Issues in Domestic Petroleum Pricing in Oil-Producing Countries

Author/Editor:

Sanjeev Gupta ; Benedict J. Clements ; Kevin Fletcher ; Gabriela Inchauste

Publication Date:

August 1, 2002

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 2002/140

Subject:

English

Publication Date:

August 1, 2002

ISBN/ISSN:

9781451856132/1018-5941

Stock No:

WPIEA1402002

Pages:

31

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