China - Gas Subsidies Costing Them

[IntenseOperator]

Heard about these countries that have had to cover the increase in gas prices, instead of their general populations today. This article is from June but covers some good points. I'll post another if I find one today. This energy policy masks the actual inflation of the country and things get nasty if the subsidy is recinded.

"The people need to wonder, who pays for the subsidies?" said Louis Vincent Gave, chief executive of GaveKal, a research and asset management company. "Most Asian countries are printing money to pay for them."

http://www.iht.com/articles/2008/06/04/business/rtrcol05.php

 

[IntenseOperator]

Studies by both the World Bank and the OECD indicate that getting rid of energy subsidies would raise real incomes globally by three-quarters of one per cent, although the gains would be unevenly distributed. Most developing countries would be better off; in particular, the former Soviet Union and Eastern European countries would benefit, with an expected increase in income of 20 per cent. The major exception would be China, where the deterioration in terms of trade might result in an average real income loss of just below one per cent per year. According to the Bank and the OECD, the other losers would be energy-exporting countries, with an estimated decrease in real income of five per cent annually. However, a specific study of three such oil exporters - Algeria, Iran and Nigeria - concludes that bringing domestic oil prices up to world levels would generate $69 billion annual income. That's because removing energy subsidies would improve the efficiency of domestic oil use, resulting in savings of between 10 per cent and 18 per cent of current production, which could then be sold abroad.(Source: same as above)

http://peakoildebunked.blogspot.com/2005/10/120-gasoline-subsidies.html