The Price of Cheap Energy

China, the US, Russia, India and the EU together account for more than half of all fossil fuel subsidies.

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Global Fossil Fuel Subsidies
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Notwithstanding the hype around green energy and electric vehicles, governments worldwide spent some 7 percent of gross domestic product subsidizing fossil fuels in 2022. For some energy sources, such as natural gas, location has a major effect on pricing. In North America, natural gas costs approximately $7 per gigajoule, compared with $25 in East Asia. Oil products, on the other hand, are traded in a more interconnected international market and thus do not fluctuate so much on cost.

But geopolitics plays a role as well, and no one subsidizes energy like China. The Middle Kingdom spent $2.2 trillion on fossil fuel subsidies last year, several times more than the next country, the United States ($760 billion). Notably, despite the costs of its war in Ukraine, Russia spent $420 billion. China, the U.S., Russia, India and the European Union together accounted for 57 percent of all fossil fuel subsidies.

Geopolitical Futures (GPF) was founded in 2015 by George Friedman, international strategist and author of The Storm Before the Calm and The Next 100 Years. GPF is non-ideological, analyzes the world and forecasts the future using geopolitics: political, economic, military and geographic dimensions at the foundation of a nation.