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Cablegate: Burmese Fuel Prices Rise 100 Percent

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RR RUEHBZ RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGO #0749 2271110
ZNR UUUUU ZZH
R 151110Z AUG 07 ZDK
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC 6356
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1481
RUEHBY/AMEMBASSY CANBERRA 0433
RUEHKA/AMEMBASSY DHAKA 4580
RUEHLO/AMEMBASSY LONDON 1975
RUEHNE/AMEMBASSY NEW DELHI 3972
RUEHUL/AMEMBASSY SEOUL 7527
RUEHTC/AMEMBASSY THE HAGUE 0639
RUEHKO/AMEMBASSY TOKYO 5081
RUEHCN/AMCONSUL CHENGDU 1166
RUEHCHI/AMCONSUL CHIANG MAI 1035
RUEHCI/AMCONSUL KOLKATA 0029
RUEATRS/DEPT OF TREASURY WASHDC
RHHMUNA/CDR USPACOM HONOLULU HI
RUEHGV/USMISSION GENEVA 3230
RHEHNSC/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 0876
RUEKJCS/SECDEF WASHDC
RUEHBS/USEU BRUSSELS
RUEKJCS/JOINT STAFF WASHDC

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

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