Issues in Domestic Petroleum Pricing in Oil-Producing Countries

By Sanjeev Gupta, Benedict J. Clements, Kevin Fletcher, Gabriela Inchauste

August 1, 2002

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Sanjeev Gupta, Benedict J. Clements, Kevin Fletcher, and Gabriela Inchauste. Issues in Domestic Petroleum Pricing in Oil-Producing Countries, (USA: International Monetary Fund, 2002) accessed December 3, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Commodities, Consumption, Energy subsidies, Expenditure, Fuel prices, National accounts, Oil, Oil prices, Prices

Keywords: Consumption, Country, Domestic prices, Energy subsidies, Excises, Fiscal policy, Free market price, Fuel prices, Global, Government, Incidence, Max-min price stabilization law, Oil, Oil prices, Petroleum, Petroleum product price, Price, Reference price, Subsidies, Subsidy, Subsidy reform, Transfer program, World oil prices increase, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/140
Stock No:

WPIEA1402002
ISBN:

9781451856132
ISSN:

1018-5941

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