Debate - Rajmi Manatunga
How the oil crisis has hit the world
Andy McSmith, Jerome Taylor and Nigel Morris
British pensioners who cannot afford to heat their homes. European
hauliers and fishermen whose livelihoods are under threat. Palestinians
forced to fill up their cars with olive oil. Americans asked to go down
to a four-day week.
All around the world, in a multitude of ways, the soaring price of
oil is hurting rich and poor alike. For the lucky ones, it is simply a
matter of changing their lifestyle. But those most vulnerable to the
price of oil have been driven on to the streets in angry protests, which
raise a fundamental question: what can we do to survive in a world where
a barrel of oil costs $127 (sterling pounds 64)?
Great Britain
The rise in the oil price could not come at a worse time for Gordon
Brown. After a week that has seen hauliers blocking roads and air
passengers facing higher surcharges, yesterday it was the impact on fuel
bills that came to the fore.
The Prime Minister’s attempt to ease the pain felt by pensioners and
low-income families from rising fuel bills was dismissed as a “sticking
plaster to hold back a catastrophe”. It consists mainly of advice on
coping with the cost of heating rather than extra money.
The number of Britons in “fuel poverty” - 10 per cent of their income
goes on energy - is thought to have reached four million. The average
annual household bill for heat and light is now more than œ1,000.
The Government plans to reform data protection laws so that
low-income families can be contacted directly by the companies and
offered help. The aim is to ensure that the “social tariffs” get to the
people that need them most.
Europe
Luxembourg’s Finance Minister, Jean-Claude Juncker, who chairs the
commission of European Union finance ministers, issued a call to all EU
Governments yesterday to hold their nerve and avoid the temptation to
use the tax system to relieve the misery of high oil prices.
Protests over rising oil prices |
He reminded them that, when they met in Manchester in 2005, they
agreed that such a move would encourage demand and send the wrong
message to oil producers.
That is not what France’s President, Nicolas Sarkozy, wanted to hear
yesterday, after a week of protests by French truckers and fishermen
left several motorways blocked and ports paralysed. M. Sarkozy suggested
capping fuel taxes if the oil price rose further.
In the Netherlands, the protests caused less inconvenience, but made
more noise when, at 11.45am on Thursday, lorry drivers across the
country simultaneously blew their horns in protest at diesel prices. In
Bulgaria, lorry and bus drivers launched a joint protest.
The protest spread to the seas yesterday, as fishermen across Europe
went on a one-day strike, blocking ports. The biggest demonstrations
were in Spain and Portugal where 10,000 protesters converged on Madrid.
Some handed out free fish to underline their point that, with the
current cost of fuel, they are practically giving their catches away.
Passers-by pushed and shoved to get their hands on the free hake.
The United States
There are signs that the fuel crisis is persuading Americans to think
about leaving the car in the garage. In March this year, the number of
miles driven by American motorists was 11 billion fewer than in March
2007, according to the Transportation Department. That is the sharpest
drop year on year that the department has ever recorded, and the first
fall of any kind recorded in the month of March since 1979.
The US Energy Department projects that this year, domestic gas
consumption will drop by 190,000 barrels a day and overall petroleum use
by 330,000 barrels a day, the first annual fall since 1991. But those
figures look less impressive when expressed as percentages. Eleven
billion fewer miles is a drop of 4.3 per cent and 330,000 barrels is
less than 1 per cent of the country’s total daily consumption.
Even so, this is good news for the environment, since the US’s
greenhouse gas emissions fell by nine million tonnes in the first
quarter of 2008. And insurance companies report a sharp drop in road
accidents.
An increasing number of employers, anxious to keep their staff, are
offering them the option of working longer but fewer days, to cut out
journeys to work. There is a plan to offer public employees on New
York’s Long Island the opportunity to work four 10-hour days, instead of
five eight-hour days - a move which, it is reckoned, would save more
than 30 barrels of oil a day. When Kent State University, in Ohio,
offered this opportunity to 94 security staff, 78 of them snapped it up.
In Northern California, one man thought he had found a way to profit
from the crisis. He was spotted rummaging around in the garbage behind a
Burger King, with a tube and a storage bin.
When police caught up with him, they found that he had 2,500 gallons
of used fryer grease stolen from various restaurants. Chip pan fat is
worth more than four times what it was a few years ago, making that haul
worth more than sterling pounds 3,000.
Outside Seattle, the owner of a pizza restaurant is thinking of
installing a CCTV camera over its 50-gallon cooking-oil barrel to keep
rustlers away. “Fryer grease has become gold,” its owner, Nick
Damianidis, told The New York Times. “And just over a year ago, I had to
pay someone to take it away.”
