Governments Try to Fight High Fuel Prices with Subsidies, Tax Cuts

From Far East to South America, governments have been announcing fuel subsidies to ease the pressure on consumers from the impact of skyrocketing energy prices after oil soared to 14 year highs.

Japanese industry ministry issued a temporary emergency measure in January to ease wholesale prices and tried to mitigate the rise in gasoline prices by giving subsidies of 3.4 yen per liter to distributors. Since its first application on Jan. 27, the subsidy has risen four times to finally hit the upper limit of 25 yen per liter.

The Japanese government considers extending the subsidy, which was set to expire at the end of this month.

France announced plans on Jan. 25 for a further cut of 10% in tax on transport costs for commuters.

Macron promised measures to help households deal with high prices a month ahead of the presidential election. French government has already spent €20 billion a year to moderate energy costs.

In addition, France’s oil giant TotalEnergies will offer a discount of 10 cents per liter at domestic gas stations.

South Korea has been another country that cut taxes on fuels. The measure that took effect on Nov. 12 was extended until the of July. The government cut taxes of 164 won, 116 won and 40 won per liter for gasoline, diesel and LPG respectively.

The government had announced in October that taxes on key oil products would be slashed by a fifth and the 2% LNG tariffs would be temporarily removed.

Malaysia’s oil subsidies may more than double this year to reach 28 billion ringgit ($6.67 billion) if oil prices remain high, taking its monthly bill to 2.5 billion ringgit if the price keeps above $100 a barrel.

Malaysian government’s January expenditure on gasoline, diesel and LPG amounted to 2 billion ringgit, increasing tenfold on the year. Last year, the government’s petroleum subsidies were 11 billion ringgit.

Brazil’s Senate passed two legislations last week to cut fuel price hikes with subsidies and tax exemptions. While it’s good news for Petrobras, the state oil company, it’s bad news for the states, which will have reduced tax revenues.

The first bill allows the government to compensate fuel distributors if international prices go above a certain range for domestic prices.

The second bill simplifies measures on calculation of the state tax regarding prices of gasoline, ethanol, diesel, biodiesel and LPG.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

Australia’s Invictus to Start Drilling for Oil and Gas in Zimbabwe

Australia’s Invictus Energy is set to start drilling its first exploration well for oil and gas in Zimbabwe, the company’s Zimbabwean subsidiary announced on Friday. The first well, Mukuyu-1, situated in the Muzarabani-Mbire area, will be 3.5 kilometres (km) deep at a cost of $16 million, the Australian company’s local subsidiary Geo Associates said.

Shell Invests More than Half a Billion Dollars in Australian Power Market

Royal Dutch Shell bought Meridian Energy’s local electricity business in Australia to provide electricity to households for the first time. The deal is worth $528 million. Shell previously acquired Australia’s biggest power supplier to commercial businesses in 2019. The new acquisition is in line with the company’s plan to double its power business to 560 terawatt hours a year by 2030.   

U.S. Will Block Nord Stream 2 Operation If Russia Attacks Ukraine

The U.S. State Department made it clear that the Nord Stream 2 pipeline will not become operational if Russia decides to invade Ukraine. 

Stay informed

error: This content is protected !!