Abstract

Why do environmentally and economically costly fossil fuel subsidies persist? One explanation may be election timing, since rising gasoline prices can harm a leader’s reelection prospects. Drawing on theories of retrospective economic voting, I argue that incumbents reduce the risk of electoral backlash by controlling gasoline prices as an election nears, especially when they cannot offset rising prices with more comprehensive social assistance policies. I evaluate this argument using monthly gasoline price data from 1990 to 2015 for more than 90 democracies. I find that when incumbents are uncertain about their electoral prospects, the impact of a pending election on gasoline prices is negative in democracies with low state capacity, and the effect is economically meaningful in terms of reduced per-liter cost. The findings contribute to our understanding of the political determinants of fossil fuel subsidies, opportunistic business cycles, and the political and distributional challenges of adopting effective climate policy.