At What Cost? Subsidies and Fuel Prices in Asia Pacific
Amid soaring fuel prices in 2022, countries in the APAC region adopted different approaches to tackle the issue of high fuel prices. Indonesia tripled its energy subsidy budget to maintain stable fuel prices, resulting in a remarkable 65% year-on-year growth in retail fuel demand. However, to curb ballooning subsidies, a significant 30% price hike was implemented in September 2022. On the other hand, India opted for price freezes and tax cuts to mitigate rising energy costs since May 2022. In this Insight slide deck, we address the following: • Stabilisation of fuel prices post-2022 peak • Analysis of Asia-Pacific fuel price policies on retail prices and demand • Evaluate the consequence of policy removal on Indonesia and India’s retail prices and demand The analysis shows that the impact of the policies on demand is minimal now, as fuel demand in these countries is mainly driven by income growth, rather than discretionary spending, like the US and Europe.