International Information Programs
Office of Research Issue Focus Foreign Media Reaction

August 16, 2004

August 16, 2004




**  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.




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.




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."  




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...."




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.'"




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 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."




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."




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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