[Dry Ice]

Lebanon raises fuel prices as oil climbs on international markets: Consumer Lebanon president questions 'unrealistic' hike [The Daily Star, Beirut, Lebanon]

Jun. 11--BEIRUT -- Prices of gasoline and kerosene in Lebanon rose for the fourth consecutive week Wednesday amid indications that the volatile oil market would add more pressure on the transport and production sectors. Most gas stations, at the instructions of the Energy and Water Ministry, increased the prices of 20 liters of unleaded 98 octane gasoline by LL900 to LL30,400 and 95 octane by LL800 to LL29,800.

Prices of gas oil, fuel oil and natural gas also rose Wednesday.

The government attributes the change in prices to the rise in the price of oil in international markets which on Wednesday was trading at above $71 a barrel.

Bahij Abu Hamzeh, president of oil importing companies, told The Daily Star that the rise in the prices was only natural given the oil market situation.

"The oil importing companies have nothing to do with these changes. We just follow the instructions of the Energy Ministry," he said.

But Abu Hamzeh did not believe prices of gasoline in Lebanon would reach LL35,000 in the near future.

"I don't think the prices of oil in the international markets will hit $100. The market is still saturated with oil," he said.

However, the president of Consumer Lebanon Zuheir Berro blamed the government for the "unrealistic" rise in the prices of gasoline.

"How can the government explain that when the price of oil in June 2007 reached $140 the price of 20 liters of gasoline stood only at LL34,000? Why do prices keep changing so rapidly in Lebanon?" he asked.

Berro added that the government was slapping a very high tax on every 20 liters of gasoline.

The government collects a tax of LL12,500 from each 20 liters of gasoline to feed the treasury with badly needed funds.

Despite many calls by trade unions and political parties to drop the value added tax and tariffs on gasoline and kerosene, the government turned a deaf ear to these requests.

It argues that tax revenues from oil are one of the few options the Finance Ministry has to pay a large part of the salaries of government employees.

Outgoing Finance Minister Mohammad Shatah repeatedly said the government couldn't reduce the taxes on oil because it has limited sources of revenues.

He added that the Cabinet did not raise the value added tax nor did it introduce any new taxes in its 2009 draft budget.

"We took into consideration that the delicate economic situation and the global financial crisis may not be suitable to add more taxes on the citizens," the minister said earlier.

Berro warned that consumer prices, including gasoline, have risen by more than 3 percent in the first quarter of this year.

"The change in oil prices will definitely hurt consumers and productive sectors which depend heavily on this commodity to run their factories," he added.

But Abu Hamzeh did not share Berro's concerns.

"The prices of basic commodities in Lebanon did not rise considerably in the past few months. The Lebanese should use public transportation more often because it is much cheaper then filling your car with gasoline," he said.

Abu Hamzeh stressed that the consumption of gasoline per individual in Lebanon is probably one of the highest in the world.