Oct 9, 2019

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

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.

Go deeper

Riots persist in Ecuador after president ends fuel subsidy

Riot police, protesters and smoke in Quito. Photo: Martin Bernetti/AFP via Getty

Violent protests continued in Ecuador today, 2 days after President Lenín Moreno fled the capital and moved government operations to a port city.

Driving the news: Moreno is standing by the policy that sparked the unrest — the termination of a popular, but costly fuel subsidy.

Go deeperArrowOct 11, 2019

Ecuador’s president agrees not to slash fuel subsidies amid deadly protests

Protestors in Quito on Oct. 7. Photo: Cristina Vega/AFP via Getty Images

Ecuador's President Lenín Moreno said on Sunday that his administration would agree not to terminate the country's fuel subsidies and sit for talks with indigenous groups, in an effort to end deadly protests that had roiled the country, according to the Wall Street Journal.

Why it matters: Thousands of Ecuadorians, set off by Moreno's announcement that he would end a 4-decade-old, $1.4 billion-per-year fuel subsidy, have been protesting for almost 2 weeks, clashing with police, ransacking government buildings and looting businesses. Confrontations between demonstrators and state security forces have resulted in 7 deaths, 1,300 injured and 1,152 arrests.

Go deeper: Ecuador’s president flees the capital amid protests

Keep ReadingArrowOct 14, 2019

Exxon and Chevron profits tumble in Q3 earnings report

Photo: Spencer Platt/Getty Images

ExxonMobil and Chevron both reported steep declines in Q3 earnings this morning, becoming the latest oil giants hit by lower prices.

Why it matters: Exxon is the largest U.S.-based multinational oil-and-gas company, and its financial performance has struggled in recent years.

Go deeperArrowNov 1, 2019