Hong Kong Newspapers Warn of Oil Price Risk

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Hong Kong Newspapers Warn of Oil Price Risk, Urge Action

HONG KONG, Sep 17, 2000 -- (Reuters) Hong Kong newspapers urged the territory's government on Sunday to take urgent measures to ward off possible social unrest caused by spiraling world oil prices.

Accusing the government of inaction and downplaying the problem, some newspaper editorials warned that the type of fuel protests seen in parts of Europe in recent weeks could well erupt in Hong Kong.

"We need to immediately resolve the difficulties faced by some industries that are most affected, such as transportation," said the independent Chinese-language daily Ming Pao.

"Otherwise, protests and demonstrations such as those seen in Europe could happen and this would adversely affect Hong Kong's society and economy," the newspaper said.

Its fears were echoed in a column in the pro-Beijing Ta Kung Pao on Sunday, which said high oil prices would pose severe setbacks for Asian economies struggling to recover from the regional financial crisis.

Benchmark oil prices shot up to post-Gulf War highs last week, exacerbated by renewed tensions between Iraq and Kuwait. November Brent crude futures closed at USD 33.90 per barrel on Friday.

The editorials followed reassuring words from Chief Executive Tung Chee-hwa on Saturday, who said he was hopeful oil prices would remain stable over the longer-term.

Tung, however, said: "If fuel prices stay high for a long time, it will affect the economies of Europe and the United States and we shall eventually be affected."

Financial Secretary Donald Tsang urged calm on Saturday, saying: "We are having negative inflation...for the meantime, a mild price increase can still be tolerable and people do not need to worry too much."

Ming Pao's Sunday editorial, however, lambasted Tung and Tsang, saying the ills of high oil prices were already apparent in Hong Kong.

Hong Kong's Hang Seng stock index plunged 5.94 percent last week to close at 16,249.53 on Friday partly due to high oil prices.

Oil company Shell announced on Friday a nearly 16 percent increase in its retail price of liquefied petroleum gas in Hong Kong to HKD 7.13 (USD 0.91) per kg.

Shell was subsequently criticized by newspapers and the government issued a statement encouraging oil companies to be transparent in determining prices.

Ming Pao urged the government to act.

"The government should have measures to tackle a continued rise in oil prices. Lowering duties for diesel-run public transport is one important consideration," it said.

http://www.insidechina.com/news.php3?id=200125§ion=Hong+Kong

-- Martin Thompson (mthom1927@aol.com), September 17, 2000

Answers

The 6% plunge at the Hong Kong Stock Exchange last week is no small potatoes. It could be giving out signals of similar, big drops, elswhere.

-- Wayward (wayward@webtv.net), September 17, 2000.

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