Pacific oil prices

Gulf crisis hits Pacific oil prices

SOUTH Pacific nations are already feeling the impact of the Gulf crisis.

The sharp rise in oil prices is now working its way through into the basic economic functions electricity gener ation and transport. A great proportion of the power generated in the island states is by means of diesel generators (although there are moves to have more hydro electricity). Shipping and aviation are particularly hit by the great distances both between countries and even within those which consists of far-flung islands.

The Solomon Islands Electricity Auth

ority spends 54 per cent of its total outlays on diesel fuel. Last year’s fuel bill ran to 5155.01 million (US$l.9B million). The authority has been caught in the pincer of rising oil prices and the devalaution of the Solomon Islands dollar.

The country’s problem will be felt, to a lesser degree, throughout the South Pacific higher power charges will work their way through to all parts of the economy. For example, Blue Pacific Laundry on Rarotonga is expecting its electricity bill to shoot up and this will have to be passed on to customers.

But transport will be even more dras tically affected. The price of aviation fuel at Fiji’s Nadi International Airport has increased by 55 per cent since the crisis

began. Western Samoa has announced that air cargo rates out of Apia will rise by seven per cent, passenger fares by eight per cent.

In the Cook Islands, shippers have been told that Pacific Forum Line rates have gone up four per cent. Another shipping line, Tasman Asia, has reported that bunker fuel costs had risen by 60 per cent and was still rising. But the impact, while being felt in both import and export sectors, will also permeate through to the region’s other significant earner: tourism.

Some air fares out of Australia have already gone up by eight per cent, and there will be temptation for all airlines to use the fuel issue as an opportunity to raise fares. n