Oil price hike brings Asia serious challenge but chances remain

The dramatically soaring oil price seems to drive many Asian countries mad but, according to Asian Development Bank Chief Economist Ifzal Ali, it could be a chance for some of them to change their way of using unrenewable petroleum.

Oil price hike remains one of the major risks for Asian economy in the next two years, Ifzal Ali said here Thursday, "If the crude price increased by 10 U.S. dollars a barrel in near future, GDP growth of the whole Asia would count down by 0.6 percent. And for China, it could be 1 percent."

Some of Asian countries have coped with the problem by giving subsidies to either consumers or oil companies, which are owned by the state, Ali said, but it will not be sustainable.

Asian countries need to reduce the subsidies to the oil sector though it would raise oil price in their domestic market, Ali said.

Subsidy reduction will save a large amount of budget and allow the government to adopt a more focused policy to cope with the problem, for example, relocating the money to people that need assistance most, he added.

High energy price could be a chance for countries with low efficiency of energy use to change their way of growth, he said, adding that the countries that has high efficiency of energy use will take the advantage in the current situation.

Asian Development Bank has planned to start a project of providing 1-billion-U.S. dollar loan annually for developing countries to develop technologies of efficient energy use and renewable energy from 2007.

Asian Development Bank President Haruhiko Kuroba had described the crude oil price of 75 U.S. dollars per barrel as " unsustainable."

Kuroba also urged oil producers to try their best to stabilize the oil price while the consumers are struggling to fill the energy shortage.

Source: Xinhua