Measures to Reduce the Economic and Social Impact of High Fuel Prices
High volatility in the world prices of petroleum has been a characteristic feature of the global economy in the last decade. World petroleum prices increased four-fold between 2004 and 2008 and, and following a drop in prices in the second half of...
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| Format: | Report |
| Language: | English en_US |
| Published: |
Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/429111468002402640/Measures-to-reduce-the-economic-and-social-impact-of-high-fuel-prices http://hdl.handle.net/10986/27337 |
| Summary: | High volatility in the world prices of
petroleum has been a characteristic feature of the global
economy in the last decade. World petroleum prices increased
four-fold between 2004 and 2008 and, and following a drop in
prices in the second half of 2008, petroleum prices have
been rising again, and they are several times higher than
they were two decades ago. Since high and volatility of
prices is likely to be a permanent feature of the global
economy for the foreseeable future, they merit a
reconsideration of the national transport and taxation
policies that were put in place when fuel prices were not
such a significant component of trade-related transactions
costs in Sub-Saharan Africa (SSA) countries. Transport
practices that were based on the assumption of low price of
fuel are not sustainable, and policies neglect fuel
efficiency considerations through lowering the fuel
consumption of vehicles measures are no longer sustainable.
Efficient and low transport cost is essential to achieve
regional economic integration and strengthen Africa's
competitiveness in external markets. Higher diesel prices
also impact on the prices of all other goods which use
diesel as an intermediate input. The most significant among
them with implications for the poor in low-income developing
countries is food, on which the poor spend a
disproportionately high share of their total household
expenditures. This report is in three parts in the first
part, transport fuel prices in the countries of SSA are
compared with those of other regions of the world. The
comparison is not only in terms of the actual retail prices
but also, but taking account of per capita incomes and truck
revenues, also in terms of affordability. This Part also
provides evidence of the make-up of transport fuel prices in
SSA countries, as a first step in assessing how they can be
dealt with. The second part provides new evidence of the
impact of these high fuel prices on the export competiveness
of a sample of six SSA countries. It also provides a shorter
description of the results of a study of the impact of fuel
prices on logistics costs in Central America, since so far
there have not been any studies of the impact of high
transport fuel prices on logistics and food costs in SSA
countries. The third part deals with the ways in which the
impact of high transport fuel prices can be addressed. Two
main areas of action are described, those that would reduce
the retail price of transport fuel and those that would
increase fuel efficiency, so they impact of high prices
would be reduced. This section focuses on diesel fuel, as
this is by far the most used by the trucks that transport
export products and are involved in domestic logistics. This
section concludes with some ideas on what could be done next
to make progress on implementing the most promising ideas
for reducing the impact of high transport fuel prices. |
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