» Decem#Oil #OilPrice #Iran Forecasts $40 p/b #OilMarketPrice for Next Year Budget. But some said even that projection was overly optimistic
Analysts examining the budget said the Saudis were assuming that a barrel of oil would average about $45 in 2016. The Finance Ministry projected the 2016 budget to be about 840 billion riyals, down from 975 billion riyals this year, Al Arabiya reported. Under the 2016 budget, the goal is to reduce the deficit to 326 billion riyals, or about $87 billion. The cost of some grades of domestic gasoline, among the first to be affected, could rise as much as 50 percent, a potentially unsettling spike in a country where mass transit does not exist and cars are a basic necessity The government ran a record deficit of about 367 billion riyals, or roughly $98 billion, in 2015, according to the Saudi-owned Al Arabiya news channel. The official Saudi news media reported that the Finance Ministry would cut spending, adopt new taxes and reduce price subsidies for fuel, water and power. Pressured by low oil prices and costly wars in the Middle East, Saudi Arabia announced a sharp reduction in its 2016 budget on Monday to control a worsening deficit, which is steadily draining the kingdom's financial reserves. » Decem#Oil #OilPrice #SaudiArabia, Squeezed by Low Oil Prices, Cuts Spending to Shrink Deficit. The impetus for reform may increase, especially if oil prices stay around their current low price threshold for an extended period, thus putting increased financial pressure on governments that rely on oil export revenue to fund government activity While in the past the international community has joined in a variety of forums to encourage fossil-fuel subsidy reform during a time of high oil prices-when the burden on governments is the heaviest-today's low oil price environment may very well be a more viable time to pursue this pathway of reform. Most importantly the subsidies are usually an inefficient way of providing economic support to a given country's population-a main goal of their existence.
These consumer-oriented subsidies also have a market-distorting and economic effect-driving increased consumption of the subsidized products and leading the domestic economy to invest further in industries that rely on artificially cheap fuels. These subsidies can be costly when oil prices are high because the governments bear the cost of selling these fuels to their populations at below-market levels. In many of the world's large oil-producing and consuming countries, the government subsidizes the consumption of fossil fuels-particularly petroleum products used for cooking, driving, and heating. » Decem#Oil #Geopolitics Paper, Prospects for #FossilFuelSubsidy Reform in Oil-Producing and Exporting Countries. :\GDR climate equity reference calculator> global effort sharing
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