August 16, 2004
RISING OIL PRICES: 'A CRUDE AWAKENING'
KEY FINDINGS
** Global dailies fear
"skyrocketing" oil prices may undermine international economic
growth.
** Many papers attribute
higher energy costs to the volatility of international affairs.
** Others identify as
culprits "inexorably rising" demand and limited supply.
** Papers differ on how to
respond, while some Euro outlets find the concerns are overblown.
MAJOR THEMES
Expensive oil 'could foil all hopes' for economic recovery-- Qatar's semi-independent English-language Gulf
Times warned of a world economy "derailed" by elevated oil
prices, while a Hong Kong editorial raised the prospect of economic
recession. Singapore's pro-government Straits
Times spoke of a "grave threat" to global economic recovery in
Asia. German outlets noted that the
gasoline "price shock" has "considerably slowed down"
American oil consumption, and an Asian paper contended the U.S. economy is
showing "signs of fatigue."
French and Italian writers suggested such a malaise could doom President
Bush in November.
Petrol prices 'extremely sensitive' to 'international diplomatic
events'-- Russia's Yukos imbroglio, mused an Italian
editorial, has "repercussions" for global oil markets: "it's globalization, honey." Many outlets worried about threats to Iraqi
oil facilities, and Japan's business-oriented Nikkei lamented how the
"prolonged chaos" in Iraq's "oil-rich south" will influence
oil prices already soaring "due to the ongoing domestic
confusion." Venezuela's
English-language Daily Journal admitted that "speculation"
about the country's oil supplies after the recall referendum are affecting
"the widespread nervousness" in international markets.
'Strongly increasing' demand, production 'bottlenecks'-- Some media, particularly Asian outlets,
argued that insatiable demand and insufficient supply account for the mounting
costs of "this precious black gold."
These outlets linked heightened demand to the prodigious energy needs of
China and India, "the economic giants of tomorrow." Oil demand, asserted Hong Kong's independent Economic
Journal, is "beyond OPEC's control." On the supply side, a German scribe reckoned
OPEC "is working at 90 percent capacity" and Russia "sees itself
incapable" of short-term production increases. The "warning signs" of
"diminishing supply and profligate consumption" have been apparent
"for some time," contended a writer in Singapore.
'The world must find ways to cope,' others say don't panic-- Outlets split on what actions to take. Asian and European commentaries recommended
reducing dependence on oil. A Japanese
editorial championed the development of "alternative power generation
systems." France's Liberation
noted that rising prices validate France's increasing reliance on nuclear
energy. German editorials focused on
supply-side policies such as suspending production quotas. China's official English-language China
Daily called for a "national strategic petroleum reserve." However, some European media urged rhetorical
restraint. One Italian writer judged
that oil supplies "are not running out," and a few German writers
scoffed at talk of crisis and bemoaned the "lust for exaggeration."
EDITOR: Michael Kugelman
EDITOR'S NOTE: Media
Reaction reporting conveys the spectrum of foreign press sentiment. Posts select commentary to provide a
representative picture of local editorial opinion. Some commentary is taken directly from the
Internet. This report summarizes and
interprets foreign editorial opinion and does not necessarily reflect the views
of the U.S. Government. This analysis
was based on 33 reports from 16 countries ranging from August 3 - August 16,
2004. Editorial excerpts are listed from
the most recent date.
EUROPE
FRANCE: "A Piece Of
Good News"
Gerard Dupuy in left-of-center Liberation contended
(8/12): "An ironic benefit of the
course of events will concern Bush’s political career. The man who owes his election in large part
to the contributions of the petroleum lobby could see his reelection fall by
the wayside because of rising oil prices.
Before cringing, consider this scenario:
what if the rise in oil prices was the real good news of the summer of
2004?"
"Multiple Energy"
Dominique Quinio opined in Catholic La Croix (8/11): "The price of oil is extremely sensitive
to international diplomatic events. The war in Iraq, the Yukos affair, the
uncertain political situation in Venezuela all contribute to destabilizing the
production of this precious black gold, while consumers continue to ask for
more.... This should comfort France in
its choice to increasingly rely on nuclear energy...even if the incident in
Japan on Sunday proves that there are still some dangers associated with this
type of energy."
