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What’s Really Wrong with Thames Water?

What’s Really Wrong with Thames Water?

Following the Thames Water debacle,…

Saudi Arabia’s Massive Fuel Subsidies Are The Highest In The G20

Saudi Arabia has the highest fuel subsidies in the G20, with the government spending some $7,000 per person on state support for fuel prices. That’s equal to 27% of economic output, Bloomberg reports.

The data comes from the International Monetary Fund, which reported recently that global subsidies for oil and gas had reached a record $7 trillion in 2022.

The bulk of that sum, however, was not, in fact, government financial support for fuels but rather what the IMF calls implicit subsidies and defines as the environmental damage done by the use of oil and gas.

The fund said consumers of oil and gas had a bill worth $5 trillion for last year in that sort of damages.

Saudi Arabia’s subsidies for fuels, as calculated by the IMF, are also more of the implicit than the explicit sort. The explicit subsidies were raised in 2021 to help cushion the inflation blow and stayed high through 2022 when oil surged to over $100 per barrel. In that year, most countries deployed subsidies of some sort to help keep energy costs manageable.

The IMF has been pushing Saudi Arabia to start winding down the fuel subsidies and help vulnerable households with what it calls targeted spending. The ambition is to phase out the subsidies by 2030.

Looking at the rest of the G20, while Saudi Arabia is the biggest spender on a per-capita basis, in absolute terms China is in the lead. The country spent $2.2 trillion on fuel subsidies last year, again, the bulk of that sum not representing actual government spending on making fuel cheaper.

“Fossil fuels in most countries are priced incorrectly,” the authors of the IMF report wrote. “Unfortunately, current prices are routinely set at levels that do not adequately reflect environmental damages and, in some cases, not even supply costs.”


By Charles Kennedy for Oilprice.com

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  • Mamdouh Salameh on August 29 2023 said:
    The IMF figure of $7.000 per person being spent on fuel subsidies in Saudi Arabia in 2022 and amounting to $251,65 bn annually is flawed. The reason is that Saudi Arabia couldn’t afford to spend $251.65 bn out of total oil export revenues of $311 bn in 2022 or 81% on subsidies. A more realistic figure is $84 bn based on refinery output of 2.905 million barrels a day (mbd) and a subsidy of $79.5 per a barrel of gasoline (159 litres).

    Only $2337 per person out of the IMF’s figure of $7000 or 33% were spent on actual subsidies. The balance of $4663 or 67% was an estimate of a fancy environmental damage claimed by the IMF to have been done by the use of oil and gas and therefore can’t be classified as subsidies since the Saudi government hasn’t paid them.

    And with a GDP per capita of $34,441 in 2022, Saudi Arabia is very well advised to eliminate subsidies on fuels completely and use them for instance to finance more economically viable projects such as Saudi Aramco’s Jafurah natural gas project which is projected to produce about 2 billion cubic feet of gas per day by 2030 at a total cost of $24 billion. Saudi Arabia intends to produce enough gas for domestic use to stop burning oil in its power plants and convert the remainder into hydrogen.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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