El Pais, Spain’s largest newspaper, in a sidebar to an article on the recent OPEC meeting, quoted a recent piece by Frida Ghitis on the consequences of high oil prices for states that subsidize fuels. Here’s a translation of the sidebar:
It is unquestionable that high petroleum prices benefit producers. Yesterday’s statements by the Iranian president and the lack of interest in increasing production shown by OPEC members make that clear. Nevertheless, some experts warn of unpredictable consequences for those countries that, like Iran and Venezuela, subsidize fuels. The more oil prices rise, the more costly the subsidies. “At some point, the subsidies become too much and the government has to cut back, potentially sparking unrest” warns Frida Ghitis in World Politics Review. Ghitis reminds us of what took place in Venezuela at the end of the 1980s, when protests against the cut in subsidies left many dead. More recently, that danger was visible in Iran. The imposition this June of a rationing system to limit the hemorrhage of public funds unleashed a wave of violent protests in major cities. Despite being the world’s fourth largest oil producer, the Islamic Republic doesn’t have enough refineries, which requires it to import 40% of the gasoline it consumes.
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