GERMANY: "Price Of
Profits"
Center-left Sueddeutsche Zeitung of Munich argued
(8/13): "Those who blame solely the
sheikhs, speculators, and Russia's policy for the high oil prices have not
included others who are responsible. The
energy companies in the consumer countries are also to blame. Over the past few years, they spent little to
explore new oil fields. Saudi Arabia's
oil minister rightfully pointed out that his country, despite the scarcity of
oil, and despite a new price record is unable to sell all its reserves. The unusual high difference between two
individual sorts of oil is evidence of this....
While companies prefer a light, low-sulfur oil that can easily be
refined, heavy oil that is rich in sulfur is not in demand. It is now becoming obvious that the large
oil companies invested too little in the past.
But this is now coming back to haunt them...."
"Stay The Course"
Business daily Handelsblatt of Duesseldorf stated
(8/11): "The U.S. economy is not
suffering from a lack of liquidity, but it continues to suffer from structural
distortions stemming from the booming times during the 90s and from an oil
fright. The weakness of economic growth
and employment is mainly based on the fact that many highly indebted U.S.
households are slowing down consumption in view of high energy prices. And if consumers slow down, companies must
also slow down. The result are fewer new
jobs. But many economists are expect[ing]
the Fed to have an interest rate break at its meeting in September despite the
clear message it sent out his time. Such
a break may be politically opportune in view of the presidential elections in
November, but it would not be economically wise. Those who want to heal the Americans' craze
for cheap money cannot have a break in the midst of a withdrawal treatment."
"Disruptive Factor Oil"
Folker Dries held in center-right Frankfurter Allgemeine
(8/6): "The time of cheap oil and
gas is over. We owe increasing oil
prices to the fact that the global demand for oil is strongly increasing and
because there are bottlenecks in production.
The global, additional demand for oil is as high as it was 16 years ago
and the global economy is booming....
Countries like China and India are now demanding their share in the
global oil consumption.... But this
demand is faced with small reserves. It
is true that there is enough crude oil, but what we do not have are new
production and refinery capacities. Over
the past 15 years, state and private producers have strongly reduced their
investment in new facilities because the development of prices on the oil
markets did not offer sufficient investment stimula. This is different in view of the current
price level, but new production facilities cannot be set up overnight.... And if Islamic terrorists succeeded in
cutting important nerves of the Arab oil infrastructure, the price for crude
oil would rise even more.... It will be
decisive for the global economy whether the increase in the oil price will take
place gradually or like a shock. Oil has
always become a killer of economic growth when prices skyrocketed.... But we cannot yet talk about a price
shock. In absolute terms, oil prices
reached a record high, but when we ignore inflation, oil is only half as
expensive as it was at the beginning of the 80s following the Iranian
revolution."
"Tranquilizer"
Hein-Juergen Schuermann declared in business-oriented Handelsblatt
of Duesseldorf (8/6): "The OPEC
ministers should consider a measure to reassure the global oil markets: the
definite suspension of the officially still valid production quota. This signal and the simultaneous announcement
to open upstream markets for international companies would create a confidence
that would counter term speculative overreactions for long-term oil
contracts.... But if the oil prices, despite
the most recent OPEC signals, continue to climb or if there are supply
disruptions that are politically motivated, all indications are that the
strategic oil reserves will at least be partially released in the most
important consumer country where presidential elections are due in November: in
the U.S. This happened the last time
four years ago to reduce oil prices."
"Excessive Demand"
Centrist Koelner Stadt-Anzeiger of Cologne opined
(8/6): "Unlike during the times of
the great Middle East crisis in 1973, large oil-importing countries like
Germany are not threatened with an interruption of oil supplies that is based
on political reasons. On the contrary,
emerging threshold countries like China are reporting of an increasing demand
for oil creating even greater problems of OPEC to open its oil wells even
more. The current bottleneck is a
consequence of the economic recovery but not a deliberately provoked
shortage. For many, including car
drivers, the high oil price is a nuisance, but not a killer of economy
growth. This is why it is all the more
important to reduce the dependence on oil."
"Skyrocketing Energy Costs"
Center-right Landeszeitung of Lueneburg held (8/6): "The danger cannot be ignored that the
skyrocketing energy costs are poison for the economy that is beginning to
blossom.... In view of political risks
in many oil-producing countries and the certainty that oil reserves are limited,
intelligent answers to the question are now necessary [for] how to make
ourselves more independent of oil. Germany, too, has a precious raw material,
know-how. The high tech country and its
highly paid managers should succeed in making alternatives to oil ready to be
sold on the markets."
