The steep decline in the world oil price in the last quarter of 2014 slashed fuel price subsidies. Several governments responded by announcing that they would remove subsidies for one or more fuels and move to market-based pricing with full cost recovery. Other governments took advantage of low world prices to increase taxes and other charges on fuels. However, the decision to move to cost recovery and market prices, ending budgetary support, has not been implemented consistently across countries.
Consumer subsidies to oil consumption depress the visible price of fossil fuels to end users, and with it their incentive to substitute alternative fuels or conservation. Understanding which countries mute price adjustments in oil products, and to what degree, is important in mapping out the options and trade-offs for reform.