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Viewing cable 07KABUL3198, AF: Fuel price spikes stabilizing, Iran blamed.

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Reference ID Created Released Classification Origin
07KABUL3198 2007-09-22 04:01 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Kabul
VZCZCXRO4980
PP RUEHDBU RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #3198 2650401
ZNR UUUUU ZZH
P 220401Z SEP 07
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 0392
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0532
RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUCNDT/USMISSION USUN NEW YORK 4215
RUEHFR/AMEMBASSY PARIS 2983
RUEHML/AMEMBASSY MANILA 1615
RUEHBY/AMEMBASSY CANBERRA 0275
RUEHOT/AMEMBASSY OTTAWA 1395
RUEHNE/AMEMBASSY NEW DELHI 7127
RUEHJA/AMEMBASSY JAKARTA 0060
RUEHRL/AMEMBASSY BERLIN 2111
RUEHUL/AMEMBASSY SEOUL 0082
RUEHLO/AMEMBASSY LONDON 3756
RUEHKO/AMEMBASSY TOKYO 1954
UNCLAS KABUL 003198 
 
SIPDIS 
 
DEPT FOR SCA/FO, SCA/RA, AND SCA/A (A/S BOUCHER, GASTRIGHT,DEUTSCH) 
DEPT PASS AID/ANE, OPIC 
DEPT PASS USTR FOR GERBER AND KLEIN 
DEPT PASS OPIC FOR ZAHNISER 
CENTCOM FOR CG CFC-A, CG CJTF-76, POLAD, JICENT 
NSC FOR JWOOD 
TREASURY FOR ABAUKOL AND BDAHL 
MANILA PLEASE PASS ADB/USED 
PARIS FOR OECD/ENERGY ATTACHE 
OSD FOR SHIVERS, SHINN 
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958 N/A 
TAGS: ENRG EFIN EPET ETRD KPWR EAID PGOV AF
SUBJECT: AF: Fuel price spikes stabilizing, Iran blamed. 
 
Sensitive but Unclassified 
 
1. (U) Reporting from Embassy PRT's as well as Kabul-based Embassy 
FSN's confirmed that July and August 2007 saw an increase in fuel 
prices across Afghanistan that quickly caused an up-tick in other 
prices, as well as increased grumbling against the government in 
Afghanistan's coffee house conversations.  Fuel (gasoline) prices 
jumped from an average of USD .70 (35 Afghanis) per liter to 
approximately one (1) USD per liter (55 Afghanis), or USD 3.70 per 
gallon.  A Central Bank (DAB) official recently told Embassy 
Treasury Attach that the surge in fuel prices occurred several 
months ago, but its impact is only recently being felt.  The 
official also claimed that fuel prices have started to decline since 
the July/August surge. 
 
2. (U) Citing higher transportation costs, many shopkeepers have 
increase prices.  Ghee (clarified butter) and sugar, basic stables 
in the local diet, have seen as much as a ten percent increase 
according to monthly Market Basket Survey results from PRT 
Mazar-e-Sharif, with similar results from other PRT's.  Mazar 
residents complain rising public transportation prices have made it 
increasingly inaccessible to the groups it is aimed at serving. 
 
3. (U) In a recent meeting with U.S. Commerce Secretary Gutierrez, 
Minister of Commerce and Industry Farhang and Finance Minister Ahady 
blamed the price hikes on Iran's recent decision to restrict the 
export of gasoline.  They described the move as a result of Iranian 
anticipation that increasingly stringent economic sanctions were 
soon to be applied by the international community.  According to 
Ahady and Farhang, Iran lacks sufficient refining capacity and is a 
net importer of gasoline.  The prohibition on exports was reportedly 
aimed at creating a sufficient domestic stockpile in anticipation of 
economic hard times.  The ministers claim that as a result, regional 
trade patterns have been disrupted and some neighboring nations have 
imposed a USD 100/ton export levy on gasoline.  Afghanistan has only 
one small refinery and is basically dependent on imported gasoline 
for all its fuel needs. 
 
4. (U) Comment:  While any increase in fuel prices and/or the 
regular Afghan basket of good requires close observation, a jump in 
fuel prices prior to the "heating" season in Afghanistan, which 
begins in mid-November, is cause for increased monitoring and 
concern.  Afghans already deal with a lack of sufficient electricity 
for lighting.  Increases in fuel costs, transportation costs and 
everyday living expenses as well as possible spikes in home heating 
fuel cost could create difficulties for many in the coming months, 
and might translate into public calls for the IRoA to "do 
something," and a commensurate erosion of support for the 
government.  End Comment. 
 
Wood