"Increasing Prices"
Right-of-center Schwaebische Zeitung of Leutkirch
editorialized (8/6): "This
detective story on oil for the world is pulling at the nerves of all ideas
involved, regardless of whether they are the villains in the game, the
swindlers, or the many millions of innocent people.... We can only warn against buying oil in the
fall, since prices will then certainly increase. We innocent people have only one choice: save energy, use intelligent technology to
reduce energy and to buy as little fuel as possible."
"Expensive Oil"
Center-right Frankfurter Allgemeine maintained (8/3): "The oil price is leaping from one
record to the other. But it would be too
easy to explain this with fears of terrorist attacks on the Arab oil
infrastructure or looming production bottlenecks of the Russia Yukos
company.... The demand for the black
gold will considerably increase in the coming years if new economic powers like
China and India demand their share in the consumption of oil. OPEC is working to 90 percent capacity, and
Russia, too, sees itself incapable of significantly increasing its production
on a short-term basis. This is why consumers
are well-advised to adjust to lasting, higher energy prices.... The further dynamic of the development of
prices will show whether oil also has the potential to kill economic
growth. In America, the price shock at
the gas pumps has already considerably slowed down private consumption in the
second quarter."
"Problematic Threshold"
Centrist Abendzeitung of Munich noted (8/3): "The skyrocketing oil price could foil
all hopes for an economic recovery.
Within a few weeks, the price for a barrel of oil has increased by more than
ten dollars. When the barrel cost less
than 30 dollars we were told that this threshold could become problematic for
the industrialized countries. But now
this price has almost reached the 44-euro level. This shows the dimension of the problem. Oil is the most important raw material for
the economy of the industrialized countries.
A company can hardly come to terms with such a dramatic price increase
without profit losses or an increase in prices."
"Persistently Increasing"
Right-of-center Nordbayerischer Kurier of Bayreuth said
(8/3): "In the middle of the
summer, heating oil prices are persistently increasing. Oil is as expensive as it was rarely before,
and the 40-dollar level for a barrel of oil was broken a while ago. After a few months of relative calm, the fear
of the markets of al-Qaida is back. This fear can drive prices and slow down
economic growth. Since stock market
experts are able to hear grass grow and their lust for exaggeration accompanies
developments on the markets, terror organizations like al-Qaida are able to
influence market prices. On the other
hand, al-Qaida is part of a real world and it can be fatal to underestimate
it. As long as the powder kegs in the
Middle East have not been defused, the West will not come to rest."
ITALY: "The Two
Effects Of The ‘P’ Factor: It Slows Down
Recovery And It Weakens Bush"
Massimo Gaggi commented in centrist, top-circulation Corriere
della Sera (8/5): "In addition
to economic repercussions, the increase of oil prices also has political
repercussions in the U.S., given that a recovery apparently already on the way
was considered the best electoral card for Bush, who is having problems
managing the Iraqi war. The return to a
more uncertain economic situation goes to Kerry’s advantage, even though his
energy policy is raising doubts.... The
current problems, however, should not be overestimated. Oil is a precious resource and it should be
saved, but supplies are not running out: oil companies have reserves that can
last for 40 years."
“High Oil Prices, A Tax Paid To Putin”
An editorial in conservative newspaper syndicate La Nazione/Il
Resto del Carlino/Il Giorno read (8/5): "A new tax is hanging over all of
us.... It is the Putin tax, not imposed
directly by him, but provoked, with global effects, by his political and
personal fight with those who dared defy him.
Along with the uncertainty caused by terrorism, in fact, it is the
uncertainty over the fate of the leading Russian oil company Yukos that is
having a role on the increase of oil prices....
For sure, the settling of accounts between Putin and those who dared
defy him is no longer just their business, but it is having repercussions on
the international oil market. It is our
business as well.
It’s globalization, honey."
RUSSIA: "War Makes The
U.S. More Vulnerable"
Business-oriented Vedomosti editorialized (8/12): "As
the Americans, apparently carried away by the process, bombed Najaf, hoping to
do away with Shia leader Moqtada al-Sadr, his supporters struck near Basra in
the South, the bottle neck of the country's oil industry.... Many said that the Iraq campaign, among
other things, aimed to undercut OPEC's influence on oil prices. The United States and the rest of the
industrialized world are less dependent on the oil market now, unlike in the
days of the oil crisis in the 1970s. But
the Iraq war has made them more vulnerable."
