Asia

Why are petrol prices spiking in N Korea?

A child looks through the rear window of a bus in Pyongyang, North Korea April 16, 2017. Image copyright Reuters
Image caption North Korea gets virtually all of its oil from China

The price of petrol in Pyongyang jumped by 83% at the end of last week, according to one of the expert groups which monitors life in North Korea.

NK News said the price spike was affecting petroleum and diesel fuel sales equally, and followed "rumours China had been considering a halt of all crude oil sales to the DPRK", as North Korea is formally known.

Crude oil is used for gasoline and petrol for cars and for diesel.

Foreigners in Pyongyang noticed motorists scrambling to fill up their tanks, as petrol stations started limiting what they would sell or even closing altogether.

At one petrol station, supplies were restricted to diplomats or vehicles used by international organisations, the Associated Press reported.

Queues were also much longer than usual and prices higher, it said.

The rise has prompted speculation - unverifiable - that China may be getting tough on its difficult neighbour, something other states have long been pressuring it to do.

Image copyright AFP/Getty Images
Image caption Private car ownership was rare, with most residents of Pyongyang taking public transit, but has increased in recent years

Presidents Xi Jinping and Donald Trump met in Florida earlier in the month, and have since talked on the phone.

Mr Trump has tweeted that China needs to do more to rein in Pyongyang. There is better US trade in it for China if it controls North Korea, according to the US president.

And China seems worried that there really is a risk of war on its doorstep, a war from which it could hardly isolate itself.

So China might be tightening the oil tap.

Alternatively, North Korean drivers - a small but growing number of privileged Pyongyang residents - might have feared that China was about to tighten the oil tap and decided to stock up, prompting a price surge.

Or the military might have requested more petrol. Or there might have been a simple glitch in supplies. We do not know.

But it does illustrate how much power China could exert over North Korea.

Figures are hard to come by because detailed data from North Korea and China on trade are not published. But it is clear that North Korea produces virtually none of its own oil and relies instead on China.

It produces abundant coal - even more abundant now since China cut down (perhaps to zero) its imports of coal from February.

Image copyright Reuters
Image caption Pyongyang has been broadcasting irritated messages to its only ally China

Coal can fire power stations but it cannot make vehicles move. Therefore, the result of restricting oil to North Korea would eventually be a paralysis of the economy, certainly of the war economy.

According to most estimates, North Korea has about three months of oil in reserve.

In 2003, the oil pipe from China to North Korea shut a mere three days after a missile launch. China said it was a mechanical failure, but the suspicion outside was that it was China reminding North Korea where its oil comes from.

According to Stephen Haggard of the University of California: "The objective is to send a credible signal that would make the North Korean leadership think twice."

"It is all about shifting North Korea into a mode where negotiations would resume," he told Reuters.

Is North Korea thinking twice now as petrol prices rise in Pyongyang?

Not obviously. It seems to be sending irritated messages to Beijing.

A commentary on the state news site warned that a "neighbouring country" - widely read as China - "will certainly face a catastrophe in their bilateral relationship as long as it continues to apply economic sanctions together with the United States".

China might tighten the flow - but would it shut it off altogether and so halt the North Korean economy?

Would Mr Trump really punish China if it didn't?

The situation remains unpredictable on so many fronts.

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