Why global fuel prices will spark the next revolutions

Governments across the world are attempting to wean their citizens off subsidized fossil fuels —a critical issue which environmentalists say is a big contributor to the output of carbon gases that contribute to global warming, and which have even more immediately burdened public finances the world over by an estimated total of $523 billion last year — a 30% increase over the previous year. …

For decades, the price paid at the gas pump for most of the world’s drivers has had little relationship to the true cost of fuel. Massive government subsidies have allowed millions of consumers to pay a token amount, in some places mere pennies per gallon. …

But fuel subsidies are becoming increasingly untenable as governments face mounting budget deficits in a weakening global economy, amid oil prices that have remained above $100 a barrel since 2010. …

Cutting fuel subsidies, however, will be a massive political risk to many governments — as the recent events in Jordan demonstrate. Indonesia dropped plans last April to raise gas and diesel prices by 33%, after thousands of people protested the move. Iran, which spent a whopping $82 billion on fuel subsidies last year, quietly shelved a plan earlier this year to raise gas prices, fearing that inflation could spark protests.

Last January, thousands of people in Nigeria — Africa’s biggest oil producer — fought deadly street battles with police after the government cut its fuel subsidies resulting in a doubling of fuel prices.