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Global oil shock reaches Indonesia
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Employees work at a gas station in Tangerang, Banten, on March 1, 2022.
(AFP/Adek Berry)
T
he sharp rise in global oil prices has crept onto Indonesian shores, with diesel shortages and fuel price hikes unfolding in some parts of the archipelago in recent weeks as the government winds down price control policies for the sake of fiscal consolidation.
Logistics firms have reported delivery delays because trucks are spending more time lining for Solar, subsidized diesel, at gas stations, particularly in Sumatra, Sulawesi and Kalimantan. Meanwhile, state-owned oil giant Pertamina raised the prices of all its unsubsidized gasoline and diesel brands, pushing some consumers to the more limited subsidized variants.
Furthermore, the government plans to gradually raise the prices of the subsidized Pertalite brand of gasoline and 3-kilogram liquefied petroleum gas (LPG), the most popular fuel brands in their respective categories, in the coming months.
“All [fuel prices] will go up. There are none that will not go up. So, we will do it gradually,” Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan said on Friday about the planned price hikes.
Read also: Govt plans gradual hikes for Pertalite, 3kg LPG
These developments mark the winding down of government energy price control policies meant to shield Indonesian consumers from the effects of surging oil prices amid a global economic recovery and the Russia-Ukraine war.
World crude oil benchmark Brent has exceeded US$100 per barrel, almost double the $63 per barrel assumption in the 2022 state budget, which had set aside Rp 134 trillion ($9.33 billion) for energy subsidies.
