Board of Directors (Jay)
Join Date: Jun 2004
Location: Isle of Palms, SC
While Americans and Europeans bemoan the cost of gasoline at the pumps, people in some other parts of the world enjoy filling up their tanks cheaply thanks to subsidies provided by wealthy, oil-rich governments. But fuel subsidies tend to benefit the rich (who own motor vehicles) more than the poor. The IMF estimated that 65 percent of the fuel subsidies in Africa benefit the richest 40 percent of households (2010). Only 8 percent of the $410 billion in government fuel subsidies worldwide went to the poorest 20 percent of the population.
The British insurance firm Staveley Head has released the latest list of the world’s gas pump prices. Here are the 10 cheapest countries on Earth to fill a gas tank.
1. Venezuela — $0.18 per gallon
With elections looming in October 2012, President Hugo Chávez knows that raising gasoline and diesel prices would be a risky move politically. His presidency is already threatened by his deteriorating health, providing a unique opportunity for the opposition’s candidate, the telegenic Henrique Capriles Radonski, to replace the ailing leader. The last time the government attempted to raise gasoline prices in 1989, riots ensued, and hundreds of people died. Venezuelans are likely to continue paying less for fuel than bottled water for years to come.
2. Saudi Arabia- $0.48 per gallon
OPEC recently announced that Saudi Arabia’s proven oil reserves were surpassed only by Venezuela. However, the Latin American nation is much less attractive to major oil investors, leaving Saudi Arabia as the world’s largest exporter of oil — now, and for years to come. There may be problems, however. A cable released by Wikileaks from Riyadh, written in 2008, revealed that senior Saudi officials expressed worry that the country’s reserves may have been massively overstated — by 40 percent. As tensions rise over Iran’s nuclear program, Saudi Arabia will have to address an additional challenge as well: How long is the country willing to export 9 million barrels of oil per day, up from January’s 7.5 million, to keep global oil prices from rising even higher?
Saudi Arabia spends about $13.3 billion a year to subsidize gasoline and diesel prices, Abdullah Al Shehri, governor of the Electricity and Cogeneration Regulatory Authority, told the Gulf News.
3. Libya — $0.54 per gallon
During last year's revolt against the Qaddafi regime, Libya’s oil infrastructure was heavily damaged. Many oil fields were mined, ports were the sites of fierce battles between opposing rebels and Qaddafi forces, and the country’s largest refinery, Ras Lanuf, was shut down. Today, under the provisional governing authority of the National Transitional Council, Libya is in the process of restoring its capacity to produce and export oil.
The Libyan Oil Minister Omar Shakmak said that the administration expects to reach the pre-conflict levels of about 1.6 million barrels per day by the summer of 2012, up from the current 1.265 million. The boost in production along with the country’s political stabilization could help keep global oil prices in check.
4. Turkmenistan — $0.72 per gallon
The recent re-election of President Gurbanguly Berdymukhammedov for a new five-year term mothballed plans for short-term dramatic changes occurring in the authoritarian Central Asian country. This likely means that automobile owners in Turkmenistan will continue to be entitled to 120 liters (34 gallons) of free gas a month, rendering the $0.19 price of a liter almost meaningless to some auto owners. The government has promised subsidies on an array of fuels, lasting until at least 2030. However, petroleum reserves are estimated to be relatively low, so it is unclear if the government can deliver on that promise.
5. Bahrain- $0.78 per gallon
Bahrain has relatively little oil compared to its neighbors and is working hard to diversify its economy – unlike many others on the list. Bahrain has emerged as a banking hub for the Persian Gulf and has expanded into retail sales and tourism. It signed a free trade agreement with the United States in 2005, and was cited by the UN as the Arab world’s fastest-growing economy. Given the unrest among the Bahraini Shiite population, the demands for political reforms, if not the end of King Hamad’s rule, it's unlikely that gas subsidies will end anytime soon.
