BURMESE FUEL PRICES RISE 100 PERCENT

UNCLAS RANGOON 000749 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/MLS PACOM FOR FPA TREASURY FOR OSIA:SCHUN E.O. 12958:N/A TAGS: ECON ENRG EINV PREL BM SUBJECT: BURMESE FUEL PRICES RISE 100 PERCENT ¶1. (U) On August 15, the GOB imposed a price hike on gasoline, diesel fuel, and natural gas, allegedly to keep up with global oil prices. The price of gasoline increased 67 percent overnight, from 1,500 kyat (USD 1.17) per gallon to 2,500 kyat (USD 1.94) per gallon. Diesel fuel prices doubled, from 1,500 kyat (USD 1.17) to 3,000 kyat (USD 2.33) per gallon. Compressed natural gas (CNG) prices rose an astonishing 400 percent, from 500 kyat (USD 0.39) to 2,500 kyat (USD 1.94) per container (17 gallons). The GOB last raised fuel prices in October 2005. ¶2. (SBU) The price hike has dramatically affected transportation costs. Our local staff complained that bus fares this morning rose between 100-300 percent, depending on the bus route. Maung Maung Lay, member of the Myanmar Chamber of Commerce, told us that there is a shortage of operating buses, as many drivers did not have enough money to fill their tanks. This may lead to further price increases during the evening commute. Additionally, the fuel price hike led to an immediate rise in commodity prices, and many Burmese have rushed to the markets to purchase food before prices skyrocket further. ¶3. (SBU) Comment: The GOB's unannounced and unexplained fuel price hikes put additional inflationary pressure on a stumbling economy that has already experienced 57 percent inflation this year. Although some economists speculate the GOB raised fuel prices to further ration its use in the face of shortages, others speculate the GOB hiked prices to raise revenue for its large budget deficit and to fund ongoing construction projects. Whatever the reason, the hikes are another example of the regime's gross economic mismanagement and its political tin ear. The 1988 pro-democracy uprising was born of similar bad decisions and economic failures. This year the regime has already faced sporadic demonstrations against the dismal economy. It remains to be seen how much more the Burmese will take while the generals continue live high on the hog. VILLAROSA