A team of researchers from the Bren School of Environmental Science and Management of the University of California, Santa Barbara and the University of California, Los Angeles have evaluated the effectiveness of reforms aimed at reducing the production and consumption of conventional fuels and developing renewable energy in line with the UN Sustainable Development Goals and the Paris Climate Accords. The study was led by Paasha Mahdavi, Director of the Energy Governance and Political Economy Lab at UC Santa Barbara and assistant professor at the McCourt School of Public Policy at Georgetown University. Among its co-authors was Michael L. Ross, professor at the Department of Political Science and the Institute of the Environment and Sustainability at the University of California, Los Angeles.
As part of the study, the authors collected data on gasoline prices from 2000 through 2023 in 21 major oil- and gas-producing countries that heavily subsidized fuel and accounted for 97% of global gasoline subsidies in 2003–2015. The researchers used official documents, industry reports and media publications in order to calculate the level of subsidies based on the difference between actual and market prices for each month from January 2016 to December 2023. This allowed them to identify cases of one-off price increases and transition from fixed government regulation to market pricing. They determined the frequency and duration of reforms, as well as the reasons for their possible failure in each country.
The analysis showed that the frequency and ambition of reforms in these countries grew after 2016 compared to the previous period, although their effectiveness decreased significantly. Some 91% of reforms ended in failure within three years. In 12 countries, fuel subsidies grew even further, although no significant changes were recorded in the rest of the countries under review. In a third of cases, reforms were outright canceled, often in response to mass protests. Otherwise, their effect was offset by inflation, depreciation of national currencies and rising oil prices worldwide. The most ambitious reforms had the highest risk of failure. While it remains to be seen how sustainable other types of climate policy are, the removal of fuel subsidies continues to be noticeable and painful for citizens, making these reforms extremely unpopular. In general terms, the study found that efforts to reduce gasoline subsidies have been largely unsuccessful.
The authors of the study concluded that cheap conventional fuel will continue to enjoy broad public support and that any attempts to change this will meet with resistance. In this connection, they recommended focusing on reducing the use of the most harmful types of fuel, such as coal, instead of completely removing subsidies. They also stressed the importance of finding alternative ways to reduce demand for subsidized fuel by, for instance, toughening fuel efficiency standards, fostering public transportation and incentivizing the transition to electric vehicles.
