The recent protests in oil-rich Kazakhstan have highlighted the devastating effects of rent extraction. The country’s largest sellers of liquefied petroleum gas (LPG), including KazMunaiGas, Kazgermunai, CNPC-AktobeMunaiGas and Kazakhoil, have been accused by the government of increasing fuel prices by abusing their oligopoly power. When the state lifted its price cap on LPG at the start of 2022, the market price doubled within a couple of days. The impact was immediately felt by poor and vulnerable sections of Kazakhstani society, which relied on the commodity for heating and vehicles.
Ultimately, the price hike was a violent attempt by powerful oil corporations to extract rent – they knew that most of the population had no alternative but to pay up or go without. Akin to social historian EP Thompson’s moral economy of the 18th-century English crowd that rioted against soaring food prices, Kazakhstan’s working class revolted against the market price and the injustice of the ‘free’ market.
‘Free’ market
Kazakhstan’s government justified the removal of the price cap by saying that it was complying with market principles. It wanted to liberalise the market by ending the price subsidy on LPG, and allowing the ‘free’ market to dictate the price. This policy is based on mainstream economic thinking that a commodity’s price and value should be determined by demand and supply to reflect its scarcity and costs.
