Gas Prices Around the World Threaten Livelihoods and Stability

on Jul2
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“NO ES SUFICIENTE” — It’s not enough. That was the message protest leaders in Ecuador delivered to the country’s president this past week after he said he would lower the price of both regular gas and diesel by 10 cents in response to riotous demonstrations over soaring fuel and food prices.

The fury and fear over energy prices that have exploded in Ecuador are playing out the world over. In the United States, average gasoline prices, which have jumped to $5 per gallon, are burdening consumers and forcing an excruciating political calculus on President Biden ahead of the midterm congressional elections this fall.

But in many places, the leap in fuel costs has been much more dramatic, and the ensuing misery much more acute.

Families worry how to keep the lights on, fill the car’s gas tank, heat their homes and cook their food. Businesses grapple with rising transit and operating costs and with demands for wage increases from their workers.

In many places, livelihoods are already being upended.

Dione Dayola, 49, leads a consortium of about 100 drivers who cruise metropolitan Manila picking up passengers in the minibuses known as jeepneys. Now, only 32 of those drivers are on the road. The rest have left to search for other jobs or have turned to begging.

Before pump prices started rising, Mr. Dayola said, he would bring home about $15 a day. Now, it’s down to $4. “How do you expect to live on that?” he said.

To augment the family income, Mr. Dayola’s wife, Marichu, sells food and other items on the streets, he said, while his two sons sometimes wake at dawn and spend about 15 hours a day in their jeepneys, hoping to earn more than they spend.

The Philippines buys only a minuscule amount of oil from Russia. But the reality is that it doesn’t really matter whom you buy your oil from — the price is set on the global market. Everyone is bidding against everyone else, and no country is insulated, including the United States, the world’s second largest oil producer after Saudi Arabia.

Persistently expensive energy is stirring up political discontent not only in places where the war in Ukraine feels remote or irrelevant but also in countries that are leading the opposition to Russia’s invasion.

In poorer countries, the threat is more fraught as governments are torn between offering additional public assistance, which requires taking on burdensome debt, and facing serious unrest.

In Ecuador, government gas subsidies were instituted in the 1970s, and every time officials have tried to repeal them there’s been a violent backlash.

The government spends roughly $3 billion a year to freeze the price of regular gas at $2.55 and the price of diesel at $1.90 per gallon.

On June 26, President Guillermo Lasso proposed shaving 10 cents off each of those prices, but the powerful Ecuadorean Confederation of Indigenous Nationalities, which has led two weeks of protests, rejected the plan and demanded reductions of 40 and 45 cents. On Thursday, the government agreed to cut each price by 15 cents, and the protests subsided.

“We are poor, and we can’t pay for college,” said María Yanmitaxi, 40, who traveled from a village near the Cotopaxi volcano to the capital of Quito, where the Central State University is being used to shelter hundreds of protesters. “Tractors need fuel,” she said. “Peasants need to get paid.”

The gas subsidies, which amount to nearly 2 percent of the country’s gross national product, are starving other sectors of the economy, according to Andrés Albuja, an economic analyst. Health and education spending was recently reduced by $1.8 billion to secure the country’s large debt payments.

Mexico’s president, Andrés Manuel López Obrador, is using money the country makes from the crude oil it produces to help subsidize domestic gas prices. But analysts warn that the revenue the government earns from oil can’t make up for the money it is losing by temporarily scrapping taxes on gas and by providing an additional subsidy to companies that operate gas stations.

In Nigeria, where public education and health care are in dire condition and the state cannot ensure its citizens electricity or basic safety, many people feel that the fuel subsidy is the one thing the government does for them.

Kola Salami, who owns the Valentino Unisex Salon in the outskirts of Lagos, has had to hunt for affordable fuel for the gas generator he needs to run his business. “If they stop subsidizing it,” he said, I don’t think we can even. …” His voice trailed off.

In South Africa, one of the world’s most economically unequal countries, the rising price of fuel has created one more fault line.

As President Cyril Ramaphosa campaigns for re-election at the ruling African National Congress’s conference in December, even the party’s traditional allies have seized on the cost of fuel as a failure of political leadership.

In June, after fuel reached beyond $6 a gallon, a record high, the Congress of South African Trade Unions marched through Durban, a city already wrecked by violence and looting last year, and floods this year. Higher fuel prices have been “devastating,” Sizwe Pamla, a spokesman for the trade unions, said.

The dizzying spiral in gas and oil prices has spurred more investment in renewable energy sources like wind, solar and low-emission hydrogen. But if clean energy is getting an investment boost, so are fossil fuels.



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