The Fuel Prices Goes Up Again
The fuel prices just went up again and already I saw someone wrote claiming that the rich gets richer and the poor gets poorer. I thought about it and I think this may not be accurate.
A poorer man has one small car, so he now pays 20 sen more per litre. Lets say in total he pays rm 2 more each time he fills up.
A richer man has a bigger car which takes more fuel to fill up. He pays rm 4 more each time he fills up. In addition he has 2 other cars of more or less the same size, this means he now has to pay rm 12 more to fill his cars.
So, in fact the richer guy is now paying more than the poorer guy.
Comments
"Energy subsidies are highly inequitable because they mostly benefit upper-income groups. Energy subsidies benefit households both through lower prices for energy used for cooking, heating, lighting and personal transport, but also through lower prices for other goods and services that use energy as an input. On average, the richest 20 percent of households in low- and middle-income countries capture six times more in total fuel product subsidies (43 percent) than the poorest 20 percent of households (7 percent) (Figure 7). The distributional effects of subsidies vary markedly by product, with gasoline being the most regressive (i.e., subsidy benefits increase as income increases) and kerosene being progressive. Subsidies to natural gas and electricity have also been found to be badly targeted, with the poorest 20 percent of households receiving 10 percent of natural gas subsidies and 9 percent of electricity subsidies (IEA, 2011a)."