The Corner

The Wages Of Fuel Subsidies

As frustrating as our $4 a gallon gasoline is in the U.S., at least we don’t have the problem that other countries are experiencing — a history of subsidizing consumer gas prices that current market conditions have rendered unsustainable. Look what’s happening in India and Malaysia as cash-strapped governments have been forced to end their market manipulation:

Protests broke out in India and Malaysia on Thursday as consumers reacted angrily to sharp fuel price hikes that could undermine governments in both countries.

With global oil prices soaring, authorities in the two countries said a day earlier they were slashing fuel subsidies that were draining government coffers.

In Malaysia, gasoline pump prices jumped 41 percent overnight and diesel prices surged a stunning 67 percent.

The gasoline price hike in India, the second this year, was smaller — about 11 percent in the capital, New Delhi — but will still weigh on consumers. India also raised prices on diesel and cooking gas.

The most pronounced protests were in India’s West Bengal state, where schools and businesses were closed and flights and trains canceled. Shops were also shuttered and roads emptied in the southern state of Kerala, with protests also reported in the central city of Indore.

Ruling parties in both countries are expecting adverse political consequences in upcoming elections, which is wise. And some politicians, including the Communists in Bengal, say that the government should cut fuel taxes to ease the burden on consumers.


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