Courtesy of Phnom Penh Post
Written by Kay Kimsong
Friday, 30 May 2008
Gasoline prices in the capital have topped 5,550 riels ($1.37) a liter and are set to continue rising as record-high fuel costs batter motorists and drive up inflation to near crippling levels.
World oil prices remain above $130 a barrel after reaching highs of $135 in May, and Prime Minister Hun Sen has warned that local pump prices will keep climbing on the back of global fuel costs.
“We have talked recently of the price of crude oil at $133 ... my prediction is that next week it will be $140 and then it will increase up to $200 per barrel ... the price of fuel will not decline,” Hun Sen said May 28.
“Skyrocketing oil prices continue to drive up the costs of Cambodia’s gasoline and food items,” he said, adding that even the anticipated start of oil production in Cambodia would do little to dull the negative effects of global oil prices.
Following the discovery in 2005 of undersea oil and natural gas deposits, the government has banked on vast petroleum reserves to wean the country off of costly fuel imports.
But it is unclear exactly how much oil and gas can actually be recovered, and Hun Sen said, “Even fuel producing nations have had to increase the price of gasoline.”
While motorists are feeling the cost crunch at the pumps, spiking fuel prices have had a ripple effect across all markets, most notably for consumer goods such as cooking gas and food.
According to Hun Sen, food prices have risen nearly 30 percent since 2006, while transportation costs increased by 13.5 percent.
The result has been double-digit inflation that has pushed more Cambodians deeper in poverty as staple items that were once affordable climb out of reach.
Inflation, which was at 10.8 percent at the end of 2007, will also likely stunt the country’s economic growth by as many as two points this year, according to officials.
Gross domestic product growth is expected to slow to 7.5 percent this year, compared with growth of 9.5 percent in 2007, Finance Minister Keat Chhon said on May 22.
He said the government expects to lose $300 million this year in uncollected tax revenue from fuel imports as it struggles to curb rising pump prices and ease inflationary pressures.
“Yes, we are able to control inflation by subsidizing fuel,” Keat Chhon told reporters on May 22.
The government has maintained a flat tax on imported fuel of $309 a ton, saying that raising tariffs to keep pace with world oil prices would result in far higher pump prices.
Economists, however, say that even with a flat tax on imported fuel, Cambodia is largely at the mercy of global economic forces such as fuel prices and the weak US dollar.
“This makes it difficult to bring inflation down,” said Dr Kang Chandararot, of the Cambodia Institute of Development Studies.
(Additional reporting by Meas Sokchea)
Written by Kay Kimsong
Friday, 30 May 2008
Gasoline prices in the capital have topped 5,550 riels ($1.37) a liter and are set to continue rising as record-high fuel costs batter motorists and drive up inflation to near crippling levels.
World oil prices remain above $130 a barrel after reaching highs of $135 in May, and Prime Minister Hun Sen has warned that local pump prices will keep climbing on the back of global fuel costs.
“We have talked recently of the price of crude oil at $133 ... my prediction is that next week it will be $140 and then it will increase up to $200 per barrel ... the price of fuel will not decline,” Hun Sen said May 28.
“Skyrocketing oil prices continue to drive up the costs of Cambodia’s gasoline and food items,” he said, adding that even the anticipated start of oil production in Cambodia would do little to dull the negative effects of global oil prices.
Following the discovery in 2005 of undersea oil and natural gas deposits, the government has banked on vast petroleum reserves to wean the country off of costly fuel imports.
But it is unclear exactly how much oil and gas can actually be recovered, and Hun Sen said, “Even fuel producing nations have had to increase the price of gasoline.”
While motorists are feeling the cost crunch at the pumps, spiking fuel prices have had a ripple effect across all markets, most notably for consumer goods such as cooking gas and food.
According to Hun Sen, food prices have risen nearly 30 percent since 2006, while transportation costs increased by 13.5 percent.
The result has been double-digit inflation that has pushed more Cambodians deeper in poverty as staple items that were once affordable climb out of reach.
Inflation, which was at 10.8 percent at the end of 2007, will also likely stunt the country’s economic growth by as many as two points this year, according to officials.
Gross domestic product growth is expected to slow to 7.5 percent this year, compared with growth of 9.5 percent in 2007, Finance Minister Keat Chhon said on May 22.
He said the government expects to lose $300 million this year in uncollected tax revenue from fuel imports as it struggles to curb rising pump prices and ease inflationary pressures.
“Yes, we are able to control inflation by subsidizing fuel,” Keat Chhon told reporters on May 22.
The government has maintained a flat tax on imported fuel of $309 a ton, saying that raising tariffs to keep pace with world oil prices would result in far higher pump prices.
Economists, however, say that even with a flat tax on imported fuel, Cambodia is largely at the mercy of global economic forces such as fuel prices and the weak US dollar.
“This makes it difficult to bring inflation down,” said Dr Kang Chandararot, of the Cambodia Institute of Development Studies.
(Additional reporting by Meas Sokchea)
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