SCMP Wednesday, September 13, 2000
Europe aflame with fuel protests
AGENCIES and STAFF REPORTERS
Resentment at high fuel costs escalated throughout Europe yesterday, leading to protests, blockades and panic buying after a deal to increase oil production failed to bring down prices significantly on world markets.
Asia also faced being dragged deeper into the turmoil as stock markets suffered across the globe. Oil prices remained close to 10-year highs, with traders' fears of shortages not eased by Sunday's Organisation of Petroleum Exporting Countries (Opec) deal to raise output by 800,000 barrels a day.
European truck and taxi drivers, farmers, tour operators and others who claim high oil prices are hurting their businesses continued protests in Britain, Belgium, the Netherlands and France. Irish truck drivers vowed to act from Friday unless there was a 20 per cent cut in diesel duty and protests could also spread to Germany and Spain.
British Prime Minister Tony Blair pulled out of a tour of northern England and rushed to London to consider invoking emergency measures after panic buying swept Britain and left about half its 13,000 filling stations dry.
"This is by far the worst crisis we've had in 25 years," a spokesman for Britain's Royal Automobile Club said.
Farmer David Neave said: "Blair went running home with his tail between his legs. He couldn't deal with the real feeling of this country. We'll strangle London. We will bring it to its knees."
Dutch truck drivers staged wildcat blockades to stop traffic on motorways around Amsterdam and Rotterdam, while Belgian drivers mounted a third day of blockades and their German counterparts planned action for tomorrow. It was feared eastern Europe could follow suit.
Both the British and German governments have said they will not follow the example of France, which agreed to demands to subsidise fuel prices. European Union president France has called for a meeting of EU transport ministers for September 21.
There was some relief for oil buyers on the New York market late last night (HK time), where October Brent crude fell 96 cents to $32.66 (HK$254) a barrel. The price hit a decade high of US$34.60 last week and had risen US$2 a barrel in New York trading on Monday despite the Opec deal.
President Bill Clinton said yesterday he was "watching very closely what the market will do on prices as a result of the recent Opec initiative", but said of the British protests: "I don't think blocking the way to refineries is a way to deal with the issue".
Bank of America economist Simon Flint said that if oil prices remained high, Asian governments would face hard policy decisions. "There are lots of questions about how [rising energy costs] will affect inflation and current accounts," he said.
The crisis posed a "major dilemma for central banks" in Asia, Mr Flint said. Rising energy costs are inflationary, a problem often dealt with by increasing interest rates. But such a move could put an intolerable strain on regional corporations, which in countries such as South Korea are struggling to pay off major debt loads.
Dao Heng institutional sales head Raymond Tsui said Hong Kong investors were concerned about the pressure of oil prices on the US markets. "People will be looking to see if there are earnings problems and if the US economy will have a soft landing or go into a recession," he said.
The mainland is also having to grapple with fuel tax decisions. Beijing might have to defer its introduction of fuel taxes as rising oil prices stoke unrest among consumers, industry officials said yesterday. Farmers, taxi drivers, fishing fleets and tanker operators are taking a battering from crude prices, which have seen domestic petrol and diesel prices surge by more than 50 per cent since late last year. The tax scheme, approved last October, would add 30 to 40 per cent to current levels.