Tag #Fuel Subsidies

Why do governments frequently resort to fuel subsidies despite their documented inefficiencies and negative consequences?

The Mexican government's decision to cap gasoline prices, while seemingly beneficial, is economically inefficient. Experts widely advocate for direct cash transfers to low-income families affected by rising fuel costs, as this method is more effective at alleviating economic hardship without the negative side effects of price controls, including increased consumption and budgetary strain for the government. This is consistent with recommendations from numerous international organizations such as the IMF and World Bank.