Globally, fossil fuels subsidies are sticking around

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With the Paris climate agreement, participating nations have made a commitment to curb greenhouse gas emissions caused by burning of coal, oil, and gas. Removing subsidies for fossil fuels is thought to be one of the most-cost-effective methods of progressing towards that goal. Implementing taxes on these energy sources would go further, but for now, it would be progress if we could just stop making it artificially inexpensive to use fossil fuels.

Unfortunately, it is unclear if these recommendations are being followed, since government self-reporting has been incomplete and unreliable. Without a consistent way to measure these taxes and subsidies, it is difficult to determine whether any progress has been made towards fossil fuel price reform.

Get gas

In a new investigation, a team of researchers used monthly data on retail gasoline prices in countries across the world to determine the net tax or subsidy placed on a liter of gasoline by their governments. Since gasoline is sold directly to consumers in all countries, retail prices provide an indication of underlying costs. And the cost of gasoline is relatively constant; country-to-country differences in gasoline quality are minimal and the price of oil acts as what's effectively a single world reference price. So it's possible to use the data to understand the influence of policy changes on gasoline consumption.