Thursday, June 8, 2017

A Combustible Concept: Stop Subsidizing Fuel Prices

A traffic jam shuts down Calle 26. Would charging the real price for gasoline and diesel
reduce congestion and clean up the air?
The idea seemed sensible enough: Create a fund to stabilize gasoline and diesel prices. When international prices were low, Colombian prices would be raised, contributing to the fund. When prices rose, money would be withdrawn from the fund to reduce the price at the pump.

That was the idea. But in practice, the fund has been used mostly to stabilize prices downward, to buy voters and pacify strike-prone truckers.

EcoPetror: Not so green, and
maybe someday bankrupt, too.
However, the fuel subsidy is costing EcoPetrol a trillion pesos per year, threatening its economic health. And, such subsidies disproporionately benefit the wealth and businesses, who consume much more gasoline than do poor people. They also increase air pollution and violate Colombia's promises in the Paris anti-climate change agreement.

Colombia's Controlaria recommends freeing up gasoline prices. Colombia doesn't subsidize books, apples or clothing - so, why vehicle fuels?

I just talked to a schoolteacher from Medellin who had come to Bogotá to participate in the protest marches. She told me that public school teachers often must reach into their own pockets to purchase cleaning supplies for the school and even food for the children.

"That's the government's responsibility, and they've got plenty of money to throw around," she said, accusing government officials of corruption.

The government has offered teachers only a 2,000 peso-per-month raise, she added.

Certainly, the billions of dollars thrown away on fuel subsidies could have gone a long way toward helping public school students.

'No resources for teachers,' says Santos - except maybe those millions and millions wasted subsidizing gasoline.
By Mike Ceaser, of Bogotá Bike Tours

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