According to the International Energy Agency (IEA), higher average oil prices in 2018 raised the value of global fossil fuel consumption subsidies by 34% in 2018, from US$316bn in 2017 to US$424bn in 2018. Oil subsidies rose by 27% to US$182bn, while electricity subsidies increased by 23% to US$143bn and gas subsidies surged by 74% to US$99bn. These subsidies are more than double the estimated subsidies to renewables, and their increase highlight lacks in pricing reforms undertaken in recent years.
Some countries have targeted a complete price liberalisation for the main transport fuels, such as India, Mexico, Thailand and Tunisia, while others have introduced mechanisms to automatically adjust prices with international prices, such as China, Indonesia, Malaysia, Jordan, Ivory Coast and Oman. In the Middle East (Saudi Arabia, Kuwait, Qatar, Bahrain and the United Arab Emirates) and North Africa, regulated prices were reformed to align them with cost-recovery or market-based prices. However, rising oil prices in 2018 prompted some countries to review their subsidy-cut policies: India introduced reductions in other taxes and duties, while other countries postponed upward fuel prices adjustments (as in Indonesia, Jordan or Malaysia).
Overall, fossil fuel subsidies rose by 34% (+US$110bn) over the 2015-2018 period, despite the US$36bn saved from pricing reforms. Most of the increase came from wider price gaps, and from a higher consumption to a lesser extent.
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