IRELAND: "Venezuelans
Vote On Chavez"
Michael
McCaughan opined in The Irish Times (8/16):
"....President Chavez has spearheaded an economic and political
integration project which challenges US hegemony in its backyard. A defeat for
Mr Chavez would deprive the region of its most articulate critic of
Washington's economic and foreign policies....
The Bush administration is also watching the referendum result as any
subsequent unrest could spark further price rises in the oil industry, which
provides almost 15 per cent of US imports. The referendum campaign was marked
by mutual accusations of unfair tactics. President Chavez has used state
resources to campaign for a vote in his favor, while the mainstream media has
put its considerable resources at the service of the opposition....”
"A Crude Awakening"
An editorial in the Irish Independent posited
(8/11): "Crude oil prices reached
$45 a barrel in New York yesterday....
They will certainly rise again. Yesterday, too, the flow of oil from
southern Iraq, disrupted by the fighting in the region, resumed. However, the
renewal of the supply did little to create confidence, because the pressure for
higher prices far outweighs the effects of minor interruptions or minor
improvements. The eyes of the experts
are not on Iraq. They are on Saudi Arabia. Every incident related to Middle
Eastern terrorism or Muslim fundamentalism renews talk of whether the Saudi
regime can survive. If it does not, speculation about $150 a barrel could come
out of the realm of fantasy into that of reality. There are other factors, all unfavorable. An
end has come to the comfortable belief that the world had sufficient oil reserves
for the next 100 years. Demand is rising inexorably. China has become a major
consumer. India has joined the queue. And supply is limited. It takes no genius
to foretell the next development. Price
rises at the pumps, in heating oil, in aviation fuel are all inevitable. The
world must find ways to cope, as it did in the 1970s - but preferably by better
methods than those of the 1970s. For
governments and central banks, finding those better methods will not be easy.
The latest price surge preceded the announcement by the US Federal Reserve of
an increase in interest rates. It will make the Fed, and the European Central
Bank and the Bank of England, doubtful about the merits of any further such
increases...."
MIDDLE EAST
SAUDIA ARABIA:
"Oil Prices"
The pro-government English-language Saudi
Gazette declared (8/12): "The
surge in oil prices to historical highs has prompted several international
airlines to introduce surcharges on fares on long-haul flights between Europe
and the United States. US crude recently hit record highs on the expectation
the situation in Iraq may deteriorate further at a time when oil-supplying
nations are already struggling to maintain output. Oil markets in North America
and Europe are concerned that Iraq's oil facilities may become the target of
attacks by militants locked in conflict with US-led Coalition forces as there
has been a history of sabotaging refineries and pipelines ever since the
invasion of Iraq took place.... Iraqi
officials said they had stopped pumping oil from key southern oilfields because
of violence in the region. A Southern Oil Company official said militants loyal
to Al-Sadr had threatened to target oil installations in the city of
Basra.... As if all this were not enough
there are fears that Russian oil-giant Yukos, which accounts for about 2
percent of world output, may be forced to suspend production because of a
dispute with the Russian government over a multi-billion dollar tax bill. The difficulties affecting oil supply come at
a time when the global economy is forging ahead and industrializing countries
such as China and India, the economic giants of tomorrow, have ever-greater
energy needs. What is especially troubling about the current situation is that
there is no shortage of oil, merely an interruption in supply. Oil prices will
inevitably fall back but only after the disruption that such short-term
fluctuations generate. The Kingdom of Saudi Arabia, with the world s largest
oil reserves and the largest surplus production capacity, is always under
pressure at times like this to increase oil production to bail out the
international community to prevent a global economic recession. This is a huge
responsibility that is rarely recognized and one that the Kingdom has
shouldered for the last half century. There are times, though, when even the
best of friends must ask each other if with a degree of more consultation, say
between Riyadh and Washington, a proportion of these present-day problems could
not have been avoided."
