In any case, this requirement in the US is likely to be small potatoes compared to oil-producer countries mentioned below:
New drive to reduce fossil fuel subsidies
Fossil fuel subsidies cost governments in emerging markets more than $500 billion every year and are a major contributor to climate change, according to the International Energy Agency (IEA) and International Monetary Fund (IMF).
The biggest subsidies are concentrated in the Middle East, North Africa, Asia and parts of Latin America, according to the IEA’s Fossil Fuel Subsidy Database (iea.org/subsidy/index.html).
Moreover energy-exporting countries accounted for three quarters of all consumption subsidies in 2012, according to the IEA and OPEC members account for more than half the world’s subsidies.
Subsidies account for 82 percent of the cost of electricity and fuel in Venezuela, 80 percent in Libya, 79 percent in Saudi Arabia, 74 percent in Iran, and 56 percent in Iraq and Algeria. By contrast, the average rate of subsidy is just 18 percent in India and 3 percent in China.
In cash terms the world’s biggest subsidies are in Iran, Saudi Arabia and Russia, all of which are major oil producers. Subsidies cost these three countries a combined total of $180 billion per year in 2012.
According to the IEA, phasing out subsidies for oil, gas and electricity and aligning prices with international benchmarks would cut growth in energy demand by 5 percent and carbon dioxide emissions by 2 billion tons a year by 2020 — equivalent to the current combined emissions of Germany, France and the UK.
Raising gasoline, diesel and kerosene tariffs to market levels would save 4.7 million barrels of oil a day by the end of the decade (“World Energy Outlook 2011“).
Cutting subsidies would also dramatically improve government budgets. Of 58 countries which subsidised gasoline, diesel or kerosene in 2010, 46 were running budget deficits, and in 27 cases the deficit amounted to more than 3 percent of GDP, the IMF explained in a staff note highly critical of the burden on taxpayers.
Halving subsidies would have reduced the average deficit from 2.1 percent of GDP to just 0.8 percent (“Petroleum product subsidies: cost, inequitable and rising” Feb 2010).
Subsidies often crowd out spending on infrastructure, development and social welfare. Indonesia spends more on fuel subsidies than on education or health care.
And in the biggest petro-states, including Saudi Arabia, Iran, Iraq, Russia, Kuwait, Venezuela, Libya and Algeria there has been virtually no progress toward more sensible energy pricing.
The result is a prodigious waste of energy. The petro-states are among the world’s biggest and fastest-growing oil consumers and some are now having to import natural gas for power generation to meet electricity demand. And the greenhouse emissions are enormous.
It is all ultimately unsustainable. “The state itself is teaching people to waste resources,” complains one Kuwaiti newspaper editor. But subsidy reform is probably impossible without meaningful political and social change.
arabnews