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Monday, 11 September, 2000, 15:35 GMT 16:35 UK
Oil prices hurt developing countries
Bangkok skyline
Thailand hopes to diversify its sources of energy
In recent days, Western protests over high fuel prices have dominated the news agenda.

The Organisation of Petroleum Exporting Countries (Opec) may be wary of alienating the US, where consumers are used to paying little more than $1.50 (1) a gallon for gasoline.

But the rise in the price of oil may yet hit developing countries hardest, as they have a greater reliance on oil imports.

The biggest threat to the Western economies may be that the high oil price stalls the Asian economic recovery.

Persistently high prices have dampened demand for oil in India and China, a report from the International Energy Agency ( IEA) said on Monday.

Dependent on oil

Developing countries now use more of the world's oil output than they did at the time of the last oil crisis, a report by the same agency found earlier this year.

They use nearly 40% of world oil, compared with 26% in the 1970s.

Many Western economies have sought to diversify their energy sources since then.

The growth in the use of oil in developing countries has averaged 5% per year since 1970, compared with 1% per year growth in the richer countries, the IEA report said.

This increased dependence means that China's oil import bill could jump 250% this year while the Brazilian import bill could be 150% higher as a result in the rise in oil prices.

Part of the reason that developing countries are hit harder is that they are "more reliant on their energy intensive manufacturing sectors."

With oil import bills rising, many of the benefits of foreign assistance could be wiped out, it warned.

What's the alternative?

Many developing countries are now looking for alternatives to oil, with natural gas a favoured option.

The use of gas could help the developing Asian states reduce their oil habit, a Petroleum Authority of Thailand statement said on Monday.

Oil accounts for over 60% of Thailand's energy consumption. It imported $4.2bn worth of oil last year.

The Philippines, another big oil importer in the region, has been hit by protests over soaring oil prices.

Even Indonesia, which is a net exporter of oil, could suffer from the rising price of oil. If surging prices results in higher oil prices domestically, then this could increase political tension.

Rising fuel costs in 1998 sparked riots in several Indonesian cities.

In India, where the oil import bill is thought likely to be close to $5bn this year, local media have called on the government to reduce its reliance on oil and boost its use of gas.

But some countries may not be able to find other sources of energy fast enough.

"By the year 2004, we expect significant shortages of power in this country, unfortunately the government has been unable to get coal power project on line," C Jayaratne, chairman of the Colombo chamber of commerce said.


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