Yes, they really do exist. Subsidies for the use of fossil fuels. Obviously this is insane when we\’ve also got huge subsidies for the use of non-fossil fuels.
The thing is though, it\’s different countries offering the different subsidies. It\’s the rich western countries subsidising non-fossil while the fossil fuel subsidies are all in poor and developing nations.
Like Iran for example:
However, one area that could lead to serious damage to the economy is the price of diesel. As of Sunday, the Iranian government increased its price from 1.6c to 15c a litre – a 900% increase. It is envisaged that soon this will increase to 35c.
It\’s said (by a real international agency, not mere scuttlebutt) that Iran actually coughs up $100 billion a year in such subsidies to gas and oil use. It\’s an entirely insane level of subsidy in an economy of that size: some 25% of the economy at market exchange rates, perhaps 10% at PPP.
Removing such a distortion is obviously good economics. But as so often is true, it could well be what turns the masses against the Islamic government and is therefore bad politics.
Update for Matthew.
That\’s the Tehran skyline. I\’d take it as a resonable argument against the Iranian Govt subsidising the use of fossil fuels.