<< Chapter < Page Chapter >> Page >

And with deeply underpriced energy in Venezuela there has been very rapid and unsustainable rates of growth in energy consumption. By 2013, subsidies to domestic consumers of fossil fuels reached $28 billion, or more than 7% of GDP, a far greater percentage than expenditures on education or health.

Some believe that the demand for energy for vehicle use is very inelastic even in the longer run, so that higher prices for gasoline and diesel fuel would have little effect on consumption. Experience worldwide clearly shows that this is not true. Rather, heavy subsidies on fossil fuels lead to very significant overconsumption. Any doubts as to this fact may be easily dispelled by comparing the pattern of fossil fuel consumption in the Gulf States of the Mideast with that of the rest of the world. These countries are major producers of oil: Saudi Arabia, Kuwait, Qatar, Bahrain and the United Arab Emirates. All of these countries have deeply underpriced gasoline and diesel fuel for nearly a half centiury. While they have only about 1% of the world’s population, inhabitants consume 5% of global oil supplies annually. Jim Krane, Guzzling in the Gulf , Foreign Affairs , November 2014. This is because the heavy subsidization has caused consumption of fossil fuels in this region to grow at 8 percent per year since 1972, compared to only 2% for the rest of the world.

While heavy subsidies on energy consumption have been near universal among other nations as well, including such emerging ones as Nigeria and Venezuela, several developed nations.

However, many countries including the United States also subsidize consumption of fossil fuels, typically in the form of gasoline and diesel fuel taxes that are much lower than the marginal cost of road use. But in rich nations these subsidies amount to only about $25 Billion per year, or about $25 per capita. Poor nations (in 2007) spent $310 billion on such subsidies.

Per capita subsidies for energy consumption in many emerging nations on a per capita basis have been substantial, as shown in Table 15-1.

Table 15-1 per capita subsidies for energy use (2011)
Country Per Capita
Saudi Arabia $1,036
Iran $ 786
Venezuela $ 647
Russia $ 359
Indonesia $ 102
Egypt $ 11
Average for all developed nations $ 25

The subsidies also constitute a sizeable share of GDP in nearly a dozen other nations, ranging from 11% or more in Bahrain, Egypt, Iran and Ecuador, and as low as 2.5% in India or 2% in Mexico.

Table 15-2 fossil fuel subsidies (11 nations as percent of gdp (2011 and 2013)
Country Subsidies as % GDP
Bahrain 12.5 (2013)
Egypt 11 (2011) 6.5 (2013)
Ecuador 11 (2011) 6.5 (2013)
Venezuela 7 (2013)
India 2.5% (2013)
Iran 11.5 (2011)
Jordan 4.5 (2013)
Kuwait 9 (2013)
Mexico 2 (2011)
Morocco 4 (2013)
Saudi Arabia 7 (2011)
Tunisia 4 (2013)
Source: The Economist, Various Issues 2011, 2013.

The subsidies are usually justified by the claim that they help poor consumers of fossil fuel. As shown below, this claim is incorrect. But we do know that the subsidies vastly increase fossil fuel consumption and pollution, though their effects on encouraging greater vehicle use. Also the subsidies contribute to the growth of greenhouse gasses from combustion of fossil fuels. They are also very expensive in the public budgets of nations that use them.

Questions & Answers

I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
How we are making nano material?
what is a peer
What is meant by 'nano scale'?
What is STMs full form?
scanning tunneling microscope
how nano science is used for hydrophobicity
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
what is differents between GO and RGO?
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
The nanotechnology is as new science, to scale nanometric
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
what school?
biomolecules are e building blocks of every organics and inorganic materials.
anyone know any internet site where one can find nanotechnology papers?
Damian Reply
sciencedirect big data base
Introduction about quantum dots in nanotechnology
Praveena Reply
what does nano mean?
Anassong Reply
nano basically means 10^(-9). nanometer is a unit to measure length.
do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
Damian Reply
absolutely yes
how to know photocatalytic properties of tio2 nanoparticles...what to do now
Akash Reply
it is a goid question and i want to know the answer as well
characteristics of micro business
for teaching engĺish at school how nano technology help us
How can I make nanorobot?
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
Privacy Information Security Software Version 1.1a
Got questions? Join the online conversation and get instant answers!
Jobilize.com Reply

Get the best Algebra and trigonometry course in your pocket!

Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Economic development for the 21st century' conversation and receive update notifications?