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Stability versus Sustainability: Energy Policy in the Gulf Monarchies

Jim Krane

Year: 2015
Volume: Volume 36
Number: Number 4
DOI: 10.5547/01956574.36.4.jkra
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Abstract:
Over the past half-century, production from vast reserves of hydrocarbons has transformed the once destitute Persian Gulf monarchies into developed states with comfortable lifestyles. However, longstanding policies that stimulate energy demand in these states are diverting an ever-larger share of resource production into domestic markets, threatening the region's chief export and biggest contributor to GDP. Five of these six sheikhdoms must soon choose between maintaining energy subsidies and sustaining exports. Rising domestic demand for natural gas, once considered nearly free, has already forced some states to shift to higher-cost resources, including imports. For now, governments have absorbed these costs and insulated consumers from higher prices. This practice only intensifies the pressure on exportable resources. As hydrocarbon production reaches a plateau, domestic consumption will gradually displace exports. Politically difficult reforms that moderate consumption can therefore extend the longevity of exports, and perhaps, the regimes themselves.



Inventory and Distribution of Energy Subsidies of China

Zhan-Ming Chen

Year: 2017
Volume: Volume 38
Number: KAPSARC Special Issue
DOI: 10.5547/01956574.38.SI1.zche
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Abstract:
To provide support for the energy subsidy reform as a critical step of China's recent energy reform agenda, a comprehensive energy subsidy inventory of China is compiled and the associated distributional effect is investigated in this study. According to the results, the lower boundary estimation of annual energy subsidies of China was 90-202 billion CNY, equivalent to 0.22%-0.37% of GDP or 0.95%-1.21% of government expenditure, during 2010-2014. Thanks to the specific subsidies provided to rural grid construction and transportation, 72% of the energy subsidies were distributed to residents in 2012, while fixed capital and export carried another 13% and 10%. Poorer urban household received higher energy subsidy ratio through dwelling and food expenditures, but lower ratio through transportation and communication expenditures. The overall energy subsidies are slightly regressive, thus adequate reform can narrow wealth gap on the one hand and reduce budgetary pressure on the other.





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