Panic petrol buying in Indonesia ahead of price hike

Indonesians faced another day of long queues and shortages at gas stations ahead of a controversial increase in the country's heavily-subsidized fuel prices. President Susilo Bambang Yudhoyono announced last week that the petrol price would be raised on Saturday without saying by how much, as he tries to grapple with a budget shortfall.

"Panic buying is getting more serious," said Abadi Purnomo, spokesman for state oil and gas company Pertamina. Elshinta radio reported that in three towns, all the gas stations were closed while roadside retailers sold bottles of less than one litre for 7,000 rupiah (68 cents) each, or about three times the official price. "I had to wait for two days to fill up with diesel," said Panjaitan, a Jambi truck driver quoted by The Jakarta Post.

Although a price increase is unpopular, particularly among the poor who rely on public transport and kerosene for cooking, many analysts say a cut in subsidies is an economic necessity. High global oil prices have dealt government finances a double blow. The government has snapped up dollars to pay for higher oil prices, putting the rupiah under pressure while also having to support increased subsidies to keep domestic fuel prices artificially low.

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