The Environmental Cost of Global Fuel Subsidies

Davis, Lucas W.

doi:10.5547/01956574.38.si1.ldav

Cited by 24 publications

(25 citation statements)

References 31 publications

(51 reference statements)

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“…Progressively raising public capital expenditures may well function as a desirable mechanism, however, if the future oil income in the KSA happens to diminish over time, whether because of lower prices on world markets and/or lower domestic production mirroring lower world demand. While our results are in line with the partial equilibrium analysis of welfare effects of price reforms (Davis, 2017), our paper confirms that the result holds in general equilibrium. More importantly, our paper provides additional insights into intergenerational redistributive effects of higher retail energy prices that are especially useful for oil-exporting countries with young and fast-growing populations.…”

Section: Resultssupporting

confidence: 89%

Estimating the Impact of Energy Price Reform on Saudi Arabian Intergenerational Welfare using the MEGIR-SA Model

Gonand¹,

Hasanov²,

Hunt³

2019

The Energy Journal

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This paper investigates the intergenerational welfare impact of raising administered retail energy prices in Saudi Arabia, an example of an oil-exporting country with a fast growing population. To achieve this, we develop a dynamic model with overlapping generations (called MEGIR-SA), which we believe is the first empirical application of its type to be developed for an oil-exporting country. The model is used to analyze the effects of the increase in some Saudi administered energy prices implemented at the end of December 2015. In particular, the model analyzes how these price increases might affect the welfare of Saudis through a direct increase in energy expenditures, an indirect rise in Saudi public income stemming from a lower domestic demand for oil that fosters oil exports at a given level of domestic oil production, and a direct increase of the turnover of the energy sector. The two latter effects can be redistributed by the Saudi public authorities to private agents through higher current public spending and/or public investment. The analysis suggests that the increase in end-user energy prices results in a net overall favorable effect on the intertemporal welfare of all households. This mirrors the impact on the income of private agents of the surplus in public oil income associated with lower domestic consumption of oil products and recycled to private agents. Moreover, it is shown that the additional oil income associated with the increase in domestic energy prices tends to be relatively more beneficial to future generations if it is recycled through public investment. This is reinforced if the future price of oil remains relatively low. In a possible future situation of declining oil prices and domestic production, a policy that would help meet the Saudi Arabian objectives may consist of gradually increasing the fraction of the additional oil income that is recycled through public capital spending.

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Section: Resultssupporting

confidence: 89%

Estimating the Impact of Energy Price Reform on Saudi Arabian Intergenerational Welfare using the MEGIR-SA Model

Gonand¹,

Hasanov²,

Hunt³

2019

The Energy Journal

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“…Therefore, the income effect of the rebate limited the expected decrease in energy prices. As an example from another country, it was predicted that gasoline consumption would decrease by 53% in Saudi Arabia if its price were hiked to the global spot market price, an approximately 256% increase (Davis, 2017).…”

Section: Predicted Changes In Energy Consumptionmentioning

confidence: 99%

Fossil energy price and outdoor air pollution: predictions from a QUAIDS model

et al. 2020

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➢Fossil Energy price subsidy encourages overconsumption and elevates air pollution. ➢A 100% energy price hike leads to a 29% decrease in household energy consumption. ➢A 100% energy price hike leads to a 62.9 million ton reduction in air pollutants. ➢A 200% energy price hike leads to a 45% decrease in household energy consumption. ➢A 200% energy price hike leads to a 74.5 million ton reduction in air pollutants.

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“…Artificially low fuel prices also resulted from Turkmenistan's protracted subsidisation practice: Lucas Davis (2016) reported that, in 2014, a litre of gasoline bought in Turkmenistan would cost no more than US$ 0.20. Beyond energy, Turkmenistan's subsidisation system also included "water, salt, flour and other goods" (ICG 2003).…”

Section: Tapi: a Virtual Remedy For Turkmenistan's Export Crisismentioning

confidence: 99%

Turkmenistan and the virtual politics of Eurasian energy: the case of the TAPI pipeline project

Anceschi

2017

Central Asian Survey

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The Environmental Cost of Global Fuel Subsidies

Cited by 24 publications

References 31 publications

Estimating the Impact of Energy Price Reform on Saudi Arabian Intergenerational Welfare using the MEGIR-SA Model

Estimating the Impact of Energy Price Reform on Saudi Arabian Intergenerational Welfare using the MEGIR-SA Model

Fossil energy price and outdoor air pollution: predictions from a QUAIDS model

Turkmenistan and the virtual politics of Eurasian energy: the case of the TAPI pipeline project

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