World oil crisis: impact on developing countries
The economic analysts argue that there are many reasons; direct and
indirect, behind the current oil price hike. They mainly attribute to
the developments in China and India which had increased the consumption
levels of the fuel per day. This situation had led the Organisation of
Petroleum Exporting Countries (OPEC) to a problem since its output
cannot match the increased demand from these two nations.
Among other factors, the civil war situations in Nigeria especially
the militant attacks, funding problems, strikes by Nigerian oil workers
and the attacks to the pipelines have seen in Nigeria cuts its
productions and have helped push oil prices to record highs and also led
to a demand nearly two billion dollars in arrears per day.
The other main factor is that the decrease of the oil production from
Iraq to the world market. In general Iraq is believed to hold 115
billion barrels of proven oil reserves, and possibly much more
undiscovered oil in unexplored areas of the country which produced over
2 billion oil barrels per day off that 1.59 billion barrels were
released to the export market earlier but this number has decreased to
1.46 billion today.
The next factor is that Hugo Chavez the President of Venezuela, a
member country of OPEC had imposed a tax of 60 per cent for the foreign
oil producing companies in the country. Therefore the production cost
had risen to 115 US Dollars per barrel. President Chavez's main object
is to control the oil production in the country.
Tatsuo Kageyama, ananalyst at Kanetsu Asset Management in Tokyo said
:"you really cannot forecast how much further the market will rally
now".
The economic analysts say that the member countries and the OPEC
organisation have ignored the factor of supplying according to the
prevailing demand. Their main object is to save oil for OPEC countries
for their future benefit.
However, the price of an oil litre in London had been increased to
120 pence (approximately Rs. 253) these days. Prime Minister of United
Kingdom Gordon Brown is holding discussions with the international
market and with OPEC to increase the production level to overcome this
situation while working out with United States of America, Saudi Arabia
and Kuwait to boost the oil production .
Meanwhile, in Quito, Ecuador, OPEC's Secretary-General Adballa Salem
El-Badri blamed market speculators for soaring oil prices and the weak
dollar are responsible for record crude prices. However in addition to
the OPEC countries the non OPEC countries such as USA, Russia, Mexico,
Norway, Egypt and Colombia etc exceed the total oil production of the
OPEC countries they produce 62 per cent for the export market.
In Mexico one third (1/3) national income was generated by producing
oil but they exported only 24.2 billion in 2004 and 24.6 billion in 2005
while Norway produced 46 billion per day and had contributed only 24.6
billion in the year 2004 and a another 24.6 billion in the year 2005.
Egypt too had contributed 1.2 billion and 1.4 billion oil barrels to the
export market in 2004 and 2006 respectively.
Central Bank reports say that Sri Lanka had spent nearly 2.5 billion
US Dollars for oil imports in 2007. Of this 30-40 per cent is being used
for power and energy plants. The estimated cost for this year is
approximately four billion US Dollars.
Sri Lanka spends 174 US Dollars per diesel oil barrel. After raising
the fuel prices the Government sells a diesel litre for 110 Rupees which
has been increased from 80 Rupees. But this fuel price increase would
allow the Government merely to cut down its losses from Rs. 175 million
to Rs. 60 million per day.
The Government had already rehabilitated and upgrading an oil
refinery, which boost oil production from 50,000 barrels per day to
100,000 barrels per day to adhere to modern standards and achieve
maximum productivity, to overcome this crisis.
Lankapuvath
|
