician. Subsidies encourage wasteful consumption, boost the output of pollutants and drain national treasuries.



If there is one global economic move that would—unambiguously—help clean up the environment, repair national finances and put the “market” back into energy markets, the removal of fuel subsidies is it. The International Energy Agency (IEA) says the global cost of fossil-fuel subsidies in 2013 was $550 billion, more than four times the incentives provided for renewable energy. That’s about the same as the GDP of Sweden or Poland.

Wealthy developed countries don’t directly subsidize fuel at the pump, but they spend fortunes in taxpayers’ money to sweeten the life of the oil and gas companies. Governments of the G20 countries—which includes Canada—spend about $88 billion a year subsidizing oil and gas exploration, Britain’s Overseas Development Institute estimates.

Low world oil prices have fossil fuel companies clamouring for even more breaks, and leaders of rich countries are responding. Vladimir Putin is propping up Russian oil giant Rosneft. Britain has slathered tax cuts on the North Sea producers, who had threatened to cut jobs and shelve projects unless their fiscal treatment became more generous. The lobbying might of U.S. shale oil producers and oil sands players in Canada will no doubt ensure similar support—just give it time.




I always said that if renewable energy got 1/2 the subsidies as Fossil Fuels, the world would be done with oil by now.

[hunter]

1. The entire U.S. Military Industrial Complex is a fuel subsidy...

... supporting the sacred link of oil and the U.S, Dollar.