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Energy Subsidies Reforms at OAPEC Member Countries
in light of Current Global Oil Market Developments
Economic policies adopted by most OAPEC
member countries focus on subsidizing basic
goods, especially energy. These goods are
made available at affordable prices for citizens,
institutions, and local companies, within these
countries’ efforts to realize prosperity for their
people by avoiding the negative impact of fuel
and petroleum products price fluctuations from
one side, and helping local producers to reduce
production costs, especially the industrial
sector, to benefit the end consumer from the
other side.
International Monetary Fund (IMF)
estimations indicate that the total size of energy
subsidies in the OAPEC member countries has
reached about $278.8 billion in 2011. The total
energy subsidies before taxes claimed $178
billion, while tax subsidies claimed about $100
billion. Oil products and electricity subsidies
have claimed a big share of the total energy
subsidies in OAPEC member countries.
An OAPEC study entitled “Energy Subsidies
in OAPEC Member Countries and their
Implications for their National Economies”
indicated that energy subsidy policies achieved
positive results in the beginning but as time
lapsed, negative signs started to appear,
especially in terms of the huge and rapid increase
of domestic energy consumption rates, which
are the highest worldwide. This can be mainly
attributed to the rapid increase in population,
EDITORIAL