Those subsidies are now being trimmed, as soaring crude prices make it increasingly difficult for governments to foot the bill. In recent weeks China, India, Indonesia, and Iran - countries where the government sets the price of gas - have all raised prices.

But now analysts disagree on what effect this will have, with some saying that gas consumption - and worldwide oil prices - could actually go up. They say that higher gas prices could give refiners an incentive to make more gasoline and eliminate the shortages that have plagued places like China.

"Their lifestyle as changed so much for the better, it's not going to impact them that much if gas prices go up 20%," said Nauman Barakat, an energy trader at Macquarie Futures, the trading arm of Macquarie investment bank. "They are willing to pay more so they don't have to wait in line."

Others agree with Barakat that demand and prices are unlikely to decline.

"Actual consumption is unlikely to be affected seriously," analysts at Wood Mackenzie, and energy consultancy, wrote in a research note. "As long as China's overall economy remains strong, significant growth in vehicle ownership will more than offset the negative effects of this price rise."

Source: Cnn.com

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