Forecasting Algerian oil export revenues in a deregulated market Online publication date: Tue, 15-Jul-2014
by Rabea Ferrouhki, Fatih Birol
International Journal of Global Energy Issues (IJGEI), Vol. 7, No. 5/6, 1995
Abstract: Similar to other oil exporting developing countries, one of the crucial issues facing the Algerian energy market is the heavily subsidised prices of domestic petroleum products. Currently, they still lie substantially below economic cost. Such a policy brings about excessive domestic oil demand. This, in turn, not only leads to a lower energy efficiency, but also results in oil revenues being foregone. The purpose of this paper is to investigate the impacts of a subsidy phase-out policy on the evolution of oil export availability of the country. To do that, we first analyse the relationship between oil demand on a sectoral basis by using a standard econometric approach. Then, we construct two scenarios, namely the Business as Usual and the Subsidy Phase-out scenarios in order to sketch out the long-term effects of a change in the pricing policy. The empirical results are revealing. An economically efficient pricing policy would generate additional oil revenues for the country.
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