Issues in Domestic Petroleum Pricing in Oil-Producing Countries

Sanjeev Gupta, Benedict Clements, Kevin Fletcher and Gabriela Inchauste

No 2002/140, IMF Working Papers from International Monetary Fund

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.

Keywords: WP; price; country; subsidy; government; Oil; petroleum; subsidies; domestic prices; excises; fiscal policy; incidence; subsidy reform; max-min price stabilization law; world oil prices increase; transfer program; free market price; petroleum product price; reference price; Oil prices; Consumption; Energy subsidies; Fuel prices; Global (search for similar items in EconPapers)
Pages: 31
Date: 2002-08-01
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Citations: View citations in EconPapers (23)

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