Denny wrote:Well, one other way things cold be made more logical is to have a form of the GST (or whatever its called in these places) rebate paid to lower income people, not tied to oil consumption.
It would even be smarter for these coutnries to subsidize food. But, not oil.
I did hear of the Iranian riots, but perhaps the government there did not build the case well in their budget before parliament first.
Regardless of the issues, I cannot see any minister of finance going along with a crazy scheme of using government money to buy oil products, when it cannot even control their use, and when it could upset the budget balance. Like any other outfit, the government wants to make a profit, see the cash flows in equaling those out at least, and I'd think that would apply to all countries.
Man other large oil producers, such as the U.S., Norway and Canada don't subsidize oil consumption, except perhaps indirectly by highway spending.
1. The United States is a massive oil importer, subsidizing oil use at this point would be ludicrous. Moreover, the United States indirectly subsidized oil use up until the 1970s and prices were very low. At that point, the Texas Railroad Commission (the OPEC of the USA) allowed 100% allowable production, also known as, America Peaked!
2. Norway has a massive sovereign wealth fund which is fed by oil revenues. In the future, this money will subsidize future consumption.
3. Canada and the UK get a large budget subsidy from oil revenue. This keeps taxes lower than they would be otherwise, allowing for more private consumption.
Essentially, it is impossible to be a large oil producer without using oil money to subsidize your economy.
Oil is just so darn profitable that it's existence becomes a curse if your economy can't diversify away from it in time.