Resource information
Unable to cope fully with steadily
climbing world oil prices since mid-2009, many of the 65
countries reviewed in this paper have progressed slowly or
even reversed course in reforming pricing of petroleum
products. End-user prices in July 2012 varied by two orders
of magnitude across the countries. More than two-fifths,
including some that had only recently adopted automatic
pricing mechanisms, froze the prices of gasoline, diesel, or
both for months or even years on end during the study
period. When the prices were finally adjusted, the increases
were sometimes substantial, leading to large-scale protests,
partial or full reversals of price adjustments, or softening
of pricing reform policy. Governments' attempts to keep
domestic prices artificially low -- through price control,
export or quantity restrictions, or political pressure put
on oil companies -- have helped curb inflation in the short
term, but frequently with serious negative consequences:
flourishing black markets, smuggling, fuel adulteration,
illegal diversion of subsidy funds, large financial losses
suffered by fuel suppliers, deteriorating refining and other
infrastructure, and acute fuel shortages causing
economy-wide damage. In several countries, subsidies, price
controls, and other restrictions have helped protect
inefficient refineries and oil marketers. Mitigation
responses have included fuel conservation programs; fuel
diversification, particularly liquid biofuels to substitute
gasoline and diesel; and efforts to lower costs of supply,
including strengthening infrastructure, promoting price
competition, hedging, negotiating price discounts with
exporters, and bulk procurement. Various forms of assistance
to consumers have also been offered, especially to
households, agriculture, transport, and fisheries.
