Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/192828
Authors: 
Aune, Finn Roar
Grimsrud, Kristine
Lindholt, Lars
Rosendahl, Knut Einar
Storrøsten, Halvor Briseid
Year of Publication: 
2016
Series/Report no.: 
Discussion Papers 846
Abstract: 
This paper studies the oil market effects of phasing out oil consumption subsidies in the transport sector. Welfare effects in different countries are also examined. We investigate potential feedback mechanisms of oil subsidy removal via lower oil prices in the global oil market, which may stimulate oil consumption in other regions. An intertemporal numerical model of the international oil market is applied, where OPEC-Core producers have market power. The major subsidizers of oil are OPEC countries, and we find that the effects of subsidy removal here are quite pronounced. Consumption of oil in the transport sector of OPEC countries declines significantly. As a result, the global oil price falls slightly, and other regions increase their oil consumption to some degree. Although OPEC consumers are worse off by the subsidy removal, total welfare in OPEC increases due to higher profits from oil production.
Subjects: 
Fossil fuel subsidies
transport
oil market
market power
distribution
feedback mechanisms
JEL: 
D42
Q54
R48
Document Type: 
Working Paper
Social Media Mentions:

Files in This Item:
File
Size
1.56 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.