When Southeast Asian energy ministers meet in Cambodia this week, many of them must face the fact that the pain they are feeling from $60 a barrel oil is partly of their own making. Even crude exporters such as Indonesia and Vietnam are suffering under the growing burden of heavily subsidised local fuel prices, as global oil costs doubled in two years.
And while cheap fuel has helped economies extend their recovery from the region's 1997/98 meltdown, they are keeping global oil markets tight by shielding strong domestic demand growth from the negative impact of higher costs.
"Subsidies that have minimised the price pass-through are actually aggravating oil market conditions by not reducing consumption," said Cyn-Young Park, economist with the Asian Development Bank (ADB).
Most of the 10 members of the Association of South East Asian Nations (Asean) have raised fixed retail rates at least once this year, but they have generally lagged the 50 percent surge in crude prices from a year ago, when officials last gathered.
And while they will likely discuss a host of long-term plans to diversify away from oil, minimising future price spikes, they are unlikely to risk a public backlash by raising fuel prices again - the most immediate way to curb short-term demand.
"This is a big and sensitive issue," said Weerawat Chantanakome, executive director of the Asean Centre for Energy (ACE). "It's a political issue that each country deals with differently."
Asia imports more than two-thirds of its 24 million barrel-per-day (bpd) oil needs, so the $10-rise in average US crude prices this year over 2004 cuts deep.
The ADB estimates that a rise of that magnitude shaves roughly 0.8 percentage points off Asian economic growth, excluding Japan, although it still expects 6.0 to 6.5 percent expansion for this year.
Most members of Asean - including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam - would appear less at risk, as it produces nearly two-thirds of its 4 million bpd of demand.
But unlike diversified, export-oriented Japan and South Korea, which have weathered higher prices thanks to the continued US economic expansion, the governments of Southeast Asia's more fragile economies have borne the brunt of the rise, siphoning funds needed for development projects.
"On the fiscal side, it's an unnecessary strain," said Joseph Tan, Standard Chartered economist. "It's money that could be used for expenditure."
It is ironically the region's only member of the Organisation of the Petroleum Exporting Countries (Opec) - Indonesia - that is hardest hit, paying out $650 million a month to subsidise the cheapest fuel in Asia, even after a 30 percent rise in March.
"People must be aware that as the price of oil continues to rise... this will depress the economy, both macro and micro," said Mines and Energy Minister Purnomo Yusgiantoro last month.
Yet, Indonesia is unlikely to risk public backlash by raising prices again this year, says Adam Le Mesurier, Southeast Asia economist for Goldman Sachs.
Thailand, Asean's second-largest oil consumer behind Indonesia, has moved more aggressively than most to wind down subsidies that cost Bangkok $2.2 billion since January 2004.
The government ended gasoline benefits last year and is now phasing out diesel subsidies, while also considering stringent curbs on consumption including earlier closing hours for petrol stations and electricity price increases.
Vietnam, Southeast Asia's third-largest oil producer, spends more than half its hefty crude export revenues on oil products imports as it has no major refineries of its own, then uses up more of its income by subsidising retail prices.
Even in Malaysia, the region's biggest net oil exporter, soaring fuel subsidies last year cost the government more than $1 billion.
Singapore, despite being totally dependent on imported crude, actually makes out relatively well as exports of excess oil products bolster its trade balance and its relatively prosperous populace easily absorbs the cost of higher fuels.
The nation-state's estimated 500,000-bpd of spare refining capacity is supplying major economies such as China and India, who have been forced to import more consumer fuels.
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