6. Kuwait — $0.84 per gallon
Kuwait has the sixth-largest oil reserves in the world and is one of OPEC’s top oil-producing and oil-exporting countries. Oil export revenues make up half of Kuwait’s GDP and 95 percent of state revenues. The Kuwait Petroleum Corporation plans to increase oil production capacity to 4 million barrels per day by 2020. Kuwait consumes a very small part of this oil domestically: Last year, 87 percent of Kuwaiti oil was exported.
Kuwait's fossil fuel subsidies were highest on a per capita basis, with $2,800 spent per person, according to Earth Policy Institute. The United Arab Emirates and Qatar followed, each spending close to $2,500 per person.
7. Qatar — $0.90 per gallon
As well as being the world’s largest exporter of liquefied natural gas, Qatar is an OPEC member and was the 16th biggest crude oil exporter in the world in 2009. Qatar’s own oil consumption has more than tripled since 2000, due to a growing economy (and low-priced, subsidized gasoline). The Gulf country has the second highest GDP per capita in the world, estimated at $102,700 in 2011. Qatar's proven oil reserves are at 25.4 billion barrels, and oil and gas revenues make up 50 percent of its GDP.
So far, the kingdom's economic growth has been spurred by its petroleum wealth. However, Qatar is attempting to diversify its economy and brand itself as a global "knowledge" powerhouse. In 2009, the Qatar Science & Technology Park (QSTP) was inaugurated, a 2,500 acre complex consisted of 80 research, educational, and science centers. Leading US universities such as Carnegie Mellon, Texas A & M, and Georgetown are offering various academic programs there.
8. Egypt — $1.14 per gallon
Egypt is a significant oil producer and has the largest refining sector in Africa. But due to rising domestic demand, it does import some petroleum products. Production has declined, though modestly, and was at 736,000 barrels per day in 2010. Natural gas is expected to become a larger source of revenue due to increased exploration.
Catherine Hunter, an analyst at British IHS Global Insight, commenting on the economic impact of the Arab Spring said that, "If you look at how other sectors have been declining, oil and gas investments and Suez Canal revenues have remained the two pillars of the Egyptian economy during the turmoil," UPI reports. Apache Corporation, an American oil and gas exploration firm, says it will invest $1 billion in the country in the next two years.
9. Oman — $1.20 per gallon
Oman has the largest proven reserves of any non-OPEC country in the Middle East, at 5.5 billion barrels. Production has increased 20 percent since 2007, reaching 860,000 barrels per day in 2010. Oil and gas exports were 47 percent of GDP in 2010 - led by Asia destinations. BP is contemplating whether to invest $15 billion in a gas project. "The project will make a lot of money for Oman; we just need to find a way to get a big enough piece of it for BP to make sense as an investment," Reuters quoted Jonathan Evans, BP Oman general manager, as saying.
Oman is trying to diversify its economy, with government investment in the agricultural and health services sectors. The sultanate has made education a priority, investing in basic education by establishing colleges and trade schools and offering scholarships for international studies.
10. Algeria — $1.20 per gallon
Algeria, an OPEC member, has the third-largest proven oil reserves in Africa behind Libya and Nigeria. It was the continent’s fourth largest producer in 2010 following Nigeria, Angola and Libya. The European Union relies on the North African country to meet its environmental restrictions because of the Algerian oil has a low sulfur content. Its industries are mostly nationalized and the government restricts imports, privatization, and other foreign involvement. A majority (60 percent) of Algeria’s income comes from oil production.
In order to combat high youth unemployment, the government proclaimed in 2010 that it would invest revenues from oil and gas exports in building new museums, theaters, and libraries.
Unlike Saudi Arabia, Algeria will not increase its crude oil exports because of the escalating tensions (and oil prices) over Iran's nuclear ambitions. "We have a program in place that will be maintained," said Youcef Yousfi, the Algerian Minister of Energy and Mining, the China's state-run Xinhuanet reports.
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