The Political Economy of Hydrocarbon Wealth and Fuel Prices

All governments either tax or subsidize the consumption of fossil fuels. These pricing policies have far-reaching consequences not only for the environment, but also for governance and economic development. In this state-of-knowledge paper, we examine previous research on fossil fuel subsidies, noting areas that are understudied in the context of determinants of price policies and causes for policy reform. We then describe new data on implicit gasoline taxes and subsidies, report global trends, and explore the relationship between oil wealth and government policies. We conclude with actionable ideas for future research projects.

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