Fossil Fuel Subsidies Harm the World and Its People

The world is spending billions of dollars on subsidies on fossil fuels. According to the Overseas Development Institute, wealthy countries are spending more on fossil fuel subsidies than what they are spending on helping poorer nations combat climate change. Based on the International Monetary Fund and the International Agency, a fossil subsidy consists of national governments giving financial aid to coal, gas, and oil producers and consumers.

                For example, in 2011,the United States provided farmers with a fuel tax exemption worth a billion dollars, $1 billion to the strategic petroleum reserve, and half a billion for coal, gas, and oil research and development. In the same year, Germany provided $1.9 billion euros to the coal sector. Britain provided tax concessions worth 280 million euros for oil and gas production. Rich governments have not attempted to put a price on carbon and to promote companies to use alternative resources.

                In developing countries such as Pakistan, Venezuela, and Indonesia, the government gives subsidies in an attempt to help the poor people with lower fuel prices. These countries are spending more money on these subsidies than on public health by more than double. The people benefited from the subsidies are the providers of the fossil fuels, and the subsidies have a negative impact the people in poverty who pay taxes. According to Kevin Watkins, Executive Director of the Overseas Development Institute, “the top 20 percent of the societies get about half of the total subsidy package”.  Most of the energy support, about 75 percent, from international banks went to fossil fuel projects in some of the top high emitting developing nations. In addition, global subsidies for fossil fuels are six times higher than the subsidies given for renewable energy. The ODI hopes that countries make an agreement that benefits the government, consumers, and the environment.

                Developing countries place a higher concern on fossil fuels than on the education and health of their people. The residents of the countries, especially the poor, are paying the consequences for the government’s decision. They pay taxes but receive little benefits from the government, who provide the rich with more money through the subsidies. In developed countries, the option of using renewable energy exists, but for some reason, the government still latches on fossil fuels as the primary source of energy. By consuming fossil fuels, the world is accelerating climate change; if the countries’ government placed restrictions on the consumption of fossil fuels, the world will cause less damage to the environment. The gap between the rich and poor will lessen, and the government will provide people with the services they need for their health and well being.

Based on  http://www.bbc.co.uk/news/science-environment-24833153

Global Wine Shortage

The world is undergoing a wine shortage as the consumer demand outmatches the supply. In 2012, the demand for wine surpassed supply by over 300 million cases. Production dropped to its lowest levels, and global production has been declining since 2004 when supply surpassed demand by approximately 600 million cases. According to Morgan Stanley’s analysts, global wine consumption had risen since 1996, with the exclusion of the 2008-2009 year. Global consumption is at about 3 billion cases per year. Currently, more than a million wine producers exist, and together they make about 2.8 billion cases per year. The analysts predict that inventories will be reduced soon as previous vintages, or older wine products, supply current consumption. The analysts tie this occurrence with the decrease in production in Europe due to inclement weather and other factors. The total production in Europe decreased by ten percent in the previous year and fell by twenty-five percent since its zenith in 2004. While production has been declining in Europe, it has been increasing at a steady pace in the Western Hemisphere. It seems that the New World will benefit the most from the increasing demand on global markets.

                The wine industry is undergoing an imbalance of the supply and demand curves as production decreases in the European countries. The supply used to exceed the demand in the previous years, but as wine suppliers reduced their production, the opposite has happened. Consumers are demanding more wine than what is being produced. The demand curve has been shifted to the right, which increases the price of the good produced, in this case wine. The supply curve has also shifted, but to the left, which in turn increases the price for wine while it provides a smaller quantity. Wine producers see this as an opportunity to charge more for wine. Europe is also trying to sell older wine produced and leftover from the previous year and it went under poor harvest recently, so it makes sense that less wine is produced. What European countries probably did not count on was that the producers from the New World would be able to take advantage of this situation. Wine producing countries such as Chile, Argentina, United States, South Africa, and New Zealand, are increasing their wine production, thus enabling them to provide the amount of wine that Europe is not able to offer to the global consumers and earn more profit. This can be beneficial to the developing countries such as Argentina, South Africa, and Chile, for increased trade means more revenue for the countries. This is especially good for Chile since wine production and grape agriculture plays a key role in its economy.

Based on http://www.bbc.co.uk/news/world-24746539