Poorer nations face unrest as wealthy nations snap up fuel: Report

Russia’s war in Ukraine has Europe bracing for a tough winter, but the costs are piling up higher in emerging nations as governments struggle to keep energy flowing to citizens hit by surging inflation. 

Pakistan’s government is triggering rolling blackouts and boosting power bills because it can no longer secure enough fuel. Shops in Bangladesh are closing at 8 pm as part of energy austerity measures, while Mexico’s government has bolstered subsidies to cushion residential electricity costs. 

“It doesn’t look like there is any way they can outbid the developed countries,” said Muqsit Ashraf, who leads Accenture’s Global Energy Industry practice in Houston. “It is having significant economic implications; it will also have an impact on their ability to fund other economic and national priorities.”

The energy import bills for developed nations are between 2 per cent and 4 per cent of gross domestic product, according to Ashraf. For comparison, those costs for some emerging nations have climbed above 25 per cent of GDP, he said. Meanwhile, plummeting currencies are keeping import costs prohibitively high, exacerbating efforts to control inflation.

Governments across Latin America have responded by ramping up subsidies and cutting taxes on gasoline and diesel to appease angry citizens still struggling to rebound from the pandemic.  In Africa, the World Bank took the unusual step of subsidizing bus passengers in Mozambique to mitigate the crisis while in Burundi, gasoline shortages are compelling drivers to buy fuel on the black market at three times the official price. Ghanaian President Nana Akufo-Addo is now seeking to double International Monetary Fund support to $3 billion after protests over issues including rising fuel prices.

It’s not just the developing world that is suffering. Germany may not have enough gas to get through winter if Moscow cuts off supplies. The UK is buying Australian LNG for the first time in at least six years amid tight supplies. And a surge in US gasoline prices earlier this summer may do lasting damage to President Joe Biden’s Democratic party in November midterm elections. 

But those nations have options poorer ones don’t. Developing nations have long complained that rich countries aren’t channeling enough money to help with the energy transition and ambitious climate change targets. Now that gap is widening and they are getting left behind. 

Gulf states to gain $1.3 trn in additional oil revenue by ’26: IMF

Countries in the Middle East are expected to gain up to $1.3 trillion in the next four years from additional oil revenues, according to the International Monetary Fund (IMF). The gains, due to high oil prices, will provide ‘firepower’ to the region's sovereign wealth funds (SWFs), according to Financial Times.