South America
With some of the most prominent oil producers operating outside of
the Middle East and a preponderance of left-wing governments insulating
their populations from fuel price increases with heavy subsidies, South
America has so far managed better than most with the fuel crisis.
In fact soaring oil prices have bulked up budgets to record levels in
countries such as Venezuela. Badly scarred by the oil crises of the
1970s, many Latin American nations have since diversified their energy
mix by encouraging the use of biofuels.
In Brazil, the world’s largest ethanol producer, biofuels account for
more than half of transport needs. But while biofuels have kept petrol
prices down, food prices - particularly in Central American countries
such as Mexico and Haiti - have shot up as vast tracts of arable land
are switched from producing food to fuel.
Asia
Daily protests have erupted across Indonesia this week after the
Government removed subsidies on fuel, leading to an overnight price jump
of 30 per cent. Despite being south-east Asia’s largest oil producer,
Indonesia has struggled to meet even domestic demand due to aging wells
and declining investment.
On Wednesday, Jakarta announced it would quit OPEC because it was
unhappy with the way the international oil cartel was dealing with the
crisis. But Indonesia’s poor have been left reeling by the removal of
fuel subsidies and have taken to the streets.
Malaysia has told petrol stations to stop selling fuel to
Singapore-registered cars. Singaporeans often take advantage of cheaper
oil prices in Malaysia by driving over the border and filling up there.
At the same time, airlines across the Asia-Pacific region are scrambling
to cut flights and increase surcharges to boost their haemorrhaging
cashflow.
This week Hong Kong’s Cathay Pacific and Taiwan’s China Airlines
announced they were considering scaling back some long-haul routes
whilst Korean Air said it would temporarily cut flights on 12
international routes over the summer.
Much of the regional strain placed on Asia’s oil reserves comes from
China’s near-insatiable consumption of energy. But in an indication of
how the country is struggling to import enough fuel, at least three
major Chinese cities brought in diesel rationing yesterday.
Africa
Africa is at the sharp end of the oil shock and the inter-related
surge in food prices. With millions living on the tiny margin between
subsistence and starvation, fuel costs can quickly become a matter of
life and death. Governments already under pressure from food protests,
and in some cases such as Mozambique violent riots, have now to contend
with a new problem.
In South Africa, the Government announced yesterday that petrol
prices for next week alone would rise by 5 per cent. This brings the
increase in petrol prices so far this year to 33 per cent, while the
price of diesel, used extensively in farming and heavy industry, has
leapt 49 per cent.
There are also growing fears that rapidly increasing fuel prices
could have a knock-on effect for aid agencies in countries such as
Ethiopia, which are struggling to pay for fuel. This week the Red Cross
said in its annual report that rising oil and food costs would mean it
now needs much more money than last year just to keep the same level of
aid distribution. Africa remains the largest area of Red Cross spending,
accounting for 45 per cent of the field budget in 2007.
Middle East
Not even the region with the world’s largest oil reserves has escaped
the pressures. As major importers beg major producers such as Saudi
Arabia to release millions more barrels on to the world markets those
Middle Eastern countries unlucky enough not to be sitting on lakes of
black gold are facing growing resentment from their own populations over
fuel prices.
In Egypt, petrol prices have risen by as much as 40 per cent in a
year. Yemen has been rocked by riots in the south, which is home to only
a fifth of its 22 million population but produces 80 per cent of the
country’s oil.
Young men and separatists, angry that very little of the nation’s oil
wealth has trickled down to ordinary people in the south, have been
protesting since April, raising concerns that Islamic militants could
exploit the unrest in the notoriously fractious country.
In Gaza this week, where fuel shortages have long been a major source
of seething discontent due to rationing by Israel and Hamas,
Palestinians were forced to fill their cars with olive oil instead of
diesel.
Iran is acutely vulnerable to rises in fuel prices because, despite
being the world’s second largest producer, it is still forced to import
about 40 per cent of its petrol because of a lack of refining
facilities. Protests last year over fuel prices brought in rationing,
which is still in place in Tehran and other major Iranian cities.
Australasia
As Kevin Rudd’s newly elected government tries to stem a wave of
discontent over prices at the petrol pumps, the airline Qantas announced
this week that it was intending to slash hundreds of jobs, freeze
executive pay and shut down some domestic rural routes.
Its low-budget offshoot, Jetstar, announced it would cut the number
of routes it flew by 5 per cent angering many of those living in
Australia’s vast interior who rely on the low budget airlines.
