Oil subsidy

The reduction of the price of petroleum (products) on the domestic market by means of – direct subsidies from public coffers or – (temporary) reduction of excise taxes on petroleum with the intention of halting or at least reducing the pass-through of a high petroleum price to consumer prices. – The result of such a policy is that energy conservation incentives are inhibited in the country concerned, so that demand for the more expensive crude oil hardly declines and dependence on crude oil is not reduced. In principle, however, it makes economic sense to provide a push-start for the production of domestic substitutes for petroleum (such as biofuels or solar collectors) by means of subsidies, although the benefits of subsidies must be constantly questioned. – Biofuels, oil price, inflation compensation, climate inflation, wage, indexed, wage-price spiral, oil price,
Oil price equalization, oil price shocks, petrodollar, protein inflation, real cash effect, commodity prices, shocks, structural, electricity price, second-round effects. – Cf. ECB Monthly Bulletin, October 2013, pp. 70 f. (fiscal aspects of consumer fuel prices; overview).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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