30/07/2006
October Magazine 2006/JULY /30
Experts discuss the differing points of view in line with the increase in fuel prices, and thus industrial products, and subsidization. ( Available in Arabic – German in PDF )
The government has decided to raise the price of gasoline 90-octane and diesel due to the endless annoyance of energy subsidization; however this rise in prices is expected to cause debatable repercussions. Experts say that such a minimal increase does not impose a burden on transport owners, but rather the decision has an effect on industrial product prices. The varying views for and against this issue are discussed in detail; mainly in regards to the repercussions faced by industrial factories. It is expected that, since many factories rely on fuel for various processes carried out in the manufacturing and transportation of products, the increase in prices forces the producer to increase the price of his commodity, thus negatively impacting the consumer. However, some experts believe that the large subsidy allocated to fuel will subsequently allow for the increase in subsidies allocated for other services, such as bread. Industry experts assert that long term effects will not occur as the market will absorb this increase. In addition, talks on alternate energy sources and the reasons behind such a request are discussed. Furthermore, the bread industry is thoroughly discussed in regards to the increase in subsidy allocated to it, in addition to the effects of increased fuel prices on the bakery owners. Experts assert that the increased subsidy was granted with the aim of improving the quality of bread, whilst maintaining the current rate of bread prices. In saying this, unsubsidized bread is expected to increase by 25%. It is important to note that although the fuel price in Egypt is three times higher than the rate witnessed three months ago, it is still considerably lower than any other country.