In an indication of just how much pressure the world’s airline
operators are under, Qantas estimated that this year’s fuel bill would
be sterling 500m more than last year. Petrol prices in Melbourne this
week hit an all-time high of 164.9 cents [80p] a litre on Wednesday.
Arctic
With the threat of the world’s oil reserves one day running out,
energy-hungry nations are frantically looking towards the more
inaccessible areas of the world for new sources. This week, the five
main powers bordering the Arctic - Canada, Denmark, Norway, Russia and
the United States - met in Greenland for a two-day summit to discuss
their various claims of sovereignty over the Arctic Ocean seabed.
The summit was a bid to stop the Arctic becoming a flashpoint between
the nations because of the natural resources it is thought to contain.
Oil prospectors believe it could be home to a quarter of the world’s
undiscovered hydrocarbon reserves.
In August, Russia upped the stakes by planting a flag under the North
Pole. The five countries at the summit agreed to let the UN rule on
conflicting territorial claims for the region’s seabed.
Environmental campaigners, who were not allowed to attend the summit,
are concerned that a new scramble for the Arctic has begun and are
worried that future exploration could damage the area’s sensitive
ecosystems.
They have called for a similar treaty to that which currently
regulates the Antarctic, which bans all military activity and mineral
exploitation.
Crisis in the grand ballroom
Jayantha SENEVIRATHNA
For an official, who lasts in holiday mood forever, its effect is
slick, arresting and undeniably theatrical. In a flashy envelope, carved
in golden lettering, the invitation is for another arm-chair session
pondering over “crises” in a very unlikely corner.
A “crisis” in a grand ballroom! And, the moment you cozy up in chairs
larger than life, the words “crisis” and “sustainable development”
simply become odd exceptions. “Just another customary get-together
synonymous with gleaming stationery, delicious snacks, and the sumptuous
meal,” you may say.
And, for worse, these poor folk drive in their high-powered official
limousines and gather in their hundreds in breezy air-conditioned rooms.
That is to argue over alternative energy sources, environmental friendly
solar-powered cars, or to show off a trendy hostility against ethanol.
At the end of the day, for any rational minded, it proves almost an
anticlimax. Provided more public funds and immunity from legislation, it
may well advance into local foxtrots, sambas and tangos until midnight.
Since this forum has aptly been unveiling the bitter truth, the sheer
duplicity of the so called specialists has been slowly coming into the
discussion table.
And, some contributors pitilessly employed the phrase “fake
scientists” and hit the nail on the fact in no uncertain terms while
pondering on an earlier theme. It’s crystal clear! The resource in the
shortest supply is neither ball rooms nor limousines. Moreover, it’s
neither technologies nor strategies.
Actually, what lacks is talent. It’s the talent that gives wings to
our visions of the future, the prime source of competitive advantage
overcoming a crisis. In fact, this very debate brings imagination and
life to overcome the crisis. In a daily broadsheet, commoners suggest
sensible, simple and viable solutions which sound really innovative.
Like it or not, dull on the job armchair dreamers and the proactive
common man pair off unlikely partners, especially in a country where
lazy middle-class indulgences bear many adverse effects on common
masses.
Yet, these poor theorists cling tightly on as these once prestigious
professions have slowly been becoming gateways for tax free vehicles,
sponsored tours abroad, access to wealth, and much more. “Could these
aliens deliver than being mere treasure hunters,” many wonder.
In fact, there are many officials with the mark of a scientist or a
reputable professional practitioner. Still, the masses see a lot of
initiative, common sense, and common touch in them.
Actually, it’s this minority who work round the clock to keep the
government machinery intact. But it’s a commonplace to hear the public
complain that higher officialdom is infested with lackluster egotistic
officials with multifaceted gut issues.
There are patriots who are still remembered with continuing
fascination in terms of their ideals. For instance, during late
seventies, as a teenage university student, this writer came across an
affable young man while travelling to Colombo from his home in one of
the remotest corners of the dry zone.
In an ordinary class compartment in a train, we were sitting among
the peasantry, itinerant workers, and rural students. The handsome young
man was seated next to me, but I came to know that he was a doctor by
profession some years later. Our involvement with him was a valuable
empowerment for us.
He had a dream! It was none other than Professor Senaka Bibile. In
his prime of youth, he was a young professional, in one of the most
patrician of professions. But he opted to adopt a lifestyle that is
almost plebeian.
And, the rest is common knowledge. In fact, it’s asking too much to
expect legends like him to interfere in forming energy policies. We know
that they are not made but born. But it should be an example that could
set the trend.
