This week the president of Russia’s Gazprom surprised even the most bullish oil commentators by predicting that the oil price could hit $250 a barrel. Trouble is, with “black gold” at $140, less than 60% of his target, diesel prices have already jumped by more than 35% (from an average of €0.95 to €1.30 a litre in under a year) in the EU and by more elsewhere – 63% in Malaysia, for example. And the reaction from furious workers and consumers around the world is becoming increasingly direct, ranging from tyre-burning in Nepal and India to a 500 vehicle “go-slow” protest in Hong Kong.
In Europe too the stakes have just been raised as Spain battles with mass strikes from truckers. The logistics industry has been hammered by the double whammy of rising diesel prices and slowing demand for its services as the economy falters. From Monday, says news agency AFP, a further 70,000 of Spain’s 380,000 truck drivers will join a protest started by 50,000 of their colleagues, who have blockaded motorways and sections of the French-Spanish border. For Spanish motorists the result is already dire – an estimated 40% of Catalonia’s stations are dry, according to Manuel Amado, President of the Catalonia Federation. And it’s not just the truckers who are striking – a separate blockade of key ports was started nearly a fortnight ago by most of the Spanish fishing fleet, whose slim profit margins have been further shrunk by expensive fuel. The combined economic impact of both strikes has been sudden and widespread – officials at Spain’s biggest wholesale market, Mercamadrid, declared that fish stocks would have run out by Thursday. Worse still, stocks of other food would only last “until the end of the week”.
The turmoil has even caused deaths in Portugal, one the result of angry motorists attempting to bypass a barricade. Northern Europe isn’t being spared either – 35,000 protestors took to the streets in the Belgian cities of Liege and Mons, and this weekend Britain faces potential petrol shortages as 500 oil tanker drivers working for Royal Dutch Shell threaten to go on strike.
However, as Fiona Maharg-Bravo points out on Breakingviews, it is the reaction of Spain’s government that is being watched most closely. Firms in industries ranging from shipping to agriculture will be squeezed, or even go bust in the coming downturn. It’s an unpalatable fact, but one that Spanish politicians shouldn’t try to mitigate. Their options are limited in any case – cutting fuel duty probably isn’t an option, as this is already at the 15% minimum permitted under EU rules. But should Spanish truck drivers manage to extract big concessions in some other way – higher subsidies, for example – it will embolden workers across Europe at a time when most governments, (including Britain’s) are too indebted to offer tax giveaways.
But taking a tough line won’t be easy. No government wants to risk the same fate as South Korea’s, which resigned after just 107 days in office to head off mass protests triggered by rising fuel and food prices. The grim truth, as Martin Hutchinson concludes, is that volatile commodity prices “make even competent governments look helpless, destabilising them and raising the probability of bad outcomes”.