The Sunday Times International - Comment
 

Issue of the week By Ameen Izzadeen
Soaring fuel prices
The Big Oil game
Oil and water do not mix, but oil and conflicts do. As the world oil prices reach an astronomical 74 dollars a barrel, the brunt is on non-oil producing developing countries. Inflation in these countries is reaching levels that arouse fears of revolution and chaos. Development projects aimed at relieving the lot of the poverty-stricken people in these countries grind to a halt as the governments try to divert funds to subsidise oil prices.

If the oil price continues to rise -- and it will, according to many analysts - the pace at which the poor becoming poorer and the rich becoming richer will also grow. As the current trends show, the coffers of oil-producing countries and oil firms are overflowing. Shell, Exxon and Mobil are announcing first quarter profits in the region of tens of billions of US dollars as the world oil prices saw a 18 percent rise in the first four months of the year. This price rise also means that the world oil prices have gained a threefold rise over the past three years.

The profits that the oil firms and oil-producing countries are reaping make one to question whether there was a conspiracy or concerted effort by them to keep the world prices high by creating panic, instability and artificial shortages.

Greg Palast, a journalist with socialist ideals, in an article to the London Guardian (See The Sunday Times International Section March 26 page 4) claimed that US President George W. Bush, who was once a Texas oil businessman, and Vice President Dick Cheney, who was the CEO of Halliburton, a company involved in oil industry construction, had indeed accomplished their mission in Iraq.

He said Iraq was invaded not to increase the world oil supplies and thereby bring the prices down, but to do the exact opposite. "Dick and George didn't want more oil from Iraq, they wanted less. I know some of you, no matter what I write, insist that our President and his Veep are on the hunt for more crude so you can cheaply fill your family Hummer; that somehow, these two oil-patch babies are concerned that the price of gasoline in the USA is bumping upto $3 a gallon….. Three bucks a gallon in the States (and a quid a litre in Britain) means colossal profits for Big Oil, and that makes Dick's ticket go pitty-pat with joy…".

Since I read this article, I often wonder that whenever an oil pump is blasted in Iraq, or whenever tension in the Arabian-Persian Gulf area rises, pushing the oil prices up, whether the oil firms are behind it or whether the oil-producing countries are involved in a big conspiracy in cahoots with US oil giants.
The situation in Iraq aptly demonstrates this.

After a long stalemate, Iraq has got a government, albeit under the grip of the United States. The next item on the occupiers' agenda is the restructuring of the Iraq economy. Restructuring also means privatization. In Iraq's case, it means denationalization of the oil industry. Under the new constitution which the United States helped its Iraqi collaborators to frame, Iraq's regional administrations have power to enter into oil contracts with private firms. The central government will have only limited power with regard to the oil industry. Western oil giants are waiting in the wings to force on Iraq their Production Sharing Agreements that are largely legal documents aimed at robbing Iraq's oil.

Mahatma Gandhi said nature has given enough to meet man's needs but not enough to meet man's greed. But unbridled capitalism has little respect for altruism. The world at large in the 1990s rejected socialism, largely on the basis that it curtailed individual freedom. The socialist theory says individual freedom is subservient to community welfare, But in practice, socialism in the Soviet Union and its satellite states bred corruption and created a class system based on one's affinity to or status within the party while the bureaucracy arrogated to itself all political power and usurped the people's fundamental rights.

The capitalist West and religious high-ups slammed the Union of Socialist Soviet Republics and other communist nations as members of the God-less evil empire. But with the collapse of the socialist global order, we saw the evil of the capitalist system. In the face of rising oil and commodity prices and the widening rich-poor gap between nations and within a nation due to globalization, socialism in hindsight appears to be godly.

Oil industry analysts attribute the recent fuel price hikes to the growing demand from rising economies such as India and China and from the developed world where the economy is undergoing a boom. The Organisation of Petroleum Exporting Countries, a global mafia of sorts, says the demand has gone up by a million barrels a day over the past year and it could soar from the present 90 million barrels a day to as much as 140 million. The simple economic theory of price applies here. The demand is more than the supply. But free market economic principles do not apply in the oil market. The oil-producing countries do not want to flood the market with their dwindling resource and kill the goose that lays the golden eggs. So they manipulate the market and keep the prices high.

The supply situation is worsened by security fears. Iraq is still unstable with attacks on oil pipelines being a regular feature in the conflict there. Iran is facing economic sanctions or US military strikes due to its refusal to abandon its nuclear programme. Meanwhile in Nigeria, the oil-producing Niger Delta area is engulfed in civil turmoil with the rebels and trade union activists crippling the industry demanding that the government hand out a bigger share of the oil revenue to the local people. The end result of the disruption to oil supplies is a rise in prices — a burden thrust upon the consumer.

In the United States, the rising gasoline prices have become a political issue in the election year. The US Congress is debating measures such tax rebates to consumers and tax breaks to oil companies to lighten the burden on the people. But developing countries can do very little. Venezuela's socialist president Hugo Chavez is giving oil at a concessionary price not only to poor neighbouring countries, but also to poor people in the United States. Iran's tough-talking President Mahmoud Ahmadinejad recently called on the OPEC to sell oil to developing countries at a concessionary price. For obvious reasons, there was no response from the OPEC.

The world, especially developing countries, cannot be held to ransom by oil firms and OPEC. There should be genuine efforts to find alternative energy or energy efficient methods that would reduce our dependence on oil.

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