THE PRICE OF CHEAP ENERGY / GEOPOLITICAL FUTURES

The Price of Cheap Energy

China, the US, Russia, India and the EU together account for more than half of all fossil fuel subsidies.

By: Geopolitical Futures 

Notwithstanding the hype around green energy and electric vehicles, governments worldwide spent some 7 percent of gross domestic product subsidizing fossil fuels in 2022. 

For some energy sources, such as natural gas, location has a major effect on pricing. 

In North America, natural gas costs approximately $7 per gigajoule, compared with $25 in East Asia. 

Oil products, on the other hand, are traded in a more interconnected international market and thus do not fluctuate so much on cost.

But geopolitics plays a role as well, and no one subsidizes energy like China. 

The Middle Kingdom spent $2.2 trillion on fossil fuel subsidies last year, several times more than the next country, the United States ($760 billion). 

Notably, despite the costs of its war in Ukraine, Russia spent $420 billion. 

China, the U.S., Russia, India and the European Union together accounted for 57 percent of all fossil fuel subsidies.