Interesting article that makes the case that rising energy costs hurts the “upwardly mobile poor” of the world the most, and uses Guinea as a case study.
Interesting excerpts from the article
“Guinea’s experience shows how destabilizing an energy shock can be. The country’s economic woes go far beyond rising pump prices, but the government’s decision to reduce gasoline subsidies over the past two years helped spark general strikes and riots that claimed at least 11 lives. …
Government officials say pressure from the oil companies forced their hand, and they started raising pump prices. By early last year, official pump prices at Total and Shell filling stations had risen 66% to about $3.70 a gallon in local currency terms. With monthly salaries averaging less than $200, even senior civil servants struggled to afford their daily commutes.
As oil prices kept climbing and the revalued currency sank, the big increase in pump prices wasn’t enough to ease the fiscal crunch. So, through 2005 and 2006, gasoline prices were raised four more times. For days after the sharpest increases, the rusted-out taxis and minibuses that clog Conakry’s pot-holed streets would thin out.
…pump prices are 233% higher than they were in August 2004, in local currency terms. ”
I encourage you to access the entire article on WSJ.com, but it requires a subscription to wsj.com. There is a free video on-line, which instead of providing the interesting details in the article, is simply a subset of the typical images we see of Africa — war, disease, hunger, and poverty.Â I recommend the article but not the video.