High oil prices become a headache

Alarmed high gasoline prices, Singaporean drivers are turning to a new Web site that posts data on costs at gasoline stations. Malaysia plans to blend diesel with palm oil to power cars. South Korea's Hyundai Motor Co and other automakers that sell fuel-efficient cars say demand is growing.

Consumers, car companies and governments are searching for ways to offset the drain on their economic fortunes after Hurricane Katrina's direct hit on US oil infrastructure triggered a surge in oil prices.

Indonesians that plans to cut government fuel subsidies by 50-60 percent in the next two months will not only boost the price of gasoline but for food and other essentials as well -- and even stir up social unrest.

"Life is getting harder for people on all levels," said Paulus Rumokoy, a car owner in Indonesia, where gasoline currently costs 2,400 rupiah a liter (US$0.91 a gallon).

With gasoline prices in Singapore up about 5 percent over the past two months to about 1.98 Singapore dollars per liter (US$4.48 a gallon), drivers in the city-state are trying to cut costs where they can.

"I'm feeling the heat," said Vincent Yu, a Singaporean driver who tries to save gasoline by running more errands on one trip, and sometimes takes the subway instead of the car.

Petrol Watch Singapore, which sends out e-mails and mobile phone messages about gas station prices has attracted more than 10,000 subscribers since its Aug. 25 start.

Web coordinator Neeraj Sundarajoo warned that the cost of gasoline could jump another 25 percent by the end of the year. He also advises drivers on ways to save gasoline: don't blast the air conditioning, don't leave golf clubs or other heavy items in the car to avoid carrying extra weight, and make sure there's plenty of air in the tires.

Malaysia expected to begin blending diesel with palm oil -- a technologically proven fuel mixture -- to power cars and electricity generators in a bid to reduce high fuel imports. Deputy Prime Minister Najib Razak said diesel, which along with gasoline is heavily subsidized by the government, will be mixed with 5 percent palm oil before being sold to consumers.

Automakers China, both foreign and domestic, have been shifting their focus to smaller, more fuel efficient cars. That's the fastest growing segment of the market.

Three the top-selling models in China earlier this year were economy models, according to the China Automobile Manufacturers Association (中國汽車工業協會): the Elantra, from Hyundai; Tianjin FAW Xiali Automobile Co's (天津一汽夏利汽車) oddly-named TJ7101U -- an angular compact -- and Chery Automobile Co's (奇瑞汽車) perky little QQ mini-car.

Crystal Fang, sales manager for a local car company in Shanghai, said she pays at least 100 yuan to 200 yuan more for gasoline a month than a year ago.

"High oil prices don't determine if people will still buy cars, but they do affect what kind of car they choose," Fang said.

That's good news for Japan, home to automakers that produce fuel-efficient cars like Toyota Motor Corp, Honda Motor Co and Nissan Motor Co. The Japan Automobile Dealers Association says there has so far not been any visible change in car sales.

Toyota in selling cars called hybrids that offer better mileage than regular gasoline-engine cars by switching between an electric motor and gas engine.

South Korea's Hyundai, whose fuel-efficient models are popular in India, logged growth of 51 percent in the Indian market in August over the same period a year ago.

Sundarajoo, the Web site coordinator in Singapore, said some potential buyers are researching hybrid cars, even though they are more expensive than regular vehicles.

In Thailand, the government introduced energy-saving measures in July that call for state-owned cars to switch from gasoline to gasohol, a blend of ethanol and gasoline. They also include requirements for advertising billboards to be lit only three hours a day and gas stations to close late at night.

In India, where the government sets fuel prices to keep them affordable, consumers are having to pay higher prices. This past week, authorities gave state-run oil companies permission to raise gasoline and diesel prices by about 7 percent.

In New Delhi, gasoline now goes for 165 rupees a liter (US$3.80 per gallon), and diesel for 116 rupees (US$2.70 per gallon).

In Indonesia, where fuel is subsidized, soaring oil prices are threatening to bust the government's budget, which in turn has sent the nation's currency, the rupiah, to a four-year low against the US dollar.

President Susilo Bambang Yudhoyono says subsidies need to be cut to avoid a financial crisis, and Indonesian officials this week said that authorities are discussing plans to lower subsidies between 50 to 60 percent in the next month or two.

But some fear that price hikes will trigger social upheaval reminiscent of unrest that toppled dictator Suharto in 1998.