Oil crisis : Indonesia to increase gasoline prices by 30 %

This is what happens when a country subsidize gasoline amid surging oil prices (more than 130 USD today per barrel !) : a tsunami.

Indonesians took to the streets in angry protests over the soaring cost of food and a planned fuel price hike Wednesday, as an economic “crisis” overshadowed the 10th anniversary of Suharto’s fall.

Demonstrations were under way across the country against the government’s plans to raise the subsidised cost of fuel by as much as 30 percent to protect the budget from record world oil prices.

A hike on that scale would see the cost of gasoline in Southeast Asia’s biggest economy climb to 6,000 rupiah (65 cents) from 4,500 rupiah.

It’s interesting to see that at 6 000 IDR (= 21 THB) … the price would remain under market price !

To compensate the poor, the government is planning to transfer more than 1.5 billion dollars in cash handouts to millions of low-income families. (AFP)

To “compensate” is just another form of subsidy… They just changed the perimeter, the amount etc… But the principle remains.

More than ever : oil/energy is the current biggest weak point of asian economies. And it’s true also for Thailand (read here).

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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