Subsidizing Fuel: Still The Worst of Our Policies


0303joeyThe Boston Globe shows why Fuel Subsidies are a global problem:

The tragedy of fuel subsidies is that the half-a-trillion dollars that nations around the globe devote to them could be much better used, as research directed by my organization, the Copenhagen Consensus, shows.

The UN has adopted a wide range of developmental targets to improve conditions for the world’s poorest people by 2030. We asked top economists worldwide, including several Nobel laureates, to analyze the social, economic, and environmental costs and benefits of all these targets. In trying to figure out where each dollar of spending could do the most good, we’ve found that doing away with fossil fuel subsidies would be one of the most beneficial actions developing countries could take.

Our research, by economists Isabel Galiana and Amy Sopinka, finds that every dollar diverted away from energy subsidies would bring $15 in benefits. The billions of dollars governments would save could benefit hundreds of millions of people by improving health, nutrition, and education instead, all while slashing CO2 emissions, pollution, and congestion.

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  1. The only price that will completely stop smuggling is the true market price, which with a dollar at around $1000 bolivares, and a gas price of around $2 dollars per gallon (like 60 cents per liter), would come to around 600 bolivares per liter.

    Of course this is really rough and done in only a couple minutes. The price to stop smuggling would likely be lower (due to the costs associated with the smuggling, risk, and similar factors), and depend on the gas prices for the neighboring countries, but still gas prices in Venezuela would need to increase dramatically to at least somewhat reduce smuggling.

  2. Sorry, I have to disagree. While the fuel subsidies may be the stupidest policy, it is the currency controls that win my prize for the “worst”.

  3. Dear Quico:

    I’ve been a minor stockholder in Gold Reserve, Inc. (GRZ) for around 25 years.

    The km88 Brisas-Christinas joint venture looks to me like a huge benefit to both me personally and to Venezuela if the pols on both sides realize they share the same guillotine. Political nonsense like “it’s our gold, don’t sell it” is the same as “it’s our oil, don’t sell it”.

    If you need more biased opinion you know where I am.

    Warmest Regards to You and Yours and of course Katy,



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