IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v56y2013icp382-390.html
   My bibliography  Save this article

Why do governments subsidize gasoline consumption? An empirical analysis of global gasoline prices, 2002–2009

Author

Listed:
  • Cheon, Andrew
  • Urpelainen, Johannes
  • Lackner, Maureen

Abstract

Governments spend hundreds of billions of dollars annually to subsidize the consumption of fossil fuels without understanding the environmental and economic problems this practice creates. To shed light on these problems, we examine the case of gasoline subsidies using data on gasoline prices in 137 countries for the years 2002–2009. It is useful to study gasoline pricing because gasoline is the most important transportation fuel, and there are data for many countries for the time period of investigation. We find that major oil producers subsidize gasoline consumption by artificially reducing prices; countries with weak institutional capacity also seem to subsidize gasoline, but the effects are weaker. These results suggest that policy interventions to improve institutional capacity could help developing countries in particular reduce their fossil fuel subsidies.

Suggested Citation

  • Cheon, Andrew & Urpelainen, Johannes & Lackner, Maureen, 2013. "Why do governments subsidize gasoline consumption? An empirical analysis of global gasoline prices, 2002–2009," Energy Policy, Elsevier, vol. 56(C), pages 382-390.
    • Handle: RePEc:eee:enepol:v:56:y:2013:i:c:p:382-390
    DOI: 10.1016/j.enpol.2012.12.075
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421512011421
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2012.12.075?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John M. Piotrowski & David Coady & Justin Tyson & Rolando Ossowski & Robert Gillingham & Shamsuddin Tareq, 2010. "Petroleum Product Subsidies; Costly, Inequitable, and On the Rise," IMF Staff Position Notes 2010/05, International Monetary Fund.
    2. Gabriele, Alberto, 2004. "Policy alternatives in reforming energy utilities in developing countries," Energy Policy, Elsevier, vol. 32(11), pages 1319-1337, July.
    3. Daron Acemoglu & James A. Robinson, 2001. "A Theory of Political Transitions," American Economic Review, American Economic Association, vol. 91(4), pages 938-963, September.
    4. Beck, Nathaniel & Katz, Jonathan N., 1995. "What To Do (and Not to Do) with Time-Series Cross-Section Data," American Political Science Review, Cambridge University Press, vol. 89(3), pages 634-647, September.
    5. Maddala, G S & Wu, Shaowen, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-652, Special I.
    6. Hartley, Peter & Medlock III, Kenneth B., 2008. "A model of the operation and development of a National Oil Company," Energy Economics, Elsevier, vol. 30(5), pages 2459-2485, September.
    7. Breisinger, Clemens & Engelke, Wilfried & Ecker, Olivier, 2011. "Petroleum subsidies in Yemen : leveraging reform for development," Policy Research Working Paper Series 5577, The World Bank.
    8. G. S. Maddala & Shaowen Wu, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 631-652, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian Wolf & Michael G. Pollitt, 2008. "Privatising national oil companies: Assessing the impact on firm performance," Working Papers EPRG 0805, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Lisa Cook, 2014. "Violence and economic activity: evidence from African American patents, 1870–1940," Journal of Economic Growth, Springer, vol. 19(2), pages 221-257, June.
    3. Aladejare, Samson Adeniyi, 2022. "Natural resource rents, globalisation and environmental degradation: New insight from 5 richest African economies," Resources Policy, Elsevier, vol. 78(C).
    4. Mendoza, Miguel Ángel, 2014. "Panorama preliminar de los subsidios y los impuestos a las gasolinas y diésel en los países de América Latina," Documentos de Proyectos 37431, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Mara, Eugenia Ramona, 2021. "Drivers of the shadow economy in European Union welfare states: A panel data analysis," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 309-325.
    6. Marcus Box & Karl Gratzer & Xiang Lin, 2023. "Self-employment, corruption, and property rights: a comparative analysis of European and CEE economies," SN Business & Economics, Springer, vol. 3(1), pages 1-29, January.
    7. Niklas Potrafke, 2012. "Political cycles and economic performance in OECD countries: empirical evidence from 1951–2006," Public Choice, Springer, vol. 150(1), pages 155-179, January.
    8. Afonso, António & Jalles, João Tovar, 2019. "The Fiscal consequences of deflation: Evidence from the Golden Age of Globalization," The Quarterly Review of Economics and Finance, Elsevier, vol. 74(C), pages 129-147.
    9. Seo-Young Cho, 2012. "Integrating Equality: Globalization, Women's Rights, and Human Trafficking," Economics of Security Working Paper Series 69, DIW Berlin, German Institute for Economic Research.
    10. Plessen-Mátyás, Katharina & Kaufmann, Christoph & von Landesberger, Julian, 2021. "Funding behaviour of debt management offices and the ECB’s public sector purchase programme," Working Paper Series 2552, European Central Bank.
    11. Bruno Amable & Donatella Gatti & Elvire Guillaud, 2008. "How does Party Fractionalization convey Preferences for Redistribution in Parliamentary Democracies ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00348878, HAL.
    12. Di-Marcantonio, Federica & Morales-Opazo, Cristian & Barreiro-Hurlé, Jesús & Demeke, Mulat, 2014. "Determinants of food production in Sub Saharan Africa: the impact of policy, market access and governance," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182683, European Association of Agricultural Economists.
    13. Degryse, H.A. & Havrylchyk, O. & Jurzyk, E. & Kozak, S., 2009. "Foreign Bank Entry and Credit Allocation in Emerging Markets," Other publications TiSEM fa54a876-1262-44c9-8099-7, Tilburg University, School of Economics and Management.
    14. Christine Erhel & Charlotte Levionnois, 2013. "Labour Market Policies in Times of Crisis: A Comparison of the 1992-1993 and 2008-2010 Recessions," Documents de travail du Centre d'Economie de la Sorbonne 13060, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    15. Jürgen Bitzer & Holger Görg & Philipp J.H. Schröder, 2012. "Can Trade Really Hurt? An Empirical Follow-Up On Samuelson'S Controversial Paper," Economic Inquiry, Western Economic Association International, vol. 50(3), pages 724-738, July.
    16. Potrafke, Niklas, 2010. "The growth of public health expenditures in OECD countries: Do government ideology and electoral motives matter?," Journal of Health Economics, Elsevier, vol. 29(6), pages 797-810, December.
    17. McCarl, Bruce A. & Villavicencio, Xavier & Wu, Ximing, 2009. "The Effect of Climate Change over Agricultural Factor Productivity: Some Econometric Considerations," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49452, Agricultural and Applied Economics Association.
    18. Anne Musson, 2012. "The importance of the stakeholders’ involvement in building indicators. The case of environmental regulation in France," Working Papers hal-02947023, HAL.
    19. António Afonso & João Tovar Jalles, 2015. "Fiscal Episodes, Technological Progress and Market Power," Working Papers Department of Economics 2015/09, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    20. Luca Nunziata, 2005. "Institutions and Wage Determination: a Multi‐country Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(4), pages 435-466, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:56:y:2013:i:c:p:382-390. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.