The increase in the price of fuels causes protests in half the world

BarcelonaThe war in the Middle East following the attacks by the United States and Israel on Iran and the subsequent blockade of the Strait of Hormuz have caused an increase in the price of oil, which has already translated into an increase in fuel prices and, in turn, an increase in inflation in much of the world. Furthermore, the situation is aggravated by the attacks by the Houthis of Yemen in the Bab el-Mandeb Strait and the closure of the East-West pipeline of Saudi Arabia, which further hinders the supply of oil from the Persian Gulf to the rest of the world.

These are factors that make fuel more expensive, but, indirectly, they also make food more expensive due to the lack of fertilizers. Food that also feels the upward pressure on prices caused by the war between Russia and Ukraine, two of the world's main grain-producing countries, especially wheat.

It is a situation that has already begun to spark protests in very different countries across the globe. Since the last spike in oil prices in the summer, following the end of the truce between the United States and Iran, protests have occurred in countries as different as Guatemala, Chile, Portugal, Indonesia, Bangladesh, and the Philippines.

Several international media outlets, such as the New York Times or CNN, have reported on these protests, some more peaceful, such as the case of Portugal, with slow-moving vehicle marches on the roads honking horns, and others more aggressive, with blocked streets and roads and burning tire barricades in Syria.

The situation is caused by the increase in inflation worldwide. In Spain, for example, inflation in August was 4.3%, driven by the high price of fuel. And the situation seems like it will last. Since the end of June, the price of gasoline has already risen by 30% on average in the country, according to data from the European Union. And mobilizations in Spain seem to be about to arrive. The agricultural sector has already announced that it will mobilize if they are not offered a solution to the critical situation due to the rising cost of diesel and denounces that the aid does not cover even half of the additional cost derived from the price of diesel. In the Balearic Islands, the Federation of Fishermen's Guilds says that the rising cost of diesel seriously compromises the economic viability of the fleet.

The Spanish government, for its part, is preparing to extend measures to mitigate the impact on family economies and businesses of the rising cost of living, while transporters are demanding direct aid. Other European countries have also made a move. France has extended fuel subsidies until the end of the year, and in Germany the chancellor, Friedrich Merz, has announced a fuel discount of 17 euro cents per litre, which will cost the Berlin coffers about 2.5 billion euros.

The French president, Emmanuel Macron, has also announced that he will convene the G-7 to propose to the International Energy Agency a new release of strategic reserves to pour more crude oil into the market and manage to lower its price.

Inflation affects almost the entire world, especially Asian countries, which are more dependent on oil from the Middle East. Many governments in different countries are facing a difficult question: Is it riskier to pass on price increases to an irritable public, which would accelerate inflation, or to reinforce subsidies and aid, which would increase public debt and possibly threaten the stability of national currencies? "How much fiscal capacity does Asia or the developing world in general have to handle this geopolitical crisis?", Sana Jaffrey, a professor at the Australian National University, told the New York Times. “What happens to global financial markets when this capacity starts to run out?”.

Protests especially in Asia

According to the American newspaper, in Indonesia cooking gas is already in short supply and the lack of fuel is leading to rationing. Taxi drivers have already staged a protest because their work is limited based on their license plate. And students have already demonstrated and caused the police to take action. In Vietnam, over the weekend, drivers for Grab, a ride-hailing app, called for a boycott to protest low wages caused in part by rising fuel costs.

Transport workers and indigenous activists recently marched through the streets of Guatemala, demanding measures beyond temporary fixes such as price caps and subsidies. And in Bangladesh, the shortage of liquefied natural gas needed to produce electricity has led to rationing and the temporary closure of garment factories, the main engine of the country's economy. Many turned to diesel after the war in Iran began in February, only to see those prices now rising as well. The government of Sri Lanka sets fuel prices every month, but fuel distributors selling to gas stations have begun to restrict supply in anticipation of a projected increase in demand.