Canarian teachers confirm the ineffectiveness of the gasoline discount: "it does not reach the consumer"

The professors of the Department of Applied Economic Analysis of the University of Las Palmas de Gran Canaria, Juan Luis Jiménez and José Manuel Cazorla, and professor Jordi Perdiguero, of the Autonomous University of Barcelona, ​​have advanced in an entry under the title 'The effect of the 20-cent discount on gasoline and diesel prices in Spain' from the blog 'Nada es gratuito', the results of a study that analyzes the impact the 20-cent discount has had on the price of hydrocarbons published by the Government of Spain since last April.

Canarian teachers confirm the ineffectiveness of the gasoline discount: "it does not reach the consumer"

The professors of the Department of Applied Economic Analysis of the University of Las Palmas de Gran Canaria, Juan Luis Jiménez and José Manuel Cazorla, and professor Jordi Perdiguero, of the Autonomous University of Barcelona, ​​have advanced in an entry under the title 'The effect of the 20-cent discount on gasoline and diesel prices in Spain' from the blog 'Nada es gratuito', the results of a study that analyzes the impact the 20-cent discount has had on the price of hydrocarbons published by the Government of Spain since last April.

In the period studied, they warn, the average prices in Spain increased after the policy by approximately and on average, 5 cents.

Specifically «95 gasoline increased 2.7 cents of euros before taxes and 3.7 after taxes; and diesel even more, reaching 4.1 and 6 euro cents before and after taxes, respectively«.

Jiménez, Cazorla and Perdiguero point out that "establishing a subsidy has allowed hydrocarbon producers to appropriate a part of them", due to the fact that the market "has competition problems in all the links of the productive chain" and that the demand is »inelastic«. For this reason, the reduction "has not been transferred to consumers."

In addition, he anticipates, the environmental cost must be taken into account, by encouraging the generation of polluting emissions.

The article analyzes the inflationary context due, among others, to the rise in energy prices, especially after the Russian invasion of Ukraine, several European countries have implemented measures on the hydrocarbon market in order to contain these increases. In Spain, at the beginning of April, a temporary measure was chosen consisting of a subsidy of 20 cents, with an "important nuance" detailed by the authors: "stations belonging to companies with refining capacity in Spain (Repsol, Cepsa and BP ), which are also the ones with the greatest presence in the country, should discount 5 cents while the State would contribute the other 15. For the other stations, the discount would be fully covered by public funds (20 cents)».

The authors have analyzed a panel of weekly average prices of gasoline 95 and diesel, both before and after taxes, from the first week of January 2022 to the second of May. From there, it was possible to compare the behavior of prices in Spain with respect to other countries that had not applied any measure, showing, in the opinion of this study, its inefficiency for the final consumer.

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