Strong Asian economies mask worrisome impact of rising oil prices: UNDP
By Adnan Rafique

ISLAMABAD—Despite overall economic growth in Asia and the Pacific, soaring oil prices are threatening the prospects of millions of the region’s poor and forcing them further into poverty, says a report issued by the UN Development Programme (UNDP) today.
According to UNDP report, as oil prices hit a high beyond $ 85 a barrel, the impact on the poor may presage worse to come, warns the report, Overcoming Vulnerability to Rising Oil Prices: Options for Asia and the Pacific.
This critical juncture for the region provides an opportunity for countries to “redesign their policies for both national energy security and household energy security,” says the report.
The publication offers a range of policy options to reduce national vulnerability to future price rises and protect the interests of the poor. The UNDP commissioned the report because “there is evidence that these rising oil prices are starting to bite, and most severely at the incomes and lives of the region’s poor,” says the foreword by Hafiz Pasha, UNDP Assistant Administrator and Regional Director for Asia and the Pacific.
Interviews conducted for the report among poor rural and urban households in China, India, Indonesia and Lao PDR reveal that rising oil prices are starting to put a brake on human development and in some cases, shifting it into reverse.
Between 2002-5, the households interviewed suffered dramatic price increases - paying on average 74 per cent more for their energy needs. This included 171 per cent more for cooking fuels; 120 per cent more for transportation; 67 percent more for electricity; and 55 percent more for lighting fuels. Many of those surveyed reported they had to revert to inferior fuels such as fuelwood, agriculture residue and dung cakes. Some affected by higher electricity tariffs and supply disruptions aresimply going without: they stay in darkness.
Unable to afford public buses, some in remote rural villages are now walking to the nearest health centre or school, according to the surveys conducted for the report.
These trends amount to a “climb down the energy ladder” with serious implications for the poor’s lives and livelihoods. “Less able to provide a decent education for their children, less able to work because of an unhealthy home environment, and unable to use transport to seize opportunities to earn additional income, many poor families are seeing their future compromised,” says the report.
About the countries vulnerable to oil prices, the report said that National vulnerability to oil price rises depends not just on oil intensity and on how much of the oil has to be imported, but also on the resilience of an economy. To highlight the relative vulnerability of countries in Asia and the Pacific, this report presents an oil price vulnerability index (OPVI).
The index incorporates variables that represent economic strength, economic performance and the extent to which countries base their growth on the use of oil.
“The new oil price vulnerability index can be used by countries to keep an eye on critical factors that can signal problems should oil prices jump,”says Nandita Mongia, UNDP Regional Advisor on Energy. “It can serve as a warning flare that certain steps need to be taken, depending on the extent of the oil price rise.”