Commentary from Kenya: Social Darwinism seen fueling another oil crisis

Commentary

Thursday, September 28, 2000

Wheeling and dealing fuels another oil crisis

By ERIC ORINA

The recent rise in oil prices, from $10 per barrel two years ago to nearly $35 per barrel, and the subsequent protests in Europe have brought to light the dark underside of the international market. The oil prices are said to have risen dramatically in the past six months, partly due to a genuine gap between demand and supply, and partly due to frenzied speculation on the financial markets.

The oil war has pitted the industrialised north against the Organisation of Petroleum Exporting Countries, an association of 13 nations, mostly developing economies, that depend heavily on oil exports for their income.

Ironically, Africa was largely left out of the debate on oil prices although it is likely to be most affected by a surge in the prices. The downturn in post-independent Africa's economy was first prompted by the 1973 oil shock and worsened in the 1980s with the collapse of commodity prices and persistently high oil prices.

African governments, most of which import crude, and most of whose economies depend on oil, must adjust their budgets to reflect an almost 300 per cent increase in the price of oil. In Kenya, as elsewhere, fuel pump prices have shot up.

Opec members Algeria, Equador, Gabon, Indonesia, Iran, Kuwait, Iraq, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela have three-quarters of the world's recoverable oil reserves.

Opec was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela at a time when the petroleum industry in these countries was controlled by US and European companies.

Opec had little influence on oil prices during the 1960s, when production expanded to keep pace with demand. In the 1970s, however, world demand for oil began to outstrip the available non-Opec supply and members of Opec raised their prices dramatically, leading to the global oil price shock in 1973.

Unlike the 1973 shock, the blame for the current high oil prices has been placed squarely on western governments and the global trading system.

While defending Opec against accusations that it was deliberately pushing for higher oil prices, Opec Secretary-General Rilwanu Lukman blasted European governments for imposing heavy taxes on oil products and said they, not Opec, should be blamed for the high fuel prices that sparked consumer protests throughout Europe.

"Consumers wrongly blame Opec for the inflated petrol prices and heating costs they are now having to pay. One of the reasons why the motorist in Europe is complaining so bitterly is due to the exorbitant level of taxation placed on petroleum products by regional governments, some as high as 80 per cent of the pump price," he said.

Lukman said oil producers only derive a 16 per cent take from the refined oil sold in Europe. "The governments of these countries say they are loathe to cut taxation levels on fuel because the money generated is vital for their environmental and health budgets," he said. "But at the same time these very same authorities are subsidising coal, a known heavy polluter."

He added: "Should we continue to sacrifice and shoulder the burden for the future of oil, while others conveniently sit back and watch their treasuries swell from increasing taxation?"

Lukman praised Italian Prime Minister Giuliano Amato for his criticism of other industrialised countries for not doing more to help oil producers in the developing world, when prices sank to a mere $10 a barrel two years ago.

Mr Lukman also blamed market hype and "paper barrels" as the main forces behind the soaring prices. "International oil trading has grown to become a cut and thrust, jittery institution that can create boom or bust situations simply through psychology and speculations and in what we call trading of paper barrels (oil futures)."

Opec President Ali Rodriguez said speculation on futures exchanges had added $8 to the price of a barrel of crude oil. Lukman and Rodriguez highlighted the fact that the fate of the global economy is in the hands of "the market", an amorphous, almost lawless organism that is responsive to Soroseconomics (named after US top speculator George Soros) or what can be rightly described as "casino economics".

The current global economic order has, as its predominant ideology, social and economic Darwinism  survival of the fittest, which is perceived as a law of nature.

This order has as one of its major characteristics, a formidable and almost uncontrolled expansion of the financial speculative sphere.

The "market", with a turnover of more than $1.3 trillion a day spread between New York and Sydney, completely excludes Africa and is controlled by a handful of Western billionaire speculators like George Soros.

Dealers in the market cited figures issued by various western energy organisations to justify higher prices. Until the US government decided to dip its hand into its enormous strategic reserves, the dealers were having a free ride. Last week, when the American Petroleum Institute released data indicating lower stocks of US crude, the dealers were smiling. "The market will take the figures in stride and go along its merry bullish way," said a dealer with an Internet trading company, "this is like giving a drunk another drink."

The reaction of the European public indicates that even in the opulent West, the global economic system has failed to deliver socially acceptable prosperity.

It has become clear that the current problems of the world economy and the various forms of social regression plaguing societies are due mainly to the present form of global capitalism, with its excesses and aggressive ideological militancy it has taken since the beginning of the 1980s.

It is apparent that more of the same type of globalisation, liberalisation and privatisation and "free markets" will lead to more inequities and inequalities. There is no example in history of a laissez faire philosophy bringing more equality and more fraternity. Laissez faire is simply a theory to secure the positions of the mighty and powerful.

The time is ripe for an end to the current global economic system.

http://www.nationaudio.com/News/DailyNation/Today/Comment/Comment0.html

-- Carl Jenkins (Somewherepress@aol.com), September 27, 2000