QATAR:
"High Energy Costs May Derail World Economy"
The semi-independent English-language Gulf
Times opined (8/9): "Nobody
wants oil prices to go beyond a reasonable limit. Leading officials of the Organisation of the
Petroleum Exporting Countries (Opec), including its former president and
Qatar’s Energy and Industry Minister HE Abdullah bin Hamad al-Attiyah, have
repeatedly said that the members of the organisation would be happy with a
price tag of around $30 a barrel. But
defying the good intentions of the producers and the earnest expectations of
the consumers, oil prices continue to rise triggering fears that the world
economy could be derailed by higher energy costs. Throughout the world, alarm bells have begun
to ring with petrol prices set to reach record levels.... Prices have been driven higher each day of
the past week, first as Russian oil giant Yukos said it faced bankruptcy and
might have to cease pumping oil, then as the US announced a terror alert and,
finally, by an attack on an Iraqi oil pipeline.
Economists have calculated that a $10 a barrel rise in oil prices knocks
about 0.5 percentage points off world growth after 12 to 18 months. Brent has averaged around $25 a barrel in
recent years, so a sustained price above $40 could knock the world economy hard. According to Andrew Oswald, Professor of
Economics at Warwick University, 'oil prices matter enormously for the world
economy and will continue to do so for at least our lifetimes.'"
ASIA PACIFIC
CHINA: "Oil Reserve
Key To Energy Security"
Zha Daojiong reasoned in the "Opinion"
page of official English-language China Daily (Internet version,
8/11): "Shortly after China became
a net importer of petroleum products in 1993, experts in macroeconomic policy
and petroleum production began discussing the necessity for establishing a
national strategic petroleum reserve. A
decade later, a petroleum reserve is proving to be a key element in
safeguarding China's energy security.
Because of the absence of a strategic petroleum reserve, China has to rely
on huge petroleum imports to satisfy domestic oil demands for economic and
social development. And such reliance
is easily used by international petroleum dealers to manipulate oil prices. As a result, China has to face continuously
rising oil prices, not only for oil in daily usage, but also for those to build
up common reserves. On the international
market, voices are rising that China's imports of petroleum are becoming a
global threat, which is quite similar to the excuses heard in attacks on China's
imports of steel and grain. But at the
same time, many of those who spread such opinions have profited heavily by
selling oil to China. As one of the most
efficient ways to guard a country's energy security, the strategic petroleum
reserve offers a solution when a sudden disruption in petroleum supply
occurs. Compared to other solutions
against short-term oil supply disruptions - like limiting demand and bolstering
domestic supplies - strategic petroleum reserve can ease market pressures by
releasing the oil in reserve, hence checking the upward momentum of oil prices
and cushioning the shock to the economy posed by the slump in oil
supplies...."
CHINA (HONG KONG SAR): "The Oil Market Is Volatile"
The independent Chinese-language Hong Kong Economic Journal
editorialized (8/12): "....In the
statement issued by the Federal Reserve, it said the U.S. economy has obviously
slowed down in these past two months. It
might be due to the upsurge of energy prices.
When oil prices are hitting a record high everyday, people are fed up
with the 'comment' that high energy prices will harm economic prospects. Nevertheless, they should pay attention to
the substantial impact on the economy due to mounting oil prices.... The reason why today's oil prices make people
feel uneasy is not because of their rising trend but because of their
continuing demand. For the past thirty
years, oil prices stood at above U.S.$30 per barrel. After the adjustment of inflation, oil prices
of U.S.$30 per barrel in the 80's is equal to U.S.$60 per barrel today. Current oil prices have not yet reached such
a high level. However, since the demand
is increasing and the supply is getting tight.
It is not impossible that oil prices may rise to a level that will
trigger economic recession.... The U.S.
economy is showing signs of fatigue. But
if oil prices bring about a rise of commodity prices, the situation of having
negative interest rates (interest rate lower than the inflation rate) can
hardly be changed."
"Demands Remain High, Oil Prices Will Not
Drop"
Independent Chinese-language Hong Kong Economic Journal
stated (8/5): "Oil demands are
beyond OPEC's control. What the OPEC
members can do is adjust their productions according to the market situation to
keep oil prices in a level meeting OPEC's interests while not causing any
impact to the global economy. In recent
years, the global oil demands are much higher than expected. Neither OPEC, oil refinery facilities or oil
tankers can meet the increasing demands.
That's why oil prices and the transportation fee have both risen. OPEC and the business operators have no way
to resume a balance in the oil market.
This means that oil demands must drop before oil prices can drop. However, how high should the oil prices rise
before the demands will have a reaction?
