Earth Equity News

Oil Subsidies are Keeping Price of Oil High. Editorial, NYTimes, August 1, 2008. "It is not too surprising that oil prices have retreated from the lofty highs of more than $140 a barrel reached in July. Energy consumption is falling... [and] Americans, the world's most avid gas guzzlers, [have finally responded by driving] about 10 billion miles less in May than they did [during the same month in 2007]... [But] unfortunately... across the developing world, governments are subsidizing energy, blunting the incentive to conserve by keeping prices low... Venezuela and Egypt are forecast to spend more than 5% of their total economic output on subsidies this year [and] Indonesia... almost as much... While demand for oil in the rich world is expected to fall about 1% this year, consumption in emerging and developing countries is forecast to rise 3%... Governments in developing countries say they must shield the poor from high energy prices. They worry that eliminating subsidies might lead to inflation... But these subsidies are misguided and mainly benefit the well-off, who own big cars and fly in jets, as well as energy-intensive industries, which are not usually those that create most jobs. [Oil subsidies] are expensive, sucking in public money that might be better used on... health care or education. And they get costlier as the price of oil rises... Subsidies are a big factor keeping world oil prices high. Outside of the Middle East and some parts of Texas, this is in nobody's interest."