Raising prices of gasoline and diesel in Burma
Aug 18th, 2007
Gas prices were raised in Burma recently. I think the poor will eventually bear the burden of price hikes and indirect costs. Higher gasoline prices could push up the expenditure of a household even though they don’t own a car or no electric bulb installed in their homes.
Since the gasoline prices will be mostly priced in Burmese kyats. Inflation and rising consumer prices may drag Burmese Kyat down relative to basket of hard currencies. Therefore asset owning or business running middle class and business folks and families living afloat on inbound remittance from family members working in overseas will not feel the heat in the longer run. The real losers will be urban working class folks in poor suburbs of Yangon and other major cities.
However, this move can be considered as good thing for future Burma as Myanmar Petroleum Enterprise has been distributing the gas at subsidized prices after importing from foreign countries; Burma has been a net importer for gasoline and diesel since 1980s. Were Burma a democratic country with elected government, they would have to act this too as no government could sell services at subsidized prices in the long run.
With more than 500,000 hydrocarbon powered mechanized vehicles running throughout Burma, even if rationed gasoline at subsidized prices is sold only to automobiles registered in Yangon, it could still drain from the budget.
So in my opinion, it is sort of doing favour for the next government although one could share the pain with and pity for the poor.
I have made some comparisons out of curiosity, see below.
In Burma
New Gasoline price = $1.94 per British gallon
New Diesel price = $2.33 per British gallon
In some parts of USA
3+ USD / (American) Gallon —> i.e. $6 per UK Gallon
In some parts of Europe
1.3 to 1.5 Euros per Liter —-> $7 per UK Gallon
Conversion Factors:
1 US Gallon = 3.7854 Liters
1 UK Gallon = 4.54609 Liters/Litres
So if the government could explain why the prices were raised then the public may understand it and it will be better for everyone concerned.
If the CNG price were not raised, assuming all urban public transport were already converted to CNG. If Jetropa or Physics Nut (Kyat Su) project materialized and some cocktail of Diesel and processed Physics Nut oil could relieve if not totally replace the demand for the Diesel, then the raising consumer price could be controlled and it will be good for the poor.
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References:
[1] Wiki entry on unit of Gallons
http://en.wikipedia .org/wiki/ Gallon
[2] A Primer on Gasoline Prices
http://www.eia. doe.gov/bookshel f/brochures/ gasolinepricespr imer/eia1_ 2005primerM. html
[3] Oil Price Controls in China
http://delong. typepad.com/ sdj/2005/ 08/oil_price_ contr.html