Gasoline subsidies hindering transition to cleaner energy

London, (Quantum Commodity Intelligence) - The free market should be adopted in gasoline markets across the world to help in the transition to cleaner energy, according to a research paper from the International Energy Agency.

Some 38 countries, mainly in Africa, Asia, Oceania and to some extent South America, fix or heavily regulate gasoline pump sales.

In these countries with fixed prices, the average price for gasoline is 82 cts/liter.

In comparison, in 44 countries with liberalised markets, the average gasoline price is $1.03 per liter.

"Governments that subsidise fossil fuels could gradually phase out harmful subsidies to favour more efficient use of fuels and remove the economic burden on their budgets," the research paper authors, Domenico Lattanzio and Alexandre Bizeul noted.

"Some of resulting savings could be spent on mitigating the impact of higher fuel prices on low-income households, ensuring energy access for all."

Once explicit consumption subsidies are removed, fuel prices could be gradually increased through environmental taxation to compensate for the ecological and social costs of fuel use, including air pollution and global warming, the IEA research paper points out.