Kazakhstan crisis reveals risk to autocrats from high fuel costs

The deadly unrest rocking Kazakhstan this week offers a warning to strongmen worldwide on what could happen if they fail to shield citizens from soaring energy prices.

Touching off the violent protests was Kazakhstan's decision to lift the price caps on liquefied petroleum gas, used in part to fuel vehicles in the country. The move, taken to prop up LPG producers, roughly doubled the price, according to Russia's TASS news agency.

Leaders of authoritarian states and some emerging nations have curried public support by offering generous fuel subsidies. Rising energy costs have rendered those allowances fiscally unsustainable. But those leaders must weigh any changes against the potential public backlash.

Kazakhstan is an oil producing country. But according to news reports, drillers there such as U.S. companies ExxonMobil and Chevron prefer to export in order to fetch higher prices, leaving the country short on supplies.

The leaderships of other countries are also threatened by the rise in energy fuel prices, including China, which has been grappling with coal shortages. On Thursday, China's top national planner, the National Development and Reform Commission, published a lengthy statement from its head, He Lifeng, telling industry to "focus on ensuring the security of energy resources."

This follows an NDRC notice late last year calling for stable supplies of coal. On Thursday, coal industry groups urged all members to implement that directive.

Yet coal-fired power plants are struggling with earnings as China works to minimize the effects of power shortages on living standards. Electricity rates do not fully reflect the rise in coal prices.

During the third quarter of 2021, 60% of 43 listed thermal power companies reported losses, according to an analysis by a brokerage reported in Chinese media. The government granted cash-strapped power companies an extension on tax payments for the fourth quarter, along with other financial support.

In Saudi Arabia, the government decided in July to cap gasoline prices at 2.18 riyal (58 cents) per liter. Oil producers in the Middle East that are pushing reforms to wean their economy off petroleum have been forced to minimize the impact of that agenda on living standards.

Iran announced in 2019 that it would triple gas prices, triggering massive protests nationwide. Since then, Tehran has not dared to touch fuel prices.

Even democratic European countries have become wary of energy prices. In France, the "yellow vest" protests against rising fuel prices weakened the political mandate of President Emmanuel Macron. France last month distributed 100-euro ($113) checks for 5.8 million low-income households to cope with surging energy prices. That same month, Spain said it would extend relief on energy taxes.