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Ecuador's gas price protests show why it's hard to phase out fuel subsidies

Protestors watching a fire burn in Ecuador
Protestors in Quito, Ecuador, on Oct. 8. Photo: Jonatan Rosas/Anadolu Agency via Getty Images

The turmoil in Ecuador is a fresh example of why fossil fuel subsidies are so persistent worldwide: There's support for phasing them out in theory, but in practice it's a different story.

Driving the news: President Lenín Moreno this week said he has temporarily moved government operations from the capital city, Quito, to the port city of Guayaquil.

  • This comes several days after Moreno announced the termination of roughly $1.4 billion in annual fuel subsidies, causing gasoline and diesel prices to rise sharply and playing a role in triggering violent protests.

Quick take: While I'm not an expert in Ecuadorian politics, it's hard not to see a connection here to protests earlier this year in France over an increase in the gasoline tax amongst other things.

  • This helpful Bloomberg explainer on Ecuador makes the same point about removal of decades-old subsidies there.
  • "Fuel price rises have a long history of provoking unrest not just in Latin America but around the globe — a gas tax increased sparked the Yellow Vest movement in France," they report.

Where it stands: AP reports that protestors have "seized some oil installations" as part of the wider demonstrations, and that the state oil company warned that lost production could reach 165,000 barrels per day.

  • "The government declared an overnight curfew around key state installations and government buildings as well as vital infrastructure such as airports and oil refineries," they report.