You’ve given a pretty good account of the problem. So what kinds of solutions have been effective at addressing this insidious problem?
We have found that the best way to tackle high energy prices is not through fossil fuel subsidies or tax holidays, but through deep and sustained investments in clean energy, public transportation, and urban/rural planning. Some of this is long-term, like building new bike paths, EV charging networks, or new intercity trains. There are also emergency measures, like cash transfers and targeted assistance for low-income households and subsidies for public transportation.
We are already seeing this across the world in response to the Iran war, in places like Pakistan, Indonesia, Egypt, or The Philippines. Ultimately, by reducing demand for fossil fuels, governments can more effectively remove fossil fuel subsidies without political backlash.