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The Honolulu Advertiser
Posted on: Sunday, September 11, 2005

Rising fuel costs crippling economies

By WILL WEISSERT
Associated Press

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TILAPA, Guatemala — After 12 hours of bone-jarring waves and skin-scorching sun and salt, Rolando Linares might pull enough fish from the Pacific to buy two gallons of gas.

"It keeps getting more expensive and the price of fish stays the same," says the 17-year veteran fisherman of the waters off western Guatemala.

The same soaring fuel prices squeezing family pocketbooks and slicing into cooperate profits in the United States and Europe are especially catastrophic in the poorest corners of the globe. Here, more money spent on gasoline can push small businesses into bankruptcy and families into poverty, while straining fragile economies to the point of near collapse.

High prices at the pump across Africa are crippling public transportation, and few in Asia have been harder hit than Indonesia — where the national currency, the rupiah, has fallen to four-year lows against the U.S. dollar as skyrocketing fuel subsidies drain government coffers.

Oil prices are a national security issue for the Philippines. For every $10 increase in world crude prices per barrel, the government must spend an extra $1.26 billion of its foreign exchange reserves, President Gloria Macapagal Arroyo estimates.

Terrorists "tend to take advantage of situations like this," Arroyo said.

And even though the poor don't have cars, they feel the higher oil prices as food, energy and transportation costs rise.

With inflation in Sri Lanka increasing to 15 percent thanks to high oil prices, M. Maheswari now skips breakfast so her 11-year-old son, Kugan, can have his.

"I am finding it difficult to have three meals for all of us," said the house maid, who makes a monthly salary of $65.

Presidents in Central America have for months pleaded with oil-rich Venezuela and Mexico to help bring down gas prices.

In Guatemala, a gallon of gas in the capital of Guatemala City costs an average of $3.26, and prices in the countryside and at other points throughout the region are approaching $4, the Guatemalan Energy Department reports.

In neighboring El Salvador and Honduras, drivers have lined up at gas stations this week to buy fuel they are afraid will get even more expensive in coming days.

There have been frequent calls to rework the 25-year-old San Jose Accord, under which both Mexico and Venezuela provide subsidized oil to 11 Caribbean and Central America nations.

"We are all facing a grave situation," Guatemalan Economy Secretary Marcio Cuevas said of the region. "We have to take the appropriate measures. If not, we will have crisis, not just in the short term, but in the long term."

The rising energy and other daily costs hit Guatemalans hard, especially the estimated 60 percent who live on less than $2 a day.

Grinding poverty is everywhere in Tilapa, a village of cinderblock and corrugated metal shacks.

Fishermen are especially vulnerable to rising fuel prices. The gasoline they use to fill the tanks of their speedboats costs $4.05 per gallon — the equivalent of as much as 12 pounds of fish.

"Here, misery comes and the people say nothing," said 19-year-old Marco Tule, who was sitting on a crumbling wooden dock, wearing a sideways baseball cap. "But with gasoline like it is, this is desperation, not misery."

Pumping gasoline at an Esso Station in Guatemala City, 175 miles to the east, 40-year-old accountant Jorge Diaz said he was selling his 2003 Chevy Suburban, in large part because it costs nearly $60 to fill the tank.

"I love this truck," he said. "But I need something smaller."