The Effect Of Fuel Oil Subsidy On Transportation Costs: A Case Study Of The One Price Fuel Oil Policy In The Small Islands And Outermost Regions
Abstract
This study examines the impact of Indonesia’s 2017-2019 One Price Fuel policy, which aimed to equalize gasoline and diesel prices nationwide, on transportation costs in small island and outermost regions. Transportation costs are measured by fuel costs per kilometer to the government center. Using Village Potential (Podes) data from 2006, 2014, 2018, 2019, 2020, and 2021, the study analyzes 1,993 villages with 8,374 observations. Employing the Difference-in-Differences (DID) method, the results show that the policy significantly reduced transportation costs in outermost regions by IDR 10,140 per kilometer, while the reduction in small island areas was not statistically significant. These findings suggest that price-based policies can improve access to affordable fuel when supported by adequate supply, sufficient authorized distributors, and geographically targeted distribution strategies.
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Copyright (c) 2026 Danny Syahril Ardiyansyah, Yohanna Magdalena Lidya Gultom
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EKOMBIS REVIEW: Jurnal Ilmiah Ekonomi dan Bisnis is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
