Colombia has made progress towards eliminating fuel and diesel subsidies and reducing discretionary
spaces allowing for artificially low fuel prices, but challenges remain. Colombia has provided explicit and
implicit subsidies to gasoline and diesel since 1983, costing the government up to 1.6% of GDP. This
paper discusses the political economy of fuel subsidies in the country to understand why reform has been
so slow. It focuses on the groups benefitting from the subsidies and their political participation, as well as
other economic impacts that have limited the political will to eliminate them. The Colombian case serves
as an example of the difficulty of fully eliminating fuel subsidies once they are already established.
The Political Economy of Fuel Subsidies in Colombia
OECD Environment Working Papers
