I have sympathy for the people who rely on fuel for their livelihood. Truckers, taxis and drivers have all grown up because of the hateful and unnecessary war in Iran.
Hong Kong lawmakers they asked the government to intervenesubsidizing fuel costs during price hikes to help them weather the rough patch.
I totally agree with the sentiment. If people are struggling because of events outside their sphere of influence, the government must help.
Fossil fuel supplies are regularly interrupted. Geopolitics sent oil prices soaring in 1973, 1979, 1990, 2011, 2022 and, of course, now in 2026. As much as I hate to predict more human misery, it’s likely to happen again.
So, at the risk of sounding like the worst kind of heartless crony capitalist, it’s worth asking whether exposure to oil price spikes is actually outside of people’s sphere of influence.
Some large fuel consumers, such as airlines, may use sophisticated financial instruments to hedge their fuel costs. However, they are still exposed to the vagaries of the oil market, as we can see input fuel surcharges.
Smaller companies or individuals who do not have access to sophisticated financial protections only have the option of trying to consume less fuel.
In the past, the only way to achieve this was to invest in more fuel efficient engines; today the alternative is electrification.
Anyone who buys a gasoline or diesel vehicle today knows that they are handcuffing themselves to needing fuel supplies in the future.
There is enough information out there about the volatility of fuels, the efficiency of electric motors, and yes, climate change, that whoever makes that decision does so with their eyes wide open.
I don’t want to be unsympathetic. I know it’s a tough decision to pay the higher upfront costs for more fuel efficient engines or even electric vehicles.
It also seems inhumane to penalize people for decisions made years ago, some of whom even made the sustainability-driven choice to continue using an old vehicle rather than give up something useful in favor of a bright green new model.
Instead of using government funds to subsidize the ongoing support of outdated technology, wouldn’t it make sense to use government funds to subsidize people FAR from fossil fuels?
The last budget has ended the tax cut for electric cars for the first time. There is no longer a sweetener for people who make the sensible decision to avoid their shackles with fossil fuels.
Subsidizing gasoline when prices go up instead gives tax-funded sweetener to people who choose not to make the same decision. This is a perverse incentive.
Beyond the moral hazard of subsidizing poor decisions, there is a long-term consideration.
Climate change will be expensive. It will destroy property with sea level rise and the most extreme weather; will make food more expensive as crops are affected by bad weather; it will exacerbate pandemics as disease-carrying animals and insects more often come into contact with humans.
The Paris Agreement sets out a path to avoid the worst: reducing greenhouse gas emissions to net zero by 2050, with an interim target of halving them by 2030.
That’s less than five years. Vehicles usually last longer than that, so any car bought today will still be pumping out greenhouse gases then.
Making the move to net zero will take a lot of work. Building the necessary charging infrastructure, building new power plants and a robust network of batteries and other storage will require money. But don’t think of it as expensive – think of it as an investment.
We don’t have to look far for inspiration on how that investment can be made. China is moving fast electrifying its economy – not only with electric vehicles, but with electricity supply and even with heavy industry.
The investment is already paying dividends: the growing share of electric vehicles, increasingly powered by cheap solar panels and wind, helped insulate somewhat from the increase in the price of oil caused by the war in Iran.
Iran’s war is causing misery, not only for the innocent people trapped in the war zone, but also for the innocent people whose costs are rising as a result of the fuel disruption.
It is inhumane not to provide assistance to people who are trapped by these higher costs, and in that respect, I agree with the legislators who want to use government funds to ease this pain.
But let’s do it smart. Instead of resorting to plaster solutions like fuel subsidies, let’s help people in the long run.
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