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Oil Price Rise Causes Global Shift in Wealth
Oil-importing countries face their own challenges. The hardest hit are the poorest. Last year, Senegal's budget deficit doubled, inflation quickened and growth slowed. The cash-strapped state-owned petrochemical business had to shut down for long periods.
In China, the government increased domestic pump prices on Oct. 31 by nearly 10 percent with shortages, rationing and long lines throughout the country. Violence broke out at some gas stations, including an incident last week in Henan province in which one man killed another who had chastised him for jumping to the front of a line for gas.
A scarcity of diesel fuel even hit China's richest cities -- Beijing, Shanghai and trading ports on the east coast -- which in the past have been kept well supplied. In Ningbo, a city south of Shanghai, the wait at some gas stations this week was more than three hours, and lines stretched more than 200 yards.
Rumors circulated that gas stations or the government was hoarding fuel in anticipation of further price increases, prompting the official New China News Agency to warn that anyone caught spreading rumors about fuel-price increases will be "severely punished."
Li Leijun, 37, a taxi driver, said he was so angry that he was unable to buy fuel that he argued with gas station attendants and called the police. "I still didn't get any diesel," he said.
Since shedding orthodox Maoist economic policies, China's leaders have unleashed decades of pent-up demand. China consumes 9 percent of world oil output, up from 6.4 percent five years ago, according to the International Energy Agency. Yet it still subsidizes fuel. As a result, consumption this decade has skyrocketed at an 8.7 percent annual rate despite soaring prices and concerns about the environmental impact of profligate fuel use.
Consumption in South Africa is also defying high prices as long-impoverished blacks join the middle and upper classes. Cars are a status symbol, and gasoline consumption jumped 39 percent in the decade after the end of apartheid in 1994. New-vehicle sales last year rose 15.7 percent over 2005.
Highly developed consumer nations have been better able to adapt. In Japan, which relies on imports for nearly 100 percent of its fuel, nearly everyone is a loser -- with the big exception of Toyota.
Yet Japan has been weaning itself off oil for years. It now imports 16 percent less oil than it did in 1973, although the economy has more than doubled. Billions of dollars were invested to convert oil-reliant electricity-generation systems into ones powered by natural gas, coal, nuclear energy or alternative fuels. Japan accounts for 48 percent of the globe's solar-power generation -- compared with 15 percent in the United States. The adoption rate for fluorescent light bulbs is 80 percent, compared with 6 percent in the United States.
Still, rising fuel prices are pushing up the prices of raw and industrial materials, as well as food, which relies on fertilizers and transportation. Because of rising wheat prices, Nissin Food Products, the instant-noodle industry leader, will increase prices 7 to 11 percent in January, the first price hike in 17 years.
Greasing Toyota's Gears
A winner is Toyota. Soaring gasoline prices have buffed the image of the hybrid Prius and Toyota's other fuel-efficient models, such as the Camry and Corolla. Although stagnant in Japan, sales were strong in North America, Europe, Asia and emerging markets. In October, Prius sales stood at 13,158 vehicles, up 51 percent from 8,733 in October last year. Worldwide, the number of hybrid cars sold by Toyota surpassed 1 million in May.
Britain's national average gasoline price topped 1 pound per liter, or about $8 a gallon, for the first time this week because of record oil prices.