EconPapers    
Economics at your fingertips  
 

Oil consumption subsidy removal in OPEC and other Non-OECD countries: Oil market impacts and welfare effects

Finn Roar Aune (), Kristine Grimsrud, Lars Lindholt, Knut Einar Rosendahl () and Halvor Briseid Storrøsten

Energy Economics, 2017, vol. 68, issue C, 395-409

Abstract: This paper studies the oil market effects of phasing out oil consumption subsidies in the transport sector. Welfare effects in different countries are also examined. The paper further investigates potential feedback mechanisms of oil subsidy removal via lower oil prices in the global oil market, which may stimulate oil consumption in other regions. An intertemporal numerical model of the international oil market is applied, where OPEC-Core producers have market power. The major subsidisers of oil are OPEC countries, and the effects of subsidy removal here are quite pronounced. Consumption of oil in the transport sector of OPEC countries declines significantly. As a result, the global oil price falls slightly, and other regions increase their oil consumption to some degree. Although OPEC consumers are worse off by the subsidy removal, total welfare in OPEC increases due to higher profits from oil production.

Keywords: Fossil fuel subsidies; Transport; Oil market; Market power; Distribution; Feedback mechanisms (search for similar items in EconPapers)
JEL-codes: D42 Q54 R48 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988317303699
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Oil consumption subsidy removal in OPEC and other Non-OECD countries. Oil market impacts and welfare effects (2016) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:68:y:2017:i:c:p:395-409

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-10-04
Handle: RePEc:eee:eneeco:v:68:y:2017:i:c:p:395-409