It's not surprising the buyers at yesterday's weekly donkey market here were looking over their prospective purchases with care. They opened the jaws of the tolerant beasts to examine their teeth, and test-drove them, harnessed to a cart, out of the crowded yard to gauge their pulling power.

"You need to make sure that it doesn't kick people with its back legs, that it's strong and that the colour of the coat is all right," said Saber Dabour, 25. He had just bought a donkey for 410 Jordanian dinars, or just under £290.

For, while working donkeys have been bought and sold in Gaza since before Samson pulled down the Philistines' temple, it is a long time since they have been as valuable as they are now. Prices have risen, according to the traders, by up to 60 per cent since Israel closed off the enclave after Hamas's enforced takeover of the Strip almost six months ago.

Yet despite that – and, he says, that the donkey feed has also gone up from five to 15 shekels (£1.95) a day since June – Mr Sabour has decided it makes sense to sell his car and buy the creature instead. The unemployed Mr Dabour has sold his car and now intends to use a donkey and cart to sell cucumbers, onions and other vegetables door to door. "There are no jobs here, so I am going to create my own work," he said.

Pointing out that vehicle spare parts have dried up since the closure, Mr Dabour added: "A donkey doesn't need tyres, it doesn't need spare parts, and it doesn't need gasoline."

The reduction in fuel supplies from Israel into Gaza – declared a "hostile entity" by the Israeli cabinet in September – in response to continued Qassam rocket fire, has certainly quickened demand for donkeys as well as hitting water and sewerage provision. And the crisis this week, which led to the closure of petrol stations for several days, had led to a lower-than-usual 300 or so donkeys on sale in Shajaia yesterday, according to a cart-maker, Ashraf Kishko. Potential sellers were waiting to see how quickly fuel would return to the pumps.

Mr Kishko, 40, said that, with the added demand and the increased price of wood because of the closures, the carts he has been working overtime to turn out have also doubled in price, to about 120 dinars. "Without gasoline, people think it best to buy a donkey," he said. "We are going back to the period of the Turks."

Mr Kishko's reference to the last occupation of Gaza but three, which ended in 1917, is not an idle one. Here in this suburb east of Gaza City, only a couple of kilometers from an Israeli border on the other side of which new Toyotas and Daihatsus cruise on smooth first-world roads, the market displays the early signs of what some economists call "de-development".

While no doubt accelerated by Israel's June closure of the Karni cargo crossing, it is a process that started well before it. Like many Gazans over 30, Fathi abu Amra, 34, used to have a construction job in Israel before the second intifada began in 2000. Now he was intending to buy one of the donkeys here – the best of which he claims can fetch up to 600 dinars – for probable resale at another weekly donkey market in Khan Yunis. Donkey carts there are used to transport fresh water, among much else.

"You will always find someone to buy," he says. "Everyone is using them for buying and selling things like vegetables" – many of which are at rock-bottom price because of the block on exports to and through Israel.

A few metres away, Abed Shehadah, 62, who also used to work in Israel, was hoping to sell a white juvenile donkey, which he himself had bred, for around 250 dinars to help provide for his extended family.

The fuel crisis which came to a head this week followed a dramatic cut in supplies to Gaza from Israel to what the Gaza Petrol Station Owners' Association claimed was little more than 20 per cent of its normal daily needs of petrol and diesel fuel. Many Gaza streets were emptied of cars and taxis. Then the Association's 30 members with private petrol stations refused to accept the reduced supplies in protest at the cuts.

The new cut followed the failure by the emergency West Bank Palestinian government in Ramallah, set up in June by Palestinian President Mahmoud Abbas, to pay fuel bills to the Israeli supplier Doron. By yesterday, the payment issue was resolved and the owners had called off their sales "strike".

A spokesman for the Israeli military's civil administration insisted yesterday that fuel supplies being moved represented only a five per cent reduction in "heavy diesel" and 12 per cent in petrol. But those figures are heavily challenged by aid agencies who say that, despite an Israeli cabinet decision in October to reduce fuel by only 15 per cent, the diesel levels have since dropped from the usual 300-320,000 litres a day to 190,000, petrol from 80-100,000 to 47,000, and industrial fuel, including for the solitary Gaza power station, from 280,000 to 250,000.

Agencies say the fuel cuts have affected solid-waste treatment and already left 220,000 Gaza residents without running water for more than one hour a day. This is both because of the depth of the cuts and the failure of the de facto Hamas government adequately to prioritise allocation of the reduced supplies.

A Gaza petrol station owner and Fatah supporter, Nabil Nasser, was strongly critical of Hamas yesterday for not meeting Mr Abbas's demand that it renounces its June takeover as a precondition for a reconciliation with its rivals.

But he added: "Israel is not hurting Hamas with these cuts. They are not affected. It is we the people who are suffering."