Issues in Domestic Petroleum Pricing in Oil-Producing Countries

32 Pages Posted: 31 Jan 2006

See all articles by Sanjeev Gupta

Sanjeev Gupta

International Monetary Fund (IMF) - Fiscal Affairs Department

Benedict Clements

International Monetary Fund (IMF) - African Department

Kevin Timothy Fletcher

International Monetary Fund (IMF)

Gabriela Inchauste

World Bank

Date Written: August 2002

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: Oil, petroleum, subsidies, domestic prices, excises, fiscal policy, incidence

JEL Classification: D61, H2, H5, Q43, Q48

Suggested Citation

Gupta, Sanjeev and Clements, Benedict and Fletcher, Kevin Timothy and Inchauste Comboni, Maria Gabriela, Issues in Domestic Petroleum Pricing in Oil-Producing Countries (August 2002). IMF Working Paper No. 02/140, Available at SSRN: https://ssrn.com/abstract=879933

Sanjeev Gupta (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Benedict Clements

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

Kevin Timothy Fletcher

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Maria Gabriela Inchauste Comboni

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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