## Chart of the Week: Oil Prices & Energy Subsidies

_IMF Blog, November 27, 2017_

## Source details

**Canonical URL:** [Chart of the Week: Oil Prices & Energy Subsidies](https://www.imf.org/en/blogs/articles/2017/11/27/chart-of-the-week-oil-prices-energy-subsidies)

## Other formats

- [Markdown version](/en/blogs/articles/2017/11/27/chart-of-the-week-oil-prices-energy-subsidies/index.md)
- [Structured JSON version](/en/blogs/articles/2017/11/27/chart-of-the-week-oil-prices-energy-subsidies/index.json)
- [Bundle manifest](/en/blogs/articles/2017/11/27/chart-of-the-week-oil-prices-energy-subsidies/bundle-manifest.json)

## Bibliographic details
- Authors: The Editors
- Published: November 27, 2017

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### Overview
- Universal fuel and energy subsidies have been prevalent in sub-Saharan Africa but have substantial drawbacks: they tend to benefit the rich rather than the poor, foster fuel overconsumption, and crowd out more productive government spending.
- Reforms in some mostly oil-exporting countries, along with lower international fuel prices since 2014, have reduced the size of fuel subsidies in sub-Saharan Africa, and they need to do more given the recent rise in international fuel prices.
- Timeframe referenced: June 2014 to early 2017.

### Transmission of international oil price changes
- An IMF survey of fuel prices in the region indicates different pass-through patterns between oil exporters and oil importers over June 2014–early 2017:
  - Oil exporters: ratio of changes in retail fuel prices relative to changes in international fuel prices (expressed in local currency) was −19 percent, reflecting increases in domestic fuel prices despite lower international prices.
  - Oil importers: ratio was 62 percent, indicating partial transmission of lower global oil prices to consumers (less than 100 percent pass-through).

### Domestic pricing mechanisms and observed pass-through
- Fuel prices in the region are mostly set by governments, either on a discretionary basis or by automatic adjustment formulas.
- Only about one-third of sub-Saharan African countries allow automatic adjustment of retail prices; the remainder set prices administratively.
- This pricing structure has historically translated into relatively low pass-through to changes in global oil prices.

### Key elements of successful fuel and energy price reform
- Country experiences suggest a comprehensive strategy with these elements:
  1. a communication campaign;
  2. phased and gradual price increases;
  3. targeted social spending or essential investment to mitigate the impact of the reform on affected households and firms;
  4. introduction of an automatic pricing formula;
  5. accompanying measures to improve the efficiency of state-owned enterprises and service delivery.

### Implications
- Partial pass-through in oil importers (62 percent) implies consumers did not fully benefit from lower international fuel prices between June 2014 and early 2017.
- Negative ratio for exporters (−19 percent) reflects policy moves to increase domestic fuel prices in some oil-exporting countries despite falling global prices.
- Given the recent rise in international fuel prices, further reforms and robust mitigation measures are needed to manage subsidy costs and protect vulnerable households.

*Source: Chart of the Week: Oil Prices & Energy Subsidies (IMF, November 27, 2017).*

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## Content in this bundle

- **本周图表：石油价格与能源补贴, 作者：基金组织博客, 2017 年11 月.27 日**
  - [本周图表：石油价格与能源补贴, 作者：基金组织博客, 2017 年11 月.27 日 (Markdown version)](/external/chinese/np/blog/2017/112717c.pdf.md){rel="alternate" type="text/markdown"}
  - [本周图表：石油价格与能源补贴, 作者：基金组织博客, 2017 年11 月.27 日 (PDF)](/external/chinese/np/blog/2017/112717c.pdf){rel="external" type="application/pdf"}
- **今週のグラフ: 石油価格とエネルギー補助金;   IMF ブログ 2017年11月27日掲載**
  - [今週のグラフ: 石油価格とエネルギー補助金;   IMF ブログ 2017年11月27日掲載 (Markdown version)](/external/japanese/np/blog/2017/112717j.pdf.md){rel="alternate" type="text/markdown"}
  - [今週のグラフ: 石油価格とエネルギー補助金;   IMF ブログ 2017年11月27日掲載 (PDF)](/external/japanese/np/blog/2017/112717j.pdf){rel="external" type="application/pdf"}
- **Gráfico de la semana: Precios del petróleo y subsidios de la energía**
  - [Gráfico de la semana: Precios del petróleo y subsidios de la energía (Markdown version)](/external/spanish/np/blog/2017/112717s.pdf.md){rel="alternate" type="text/markdown"}
  - [Gráfico de la semana: Precios del petróleo y subsidios de la energía (PDF)](/external/spanish/np/blog/2017/112717s.pdf){rel="external" type="application/pdf"}

---

## References

- [https://www.imf.org/wp-content/uploads/2017/11/Oil-subsidies.jpg](https://www.imf.org/wp-content/uploads/2017/11/Oil-subsidies.jpg)
- [subsidies](https://blogs.imf.org/2015/05/18/global-energy-subsidies-are-big-about-us5-trillion-big/)
- [sub-Saharan Africa](http://www.imf.org/en/News/Articles/2017/10/27/na103017-sub-saharan-africa-the-path-to-recovery)
- [https://www.imf.org/wp-content/uploads/2017/11/ENG_Nov_14_Oil_Africa-4.jpg](https://www.imf.org/wp-content/uploads/2017/11/ENG_Nov_14_Oil_Africa-4.jpg)
- [Country experiences](http://www.elibrary.imf.org/page/energysubsidylessons?redirect=true)
- [Regional Economic Outlook](http://www.imf.org/en/Publications/REO/SSA/Issues/2017/10/19/sreo1017)

_Source: https://www.imf.org/en/blogs/articles/2017/11/27/chart-of-the-week-oil-prices-energy-subsidies_