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The developing nations never pass cheaper oil benefit to the end consumers. They just increase taxes to offset the decrease in price (and thats a good thing).
by option_greek 7y ago
The developing nations never pass cheaper oil benefit to the end consumers. They just increase taxes to offset the decrease in price (and thats a good thing). So there won't be any increase in consumption due to low prices.
- jdjdjjsjs 7y agoThis is also exactly correct. The actual reason is that fossil fuels are highly subsidized in most developing countries, so the only impact this has is in reducing the subsidies paid by the government exchequer.
- eej71 7y agoNot sure I understand how they can be both highly subsidized and yet highly taxed at the same time.
- SuoDuanDao 7y agoextraction companies are taxed or owned outright, end products are subsidized.
- eej71 7y agoSounds like it will just net out.
- SuoDuanDao 7y agoOnly if you tend to use as much as you produce. If you're a net exporter, it pays for a lot.
- option_greek 7y agoSome sections of society might be subsidized (poor, inputs to fertilizer industry etc) but overall the price of gas is quite high (India: $4.18 per gallon, Brazil: $4.30). Its almost at same level as California and without any activism. During the oil highs of 2011-2012, prices reached as high as $5.5 per gallon.
- PeterisP 7y agoDeveloping countries generally can't afford to subsidize fossil fuels. The only developing countries where fossil fuels are highly subsidized are the few countries with substantial domestic oil production e.g. Iran and Venezuela, not most of them.
- simonh 7y agoOk, so maybe developing nations will get a boost to government revenues. That's a trickier variable to base predictions on, depending on the level of competence or corruption in any given government.