Producer Fossil Fuel Subsidies

There are signs aplenty in rural Asia of the profligate use of energy - electrical and fossil fuel - but little evidence that such use is being assessed against its true costs. This is because supplying cheap power (and in some cases free power) is a valuable political lever. In rural Asia, the value of such 'support' can be judged by the scale of popular opposition to its withdrawal.

When the world's richest Indian, Lakshmi Mittal, recently visited Kolkata, the city of his youth, he was thrilled to see change. Mittal told the media that the biggest difference he saw was the many flyovers dotting the city skyline and "disciplined traffic". This is great progress, he told journalists, who promptly reported that the tycoon had given the city's road and traffic management a big thumbs up.

The European Union fisheries sector is firmly part of the global fisheries crisis. In Europe more than 80% of known resources are over-fished, while overseas EU fleets have done more than their share to bring commercial productivity of the oceans to an all-time low.

Direct payments were introduced during the CAP reform of 1992, allowing a transition from the earlier production-oriented CAP toward policies intended to promote rural restructuring and the positive externalities that can result from farm-related activities. Direct payments introduced in 1992, as farm income support instruments, were subsidies per hectare of crops or per head of animal.

The appearance of GSI's recent survey of how OECD economies are pouring billions into subsidising biofuels provides a good time to take stock of the GSI project.   Ours is not an ideological crusade against subsidies. Subsidies are a perfectly legitimate policy tool. Spending public money to advance private ends can sometimes make sense. But those who claim that have to provide hard evidence.

The U.S. Congress is in the process of enacting its new federal legislation in areas of agricultural and energy policy. In July, the House Agriculture Committee passed its version of the farm bill, while the Senate will tackle its version in September. Meanwhile, both Houses have passed quite different versions of the energy bill. These bills will also need a stamp of approval from the Executive Branch in the fall. Subsidy Watch has asked three experts to highlight what they consider the good and bad in these bills.

Many countries in the developing world are concerned about the impact of high oil prices on their economic growth. This is the case not only in Asia, but also in Latin America, where subsidies are often used to lower the consumer price of petroleum products, at heavy cost to public budgets.

A jump in fuel prices is never welcome by the general populace. Yet in Nigeria, where fuel prices are regulated, the government has recently allowed the price of refined petroleum products' to rise, and is prepared to continue doing so. The Nigerian government routinely imports petroleum and sells these imports at below cost on the domestic market to keep price levels down.