Burma’s military government has raised official gas prices, say sources in Mon State and Rangoon. According to Burma experts, the move is likely at attempt to save revenue as the country feels the effect of a declining international energy market.
On December 1st, the government increased the cost of a gallon of petrol to 2,500 kyat, says an IMNA reporter in Moulmein and sources in Rangoon. The increase marked a jump from the highest government price of 1,900 kyat at the end of November, the result of a slow, but steady, rise from 1,500 kyat in September and October.
The government price hike brought fuel costs in line with dropping black market prices, most recently tabbed at between 2,500 and 2,700 kyat a gallon. The black market prices are a significant drop from recent past, when gas prices crept incrementally closer to 5,000 kyat per gallon from September through November.
The black market gas prices are in line with dropping prices on the international market, which have seen a steady decline as a slowing global economy has dampened demand. According to a report released this week by the Paris-based International Energy Agency, for instance, global oil demand in 2008 will measure negative growth for the first time since 1983.
It is, however, unclear why the regime is boosting domestic prices at this juncture. No official reason for the price increase has been given by the Ministry of Energy, which has controlled gas and oil prices in Burma since the sectors were nationalized in 1962. An official at the ministry was also unable to offer an explanation when pressed by IMNA.
Some Burma analysts think the price increase is an attempt by the SPDC to increase revenue streams. “We've been hearing countless examples of regime money saving/grabbing, of which this is but the latest example,” says Sean Turnell, economics professor at Australia’s Macquarie University and author of the oft-cited yearly Burma Economic Watch. “Right now the regime seems to be running short of cash.”
The SPDC is assuredly feeling effects of the decline in oil and gas prices, Turnell told IMNA on Friday. According to Turnell’s 2008 Burma Economic Watch, released in May, gas exports make up 40% of Burma’s exports by value. The 2008 report also warned that Burma was “acutely vulnerable” to a drop in energy prices, as did the annual report released by the Asian Development Bank in March.
“Hits that are being taken on the revenue side as Burma's gas exports decline in price,” Turnell told IMNA. “Lifting the price of petrol saves the government on the subsidies it otherwise pays – both in terms of lower losses per unit of petrol, and in what they must hope will be lower demand. The [SPDC’s budget] is improved, but so is the trade balance.”
How much revenue will be saved remains to be seen, however, as drivers appear to be responding by increasing their black market fuel purchases. In the past, drivers typically purchased two gallons per day at the cheaper government price – their maximum daily quota – and filled the rest of their need on the black market.
“The price of government gas is increasing, so it doesn’t matter where we buy our gas from. The outside price is the same,” a bus driver in Rangoon told IMNA.
A source from Mudon Township, Mon State, agreed and expressed disappointment with the rising government fuel price. “If I take the gas from the government, it is no different for me,” she said. “I can just buy from the black market at the same price.”
