July 18, 2006 (LBO) – Sri Lanka is taking a hard look on how to manage subsidising fuel prices amidst a worsening Middle East crisis that is threatening to send oil prices even higher. “Right now the middle east is entering into a sixth day of intensified conflict,” Treasury Secretary P B Jasundera said Tuesday addressing a forum to launch a statistical compilation of Millennium Development Goals in Sri Lanka.
Crude prices spiked after Israel launched a wide military offensive across Lebanon last Wednesday, touched off by attacks on the Jewish state by the Hezbollah militant Islamic group and the abduction of Israeli soldiers.
In Asian trade Tuesday, oil prices rose to 75.65 dollars a barrel (up 35 cents from Monday), after hitting a record 78.40 dollars on Friday, AFP reported.
Meanwhile there was speculation of further oil price rises, with 100 dollars a barrel also being mentioned.
“If that happen what kind of economic scenario that will emerge within our own economy, which depend entirely on the importation of oil?” asked Jayasundera.
“Can the subsidy any longer be a doable option? If the subsidy is to be phased out or removed altogether, how would the vuln