Rising oil prices bring threat of inflation to Asia

Shanghai (AsiaNews/AP) –Asian consumers and government treasuries are being bled dry by rising crude prices now hovering above the $ 55 US per barrel mark.

Asian governments are pouring billions of dollars into subsidies to oil importers to keep fuel prices from rising too high. Even oil producing countries like Malaysia and Indonesia are losing in subsidies what they are making in higher oil prices.

Asian consumers have long been more sensitive to rising oil prices than their counterparts elsewhere because they pay a one dollar premium per barrel on Middle East crude.

The challenge now for Asian governments and economies is how to cope with inflation and its consequences.

Philippines' President Gloria Macapagal Arroyo said her country was in a "grave economic crisis". In order to contain fuel cost she banned unofficial use of government vehicles and urged commuters to car pool.

In India, the state-owned oil company estimates its oil bill will be 50 per cent more this year compared to last for a total cost of $ 27 billion US.

In Indonesia, low-income people, who normally use kerosene daily, complain of its rising price. The country's oil production has been stagnating in recent years, whilst imports of increasingly expensive oil products have soared. This year, the government has quadrupled its allocation for fuel subsidies.

To save on fuel, the government of South Korea has ordered fewer field manoeuvres for its 650,000 troops along its border with North Korea.

Last month, price hikes for gasoline, diesel and cooking gas sparked violent protests in Nepal.

In Thailand, the government ordered supermarkets and gas stations to close early to conserve fuel.

Japan, the continent's biggest economy, learnt its lesson from the oil shocks of the 1970s and has become vastly more efficient in energy use. However, it still remains as dependent as ever on imported oil.

China is the world second largest oil importer after the US. Symptoms of oil shock at the street level are few, mostly in the form of energy rationing and black-outs. Government controls have kept gasoline prices relatively low. Chinese drivers still pay only one-third what South Korean motorists do for a litre of gas. However, rising domestic demand for oil is pushing the government towards developing plans for alternative fuels and energy saving.