Energy Advisor

David Shields, oil industry analyst at Energía a Debate: “The sharply higher price of gasoline, much of which is imported, poses several dilemmas for governments in the region. Enacting fuel subsidies is their immediate gut reaction to price hikes at the pump that can quickly lead to food inflation and a cost-of-living crisis, hitting the most vulnerable members of society. Politicians are very sensitive to the risk of protests in the streets. Yet, it is the wealthiest segment of society that consumes the most gasoline and is the main beneficiary of the subsidies. The strain of such subsidies on national finances varies from country to country, but overall, it is immense, and subsidies can only be maintained for so long, depending on the state of the public coffers. So, if the war in Ukraine drags on, the financial risks will be high in the medium term. Subsidies account for more than 25 percent of fuel prices that consumers are now paying in…”