Ecuador: Fuel Subsidies Increase 60 Percent for January 2014

The Wall Street Journal reported that Ecuador’s expenditures for fuel subsidies reached $394 million dollars for the month of January 2014. These subsidies include high-octane naphtha, cooking, and diesel fuels. This is an increase of 60% over the expenditures for the same time period in 2013. The country also imported nearly $600 million dollars of oil derivatives in January.

According to the WSJ that 67 percent of the subsidies are for diesel. The remainder is for high octane naphtha and cooking gas. Ecuador spent over three billion dollars in subsidies in 2013 which equals eleven percent of the national budget.

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IF YOU LIVE IN ECUADOR OR YOU ARE THINKING OF MOVING THERE – YOU SHOULD READ THIS BOOK FOR ADDED INSIGHT INTO THE CULTURE.
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1. Fuel subsidies are a politial hot potato…many individuals that benefit from the subsidies are high-income earners…. the report stated that there could be serious “political implications” if the subsidies are removed.

2. The report also explained that President Correa is analyzing wasys to reduce the subsidies and that they want to place the emphasis in the cooking gas sector. One plan is to replace gas ovens with electric ovens. Current cooking gas subsidies are approximately $800 million dollars per year.

3. Another avenue may be the setting of consumption quotas for gasoline.

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