Poor countries are the worst victims of the energy crisis

It is an ironic fact that it is not only Russia or the Western countries that are paying the price for sanctions against each other, but the poor countries themselves. Without resources to support, poor countries are facing difficulties with no way out.

Kenyans are going through days fuel shortage seriously, the hours of waiting in line at gas stations are slowly becoming exhausted.

Mr. Melvin Otieno – Kenyan resident said: “I am a service driver, some drive to pay off debts, some support their families from this job. But we have been here for three days and still Haven’t bought anything yet.”

Rising prices and shortages of gasoline is a similar situation in many low- and middle-income countries. A representative of Nuli Juice Company, Nigeria shared: “Diesel constitutes a huge part of our operating costs, now oil prices have more than tripled, while the national grid is unstable in For a very long time, we were forced to use diesel. This is not a good time for businesses.”

Mr. Ariel Juarez – Representative of the Argentine Transport Federation said: “With the high cost of petrol, we were forced to stop, we couldn’t work anymore. We could not afford to pay for all the costs. costs related to shipping”.

Low and middle income countries are often heavily dependent on imported oil and gas. For these countries, an increase in world oil prices will entail a series of consequences. First these countries immediately faced a larger import bill. To restore balance of payments equilibrium, countries are forced to reduce aggregate demand for all imports. This is manifested by a decrease in domestic demand (both consumption and investment), which leads to a decrease in imports and a decrease in domestic production. These consequences pushed the country deeper into crisis.

According to the World Bank, a $20 increase in oil prices will reduce the GDP of developing countries by 0.2-0.4%, even the poorest countries can lose up to 4% of GDP.

In addition, oil and natural gas prices are also closely linked with food prices. History shows that a crisis in one area will lead to a crisis in the rest.

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