---- Eliminating consumer subsidies ---
Consumer subsidies designed to guarantee affordability and protect
households from the potentially large shocks of fuel price increases
end up artificially red...
ucing the price of energy and thus encouraging
overconsumption. Simulation results from Del Granado et al. (2012) show that a $0.25 per liter increase in
fuel prices causes a 4.5% decline
in household real incomes in Asia
and Pacific (Table 2.2.1). This
impact is partly direct, forcing
households to spend more on fuel,
and partly indirect, as prices paid
for goods and services swell with
higher embedded energy costs.
Most Asian countries provide
some form of subsidy to offset
harm to welfare, with subsidies
varying widely from country
to country (Figure 2.2.1).
--- PRC = People’s Republic of China.
Source: IEA 2012a.
Did you work on this visual? Claim credit!