Fuel prices increased to the limit

The Jakarta Post, Jakarta

State-owned oil and gas company Pertamina set fuel prices for November at the maximum allowable price, which the government explained was due to soaring oil prices on the world market as war talks in the Middle East persist.

Compared to the previous month, the price of automotive diesel rose to Rp 1,550 per liter from Rp 1,440, and industrial diesel to Rp 1,520 per liter from Rp 1,420.

Premium gasoline and bunker oil remain unchanged at their highest range of Rp 1,750 and Rp 1,150 per liter respectively.

Pertamina gave no explanation for the increase, but Minister of Energy and Mineral Resources Purnomo Yusgiantoro told reporters earlier that oil prices had jumped to US$28 a barrel -- the upper end of the trading band set by the Organization of Petroleum Exporting Countries (OPEC).

Talks over a possible U.S. attack against Iraq is stoking oil prices on fear that war in the vicinity of the world's largest oil producers could disrupt world oil supplies.

The government introduced monthly price adjustments last January, replacing the political risky move of announcing gradual price hikes as required under the International Monetary Fund (IMF) reforms program.

Fuel prices now track the movement of world oil prices, and are set by Pertamina each month based on the previous month's price average and estimation on future movement.

Car owners pay 75 percent of the market price for fuel, except for premium gasoline, which Pertamina quotes at 100 percent of its market price.