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Issues in Domestic Petroleum Pricing in Oil-Producing Countries

Author

Listed:
  • Sanjeev Gupta
  • Benedict J. Clements
  • Kevin Fletcher
  • Gabriela Inchauste

Abstract

This paper discusses issues relating to the domestic pricing of petroleum in oil-producing countries. It finds that in most major oil-exporting countries, government policies keep domestic prices below free-market levels, resulting in implicit subsidies that equaled 3.0 percent of GDP, on average, in 1999. Moreover, the paper argues, these petroleum subsidies are inefficient and inequitable-entailing substantial opportunity costs in terms of forgone revenue or productive spending-and also procyclical, complicating macroeconomic management. Nonetheless, the elimination of petroleum subsidies is often politically difficult, although countervailing measures and publicity campaigns can help engender support for reform.

Suggested Citation

  • Sanjeev Gupta & Benedict J. Clements & Kevin Fletcher & Gabriela Inchauste, 2002. "Issues in Domestic Petroleum Pricing in Oil-Producing Countries," IMF Working Papers 02/140, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:02/140
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    References listed on IDEAS

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    1. Freund, Caroline L. & Wallich, Christine I., 1995. "Raising household energy prices in Poland : who gains? who loses?," Policy Research Working Paper Series 1495, The World Bank.
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    Citations

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    Cited by:

    1. Mehrara, Mohsen, 2007. "Energy consumption and economic growth: The case of oil exporting countries," Energy Policy, Elsevier, vol. 35(5), pages 2939-2945, May.
    2. Daniel Leigh & Moataz El-Said, 2006. "Fuel Price Subsidies in Gabon; Fiscal Cost and Distributional Impact," IMF Working Papers 06/243, International Monetary Fund.
    3. repec:mbr:jmonec:v:9:y:2014:i:2:p:64-85 is not listed on IDEAS
    4. Shahabuddin M Hossain, 2003. "Taxation and Pricing of Petroleum Products in Developing Countries; A Framework for Analysis with Application to Nigeria," IMF Working Papers 03/42, International Monetary Fund.
    5. Lucas Bretschger & Simone Valente, 2013. "International Resource Tax Policies Beyond Rent Extraction," CER-ETH Economics working paper series 13/185, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    6. Charles E. McLure, Jr., 2013. "Reforming Subsidies for Fossil Fuel Consumption: Killing Several Birds with One Stone," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1312, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Arze del Granado, Francisco Javier & Coady, David & Gillingham, Robert, 2012. "The Unequal Benefits of Fuel Subsidies: A Review of Evidence for Developing Countries," World Development, Elsevier, vol. 40(11), pages 2234-2248.
    8. Lucas Bretschger & Simone Valente, 2010. "Endogenous Growth, Asymmetric Trade and Resource Taxation," CER-ETH Economics working paper series 10/132, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    9. Montfort Mlachila & Edgardo Ruggiero & David Corvino, 2016. "Unintended Consequences; Spillovers from Nigeria’s Fuel Pricing Policies to Its Neighbor," IMF Working Papers 16/17, International Monetary Fund.
    10. Daniel Artana, Marcelo Catena y Fernando Navajas & Fernando Navajas & Marcelo Catena, 2007. "El Shock de los Precios del Petróleo en América Central: Implicancias Fiscales y Energéticas," Working Papers 94, FIEL.
    11. Wolf, C, 2008. "Does Ownership Matter? The Performance and Efficiency of State Oil vs. Private Oil (1987-2006)," Cambridge Working Papers in Economics 0828, Faculty of Economics, University of Cambridge.
    12. Smeets, Niels, 2017. "Similar goals, divergent motives. The enabling and constraining factors of Russia's capacity-based renewable energy support scheme," Energy Policy, Elsevier, vol. 101(C), pages 138-149.
    13. Hochman, Gal & Zilberman, David, 2015. "The political economy of OPEC," Energy Economics, Elsevier, vol. 48(C), pages 203-216.
    14. David Coady & Taimur Baig & Joseph Ntamatungiro & Amine Mati, 2007. "Domestic Petroleum Product Prices and Subsidies; Recent Developments and Reform Strategies," IMF Working Papers 07/71, International Monetary Fund.
    15. Julien Daubanes & Lisa Leinert, 2012. "Optimum Tariffs and Exhaustible Resources: Theory and Evidence for Gasoline," CER-ETH Economics working paper series 12/163, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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