The answer has yet to be found."
"Don't Panic For The Surge Of Oil Prices"
Pro-PRC Chinese-language Ta Kung Pao noted (8/3): "Recently, oil prices have surged. It seems that they will remain high for a
period of time. High oil prices have
already created some impacts, for example, there is hint that the U.S.
consumption is changing course. The
reasons for the rise of oil prices are complicated. On the one hand, due to global economic
recovery and the increase of consumption in China and Indonesia, short-term
supply cannot deal with the large-scale expansion, and OPEC's idle capacity has
dropped.... Oil prices have also risen
recently because the market uses breaking issues to frighten consumers. Coverage includes the terrorist threats to
oil facilities in Iraq and other Middle East countries, the struggle between
the Russian government and the oil companies as well as the strike movements in
Venezuela and Nigeria. All these have
triggered huge reactions in the international market. However, many experts anticipate that the oil
supply in the middle to long term will not lose its balance. Hence, in the next few years, oil prices
should fall. If this is true, people
should not panic about the surge of oil prices in a short term."
JAPAN:
"U.S. In Full Clash With Al-Sadr"
Business-oriented Nikkei's Cairo correspondent observed
(8/11): "It appears that initial
sporadic skirmishes between the U.S. military and anti-America Al-Sadr militia
in Najaf have grown into a full-scale confrontation that threatens to engulf
middle and southern Iraq. With the U.S.
military expected to launch massive operations against Sadr renegades in the
Shiite city, the prolonged chaos in the oil-rich south will further affect oil
prices, which have soared due to the ongoing domestic confusion."
"Need For Careful Attention To Oil
Supply"
Liberal Asahi editorialized (8/9): "We should pay close attention to the
recent hike in oil prices, pushed up by continuing unrest in Iraq,
mismanagement of the Russian oil company Yukos, lingering concern about terror
threats in the U.S. and political turmoil in Nigeria and Venezuela. On the demand side, China's increasing oil
imports backed by its booming economy is a major factor for the tight petroleum
supplies. Oil-import nations need to
make adequate preparations for rising oil prices. They must also make greater efforts to save
energy and develop alternative power generation systems."
"Oil Hike Causes Uncertainty In Global Economy"
Business-oriented Nihon Keizai asserted (8/3): "Concern about the future of Russian oil
firm Yukos and political instability in Venezuela appear to have prompted the
recent hike in oil prices. Since last
year, geopolitical factors in oil-producing nations in the Middle East,
including the war in Iraq and terrorism in Saudi Arabia, have jolted the
international energy market. However,
the current rise in oil prices shows that various factors can affect the
market. Increasing energy demand in
China, India and Latin America is also a growing concern in terms of global oil
supplies. Oil-consuming countries,
including Japan, need to act in an orderly manner and urge oil producing
nations to increase production."
INDONESIA:
"Oil Price Burdens World Economy"
Independent Suara Pembaruan opined
(8/7): "The world's economy is now
facing concerns following the absurd oil price increase.... This unfavourable oil price development has
forced the Organization of Petroleum Exporting Countries [OPEC] to increase
production quotas to add stock to the market.... Observing the price hike, every party needs
to look for a solution together. Political ambition which has triggered
conflicts in the Middle East must be put aside."
KOREA: "Rising
Consumer Prices, Rising Oil Prices, Rising Taxes, And The Falling Economy"
An editorial in the English-language version of
the independent, moderate second-oldest daily Seoul Tong-a Ilbo stated
(Internet version, 8/11): "While
the economic life of the majority of the public is getting tougher and tougher,
neither the government nor politicians offer the belief that hope is around the
corner.... To add insult to injury,
consumer and oil prices are skyrocketing....
The price of Dubai oil, which makes up 70 percent of the country's oil
imports, has risen by $3 since it reached a 14-year high on May 7. What worries us are the adverse effects of
rising oil prices on economic growth, consumer prices, and exports. Nevertheless, the government and the ruling
party are failing to give confidence to the public over its projections,
policy-making, and its policy priority.
They are busy with raising taxes as if they turned deaf ears to
taxpayers' outcries...."
