Reforming Fuel Pricing in an Age of $100 Oil

Increases in world oil prices since 2004 have challenged consumers and oil-importing countries across the world. Oil prices temporarily fell sharply in 2009, only to triple three years later. The oil import share of gross domestic product rose by nearly half among net oil importers in just two years between 2009 and 2011. Governments that control oil product prices have come under pressure to intervene by keeping domestic prices low and effectively subsidizing consumers. This study focuses on the evolving role of oil in national economies, particularly those of developing countries, and proposes a menu of options for drawing a roadmap for pricing policy reform for oil products. In light of events since 2009, it examines how recent price movements have affected countries' vulnerability to world oil price increases, how governments have adjusted domestic fuel prices in response, the consequences of the policy responses, other coping mechanisms to deal with high oil prices and price volatility, the roadblocks to reforming pricing policy, and how to deal with them. This report suggests a menu of options for moving away from sectoral subsidies to market-based pricing, accompanied by an integrated social protection program and complementary policies to reduce consumption through efficiency improvement and fuel diversification. Sending the right price signals and reducing consumption can bring many benefits, ranging from greater supply security to less congestion and pollution from road transport. This report can help policy makers conduct more informed national dialogues on managing fuel pricing and the political economy around it.

Bibliographic Details

Main Author:	Kojima, Masami
Language:	English en_US
Published:	World Bank, Washington, DC 2013-01
Subjects:	ADVERSE EFFECTS, AGRICULTURE, AIR POLLUTION, APPROACH, ATMOSPHERIC PRESSURE, AVAILABILITY, AVERAGE PRICE, AVERAGE PRICES, BALANCE, BARRELS PER DAY, BASE YEAR, BENCHMARK, BLACK MARKET, BLACK MARKETS, CASH FLOW, COLLUSION, COMMERCIALIZATION, COMMODITIES, COMMODITY, COMMODITY PRICE, COMPETITIVE MARKET, COMPETITIVE MARKETS, CONFIDENTIALITY, CONSUMER PRICE, CONSUMER PRICE INDEX, CONSUMERS, CONTROLLED PRICES, CORPORATE TAX, CRUDE OIL, CURRENCY APPRECIATION, CURRENT ACCOUNT BALANCE, DECISION MAKING, DELIVERY MECHANISM, DEREGULATION, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT AGENCY, DIESEL, DIESEL FUEL, DIVIDENDS, DOMESTIC INFLATION, DOMESTIC MARKET, DOMESTIC MARKETS, DOMESTIC OIL, DOMESTIC PRICE, DOMESTIC PRICES, ECONOMIC DEVELOPMENT, ECONOMIES OF SCALE, EFFICIENCY IMPROVEMENT, ELECTRICITY, ENERGY CONSERVATION, ENERGY CONSUMPTION, ENERGY USE, ETHANOL, EXCHANGE RATE, EXPENDITURE, EXPENDITURES, FAIR, FAIR TRADING, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL CONTRACT, FINANCIAL CRISIS, FOOD PRICES, FOSSIL, FOSSIL FUEL, FUEL, FUEL OIL, FUEL PRICES, FUEL SUPPLY, FUEL SWITCHING, FUEL TYPE, FUTURE PRICES, FUTURES, GAS, GASOLINE, GASOLINE PRICE, GASOLINE PRICES, GDP, GDP PER CAPITA, GLOBAL MARKET, GLOBALIZATION, GOOD GOVERNANCE, GOVERNMENT INTERVENTION, GOVERNMENT INTERVENTIONS, GOVERNMENT INVOLVEMENT, GROSS DOMESTIC PRODUCT, HYDROPOWER, HYDROPOWER GENERATION, INCOME, INCOME GROUP, INCOME GROUPS, INCOME TAX, INEFFICIENCY, INFLATION, INFRASTRUCTURE INVESTMENTS, INSTITUTIONAL CAPACITY, INSURANCE, INTERNATIONAL COOPERATION, INTERNATIONAL MARKET, INTERNATIONAL TRADE, KEROSENE, LIQUID FUELS, LOCAL CURRENCY, LOW-INCOME COUNTRIES, MACROECONOMIC PERFORMANCE, MARKET CONCENTRATION, MARKET CONDITIONS, MARKET DISTORTIONS, MARKET INCENTIVES, MARKET PRICES, MARKET STRUCTURE, MERIT GOOD, MIDDLE-INCOME COUNTRIES, MONOPOLIES, MONOPOLY, NATIONAL ECONOMIES, NATURAL DISASTERS, NATURAL GAS, NATURAL GAS CONSUMPTION, NATURAL GAS PRICES, NATURAL GAS PRODUCTION, NATURAL MONOPOLIES, NET OIL, OIL, OIL COMPANIES, OIL COMPANY, OIL CONSUMPTION, OIL DEMAND, OIL EXPORTERS, OIL EXPORTS, OIL FUELS, OIL IMPORTS, OIL INDUSTRY, OIL INFRASTRUCTURE, OIL MARKETS, OIL PRICE, OIL PRICES, OIL PRODUCING, OIL PRODUCING COUNTRIES, OIL PRODUCTION, OIL PRODUCTS, OIL REFINING, OIL SUPPLY, OPPORTUNITY COST, OPPORTUNITY COSTS, OUTPUT, PETROLEUM, PETROLEUM GAS, PETROLEUM INDUSTRY, PETROLEUM PRODUCTS, POLITICAL ECONOMY, POLITICAL SYSTEM, POLLUTION, POVERTY ALLEVIATION, POWER, POWER GENERATION, POWER PARITY, POWER SECTOR, POWER SHORTAGES, PRICE ADJUSTMENT, PRICE ADJUSTMENTS, PRICE BAND, PRICE BANDS, PRICE CEILINGS, PRICE CHANGE, PRICE CHANGES, PRICE COMPETITION, PRICE CONTROL, PRICE CONTROLS, PRICE DECREASES, PRICE EFFECT, PRICE INCREASE, PRICE INCREASES, PRICE LEVEL, PRICE LEVELS, PRICE MOVEMENTS, PRICE OF OIL, PRICE REGULATION, PRICE RISKS, PRICE SPIKES, PRICE STABILITY, PRICE STABILIZATION, PRICE SUBSIDIES, PRICE SUBSIDY, PRICE VARIATION, PRICE VOLATILITY, PRICING MECHANISMS, PRICING POLICIES, PRICING POLICY, PRICING POLICY REFORM, PRICING REFORM, PROFIT MARGINS, PUBLIC UTILITIES, PURCHASING, PURCHASING POWER, REGRESSION ANALYSIS, REGULAR GASOLINE, REMOTE AREAS, RETAIL, RETAIL PRICES, SALE, SALES, SAVINGS, SINGLE MARKET, SOCIAL PROTECTION, SOCIAL SAFETY NETS, SPOT PRICE, SPOT PRICES, STABLE PRICES, SUBSTITUTES, SUPPLIERS, SUPPLY CHAIN, SUSTAINABLE ENERGY, TARIFF STRUCTURE, TAX, TAX EXPENDITURES, TAX RATES, TAX REVENUE, TAXATION, TRACK RECORD, TRANSPARENCY, TRANSPARENCY INITIATIVE, VEHICLES, WHOLESALE GASOLINE, WHOLESALE PRICES, WORLD MARKET,
Online Access:	http://documents.worldbank.org/curated/en/2013/01/18019602/reforming-fuel-pricing-age-100-oil https://hdl.handle.net/10986/16524
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