Abstract

Between 2005 and 2018, 41 countries had at least one riot directly associated with popular demand for fuel. We make use of a new international dataset on fuel riots to explore the effects of fuel prices and price regimes on fuel riots. In line with prior expectations, we find that large domestic fuel price shocks—often linked to international price shocks—are a key driver of riots. In addition, we report a novel result: fuel riots are closely associated with domestic price regimes. Countries that maintain fixed price regimes—notably net energy exporters—tend to have large fuel subsidies. When such subsidies become unsustainable, domestic price adjustments are large, often leading to riots.

Highlights

  • In 2019, there were major protests related to energy in Sudan, France, Zimbabwe, Haiti, Lebanon, Ecuador, Iraq, Chile, and Iran – many of which turned into riots

  • Why does fixing prices result in large domestic price shocks? The discussion in the introduction to this paper suggests that this is because fixing prices tends to create large subsidies

  • These results strongly suggest that fuel riots are driven by changes in domestic fuel prices, but these are mediated by the price regimes in place in each country and, in particular, by the size and fiscal sustainability of subsidies

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Summary

Introduction

In 2019, there were major protests related to energy in Sudan, France, Zimbabwe, Haiti, Lebanon, Ecuador, Iraq, Chile, and Iran – many of which turned into riots. Where other forms of social protection are limited, or natural resource wealth is highly concentrated, or where economic performance is poor, subsidies may be seen as part of the social contract (Lockwood 2015; McCulloch, Moerenhout and Yang 2021) When such subsidies become unsustainable, governments often attempt to reduce them by raising fuel prices sharply (Rentschler and Bazilian 2017; Lockwood 2015). There is a growing literature on the political economy of fossil fuel subsidy reform (Inchauste and Victor 2017; Skovgaard and van Asselt 2018), which provides a nuanced understanding of the complexities of policy reform and why so little progress has been made on it (Ross, Hazlett and Mahdavi 2017) This literature rarely mentions an association between price subsidies and fuel riots, other than as an explanation of why reforms stop or stall, or as a reason why reforms are not attempted in the first place.

Data and descriptive statistics
Domestic price changes and fuel riots
The role of price regimes
Robustness tests
Why countries fix prices and create subsidies
16 This takes the values
Findings
Conclusions
Full Text
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