A recent article from Economist Magazine provides some interesting commentary on current trends around the world to get rid of energy subsidies. It notes that energy subsidies have wrrecked budgets and the environment alike :
Of the $500 billion a year the IMF reckons they cost--the equivalent of four times all official foreign aid--half is spent by governments in the Middle East and north Africa, where, on average, it is worth about 20% of government revenues. The proceeds flow overwhelmingly to the car-driving urban elite. In the typical emerging economy the richest fifth of households hoover up 40% of the benefits of fuel subsidies; the poorest fifth get only 7%. But the poorest suffer disproportionately from the distortions that such intervention creates. Egypt spends seven times more on fuel subsidies than on health. Cheap fuel encourages the development of heavy industry rather than the job-rich light manufacturing that offers far more people a route out of poverty.
For all these reasons the benefits of scrapping subsidies are immense. Emerging economies could easily compensate every poor person with a handout that was bigger than the benefits they got from cheap fuel and still save money. In the process, they would help the planet. According to the International Energy Agency, eliminating fossil-fuel subsidies would reduce global carbon emissions by 6% by 2020....
[view whole blog post
]
 |
 |
 |
 |
 |
 |
|
See More
Report Abuse