With the increasing forces of globalization, discussing energy
policies poses an obvious challenge. With internet and related
communication facilities, the common man is well informed and empowered.
It’s the duty of the academics, professionals, and high-ranking
officials to get more informed and innovative in their endevours. At
least, as decent citizens, these responsible authorities should realise
that frittering away time in power is beneath their dignity.
In a blessed land where oil exploration is already contracted, a
pending energy crisis is not an indomitable challenge. It’s not a case
of weaning oil production, but of newly explored wealth. With enough
resources at hand to be in control, the country should search for people
who could minimize wasting public funds, and officials who can interpret
simple circulars to minimize official red tape.
In reality, the energy industry has not been innovative since the
introduction of the open economy. It was a great mistake.
Research has not been an integral part inside the university system,
professionalism has been reflecting copybook style attempts at
entrepreneurship, and human resource management has been based on poor
communication between the employer and employee.
If energy is to be innovative as an industry, political authority
should encourage real patriots to take the lead, and let others to
follow.
Many rural districts in Sri Lanka are still self-sufficient to a
certain extent. Most of the goods and services are produced within the
village itself and the masses are somewhat happier.
But, the open economy allow them more choice where they could buy
more in the market place, a choice which they could not manage with
discretion. In actual fact, it was not the failure of the concept, but
the lackluster officialdom who failed to empower the masses. And, how
can they empower the masses driving in their limos to the ballroom.
Especially, in energy conservation, preacher must be the first
practitioner. He or she should switch off the air conditioner, adopt the
cheap low fat diet, and travel with the masses using public transport.
Yet, it doesn’t happen.
Awfully, and day by day, the public has increasingly been becoming an
extremely disbelieving lot. Even in a remote rural district, the masses
are suspicious of the authenticity of official intervention.
Currently, global warming, energy, and food are the topics that
create immense interest among the public and the world over, but energy
seems to be somewhat forgotten in Sri Lanka.
Even the freshly coined “fake scientists” do not appear to come out
with a viable solution of appeal. But, funnily enough, their fondness to
reunite again and again in the ball room seems a bizarre case of
deception. It’s time for them to visit the land where the seeds perfect,
but not the ballroom.
The solutions may not always involve technology. It may be pedaling
your foot cycle instead of the lazy car ride home. For a suburban home,
it may be using firewood for cooking once in a while.
But for all these novelties, you need assistance and advice.
That’s where the Government interference matters. And, relevant
authorities must come out with resources, technologies, and
consultation. Most importantly, they should practice what they preach.
“A crisis is a terrible thing to waste. The energy and car industries
have not been innovative in many years because they have faced no real
crisis, no impetus for change,” Larry Page, Google’s founder, told The
Economist. Why can’t it be an impetus for change for us?
But do we have the capacity to think in the way? Yes, we have the
capacity. And, it’s time to shed petty individual indulgences for fancy
tax free cars and many other worldly pleasures we yearn for.
Strikes: Is it a healthy option?
With trade unions in the country reported to be poised for an
islandwide token strike tomorrow, the issue of ‘reasonable’ industrial
strife has gained prominence in political debates, social dialogues and
in the everyday public discourse.
While the convenors of the purported strike justify their decision on
difficulties faced by the working massed due to the ever-increasing cost
of living, the contemplated trade union action has attracted the wrath
of dissident trade unions, the criticism of Government representatives
and the disapproval of certain segments of the public who consider the
action unjust and politically motivated.
While the success or the failure of the strike is yet to be seen, the
present situation reflects the conflict of views that has prevailed in
our society regarding trade union action for many years.
Among the principle allegations levelled against Sri Lankan trade
unions is that the majority of them are affiliated to political parties,
and accordingly use labour rights to fulfil the aspirations of not the
working class, but their political patrons.
In addition, the right to strike is often abused by most trade
unions, especially in the public health and transport sectors, where
doctors, nurses and private bus operators strike at the drop of a hat,
holding patients and commuters ransom to win their demands from the
Government.
Are our trade unions using their right to defend the interests of the
working class in a responsible manner? Is the right to strike an
absolute right outweighing national security and other issues of public
interest?
Do Sri Lankan trade unions exhaust other peaceful dispute settlement
methods before resorting to strikes? Should trade unions be independent
of political affiliations? Have your say on the above issues as we take
Strikes: Is it a healthy option? as the topic for Daily News Debate this
month.
Your contributions (limited to 1,500 words) should be sent to Daily
News Debate, 35, D.R. Wijewardene Mawatha or via e-mail to [email protected]
on or before July 18, 2008. |