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Syria gas price-rise heightens war-torn country's food crisis

The country's 20% hike in domestic gasoline prices will push thousands more people even deeper into food poverty

On 4 October, the Syrian government, embroiled in a bitter, two-and-a-half year civil war against rebels, raised domestic gasoline prices from $0.58 per litre (/l) to $0.72/l. Average US gasoline prices were around $0.68/l ($3.40 per gallon) in September.

The increase will push up domestic food prices as the cost of transporting basic supplies, such as wheat, will soar by around 17%, Imad al-Assil, deputy minister of internal trade and consumer protection said.

Higher gasoline prices will also raise heating costs for households which use gasoline-powered generators to cope with frequent power outages.

As the civil war, which broke out in April 2011, has become entrenched, the availability of food in Syria has worsened, in part because of huge population displacement, currency depreciation, high fuel prices and growing insecurity affecting supply routes.

As of October, the World Food Programme (WFP) was giving food assistance to 4 million people within Syria. Helping to feed those 4 million people costs $30m every week, the WFP said.

A further 2 million Syrians have fled to neighbouring countries, such as Lebanon. It is expected that this number will only increase as fighting continues.

In 2012, Syria's inflation surged by around 50% year-on-year, mostly because of soaring costs for fuel and food, according to a WFP report published in July.

Abeer Etefa, a spokeswoman for the WFP told Petroleum Economist there has been a huge fall in food security over the past year as agricultural production has fallen. This has been exacerbated by fuel shortages. "Even when farmers do cultivate what they have planted, fuel is not available and so it affects the price of transportation so the whole dynamics of the food production system is messed up as a result," Etefa said.

The average monthly price of wheat flour doubled between May 2011 and May this year, resulting in bread shortages across the country. Etefa said the WPF expects Syria's harvest this year to yield around 20% less than last year.

The problem is particularly bad in conflict areas, where road blocks and heavy fighting restrict access. The WPF said it has struggled to deliver any humanitarian aid to cities such as Aleppo, because of the fighting.

The effect of the gasoline price rises are likely to be felt most in rebel-controlled areas of Syria where fuel is often smuggled in and can be much more expensive than in government-run zones.

Syria has been importing gasoline to make up a shortfall as its domestic crude production and refining sectors have collapsed. Western sanctions on the state-owned oil firm, Syrian Petroleum Corporation, have had a catastrophic impact on oil output.

Syria's oil output halved between 2009 and 2012, to under 200,000 barrels a day (b/d), according to data from the International Energy Agency. Suleiman Abbas, Syria's oil minister, said at the end of May that oil output was down to just to 20,000 b/d, a decline of about 95% since March 2011.

Although Syria is not a major global exporter of crude and refined products, disruption to its energy sector throughout the two-and-a-half year conflict has caused serious damage to its energy sector. Economic sanctions have halted domestic energy exploration and production. Crucial energy infrastructure, such as oil pipelines and electricity transmission networks, has been severely damaged and, in some places, destroyed.

Syria's economy is heavily dependent on both the agricultural sector and oil revenues. Syria's economy contracted by 30% last year and a further 7% in the first quarter of 2013, according to the World Bank. As the country's energy and agricultural exports collapsed, the country's currency depreciated by 180% between March 2011 and July 2013.

In 2010, the oil sector provided around 20% of total government revenues and around 35% of its exports. Revenues from agriculture comprised around 20% of GDP, the bank said.

While Libya's food crisis intensifies, international food prices are at their lowest level in three years.

The United Nations' Food and Agriculture Organisation (FAO) Food Price Index fell in September for the fifth consecutive month to average 199.1 points. This is down by more than 5% since the beginning of this year and is at its lowest since 2010. The fall was driven by sharply lower prices for cereals as increased production, falling demand from large importers and increasing stocks have all put pressure on prices.

Key points from World Food Programme report

- As of May 2013, 1.6 million Syrians were registered as refugees. There could be many more unrecorded voluntary migrants. The country's population in 2012 was 22.4 million;

- Fighting between government and rebel troops has forced 4 million people from their homes;

- Inflation increased by 50% in 2013, compared to 2011 levels;

- Unemployment in Syria is 18%. The country's average unemployment level between 2003 and 2010 was 7%;

- It costs $27m every week to provide food assistance to 4 million Syrians affected by the conflict. The cost of funding the WFP's Syrian operations alone will reach $490m by the end of 2013;

- The price of wheat flour has almost doubled from 2011;

- Diesel costs jumped 200% in January after cuts in government subsidies; and

- A shortage of diesel and natural gas for domestic use, combined with a reduction in government subsidies for gasoil, caused a 200% spike in Syria's fuel prices in January 2013.

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