SINGAPORE:
"Risks Anew With Oil Hike"
The pro-government Straits Times
maintained (8/6): "The sharp rise
in oil prices in recent weeks...is a grave threat to global economic recovery,
especially in those Asian nations which are determined to attack poverty and
bring more prosperity to their middle classes. A curious question arises: Why
were the experts saying until just a short while ago that global demand and
supply was nicely balanced? How could they get the price situation so
wrong?.... Warning signs about higher
prices, diminishing supply and profligate consumption by industrialized nations
have been flashing for some time. Internationally accepted prescriptions like
conservation and more rapid deployment of alternative forms of energy such as
hydrogen fuels remain largely in the realm of words.... The obvious solution to the persistent crisis
lies in more conservation and less consumption, especially in industrial
nations. But this is not going to happen. More attention then needs to be paid
to exploration in environmentally benign ways. The US Geological Survey says
current proven world reserves of 800 billion barrels can be enhanced by three
trillion barrels that have yet to be found and extracted. It calculates that
would take an investment of US$2.2 trillion by oil companies over the next
three decades. They certainly have the money, especially these days. Look at it
this way: If there isn't such investment, the current reserves will last only
another 10,000 days, or 27 years. And if consumption rises by 5 per cent
annually, which is about right, the world will run dry in 15 years. These are
scenarios, but oil companies and their patron governments can hardly be blase
about them."
SOUTH ASIA
INDIA:
"The Rate Of Inflation"
Influential Hindi-language Rashtriya Sahara
declared (8/9): "For the first time
in two years, the inflation rate in India has risen to 7.51 percent.... Government circles admit that a weak Monsoon
has caused food prices to go up, and this has resulted in a high inflation
rate.... The rise in the inflation rate
is also unavoidable. Ever since the UPA
took over the government, prices of petrol products have gone up on two
occasions.... Petrol, diesel, and
cooking gas have become costlier.... The
price of crude oil is continuously increasing.
At present, it is $45 per barrel.
This price might not remain stable.
In fact, the price may go up further because of the crisis in the
Gulf. Oil companies would hike petroleum
product prices in this situation.... No
immediate remedial measures to overcome the situation are in sight. Instead of treating the problem lightly,
serious efforts should be made to bring the situation under control."
WESTERN HEMISPHERE
ARGENTINA:
"The Venezuelan Crossroad"
An editorial in daily-of-record La Nacion read (8/12): "On Sunday the Venezuelan people will
vote in an unusual 'revoking referendum' of Chavez' mandate.... Curiously enough, this referendum.... will be an election in which there is only
one candidate, for his acceptance or rejection. On the other side, there is no
visible option.... According to latest
opinion polls, the 'yes' and 'no' to the Chavez' mandate are seemingly
tied.... Many suggest that the
temptation of fraud is real but succumbing to it would be a huge
mistake.... If Chavez happens to lose,
he would have one more choice, that of participating in a presidential election
one month later.... We should add that
this referendum will have its impact beyond the Venezuelan borders because, on
the one hand, its outcome could bring more instability to the already unstable
international oil prices, but also because if the 'No' wins, Chavez' imitators
could multiply themselves in a hemisphere in which the democracies of several
countries are jeopardized."
VENEZUELA:
"It Is Our Chance"
Juan C. Sosa Azpurua wrote in leading conservative daily El
Universal (8/10): "The
situation of the world energy market is critical. The oil prices will continue to be on the
rise and nothing seems to indicate that they won't go back to be at a
reasonable level in the short term. All
of the oil producers, including Saudi Arabia, are producing to their capacity
and the demand continues to grow, despite the important advancements in
alternative technologies and energy conservation. This scenario will force the transition
government to implement an aggressive oil policy with a great international
impact as a top priority."
"The Price Of Oil"
The English-language Daily Journal held (8/5): "Oil prices hit a new high this week
when West Texas Intermediate (WTI) was traded at $44.15/barrel on the spot
market. It is estimated that today's
prices are $10 per barrel above what would be their balanced level. There are several explanations for this. Even Venezuela is contributing to this
climate of uncertainty. Speculation
about what could happen with Venezuela oil supplies after the recall referendum
on August 15 is also having an impact on the widespread nervousness in world
markets. If the oil production is at
more or less the same level as in 1981 but the price is only half what it was
then, Venezuela is NOT enjoying an authentic 'oil boom.' So, even assuming that prices do not come
down, it is crucial and urgent that other non-oil sources of income and growth
for the economy be sought. This omission
is the biggest error in the Chávez administration's economic policy."
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