October 7, 2004
HIGH OIL PRICES: A 'SWORD OF DAMOCLES' THREATENS
** The "surge in oil
prices" will negatively affect both economic growth and inflation.
** Nigerian outlets assail
"illegal oil bunkering" as a "national embarrassment."
** China is now a
"major economic player" in the world oil market.
** Outlets push for both
energy conservation and alternative sources.
'Great impact on the global economy'-- Dailies expressed concern that
"continuously climbing" oil prices will "disturb the world
economy." Japan's business-oriented
Nihon Keizai warned that expensive oil will "accelerate
inflationary pressure and undermine economic growth." However, several papers acknowledged that the
world's economy "has proven surprisingly resilient despite the cost of
oil"; Hong Kong's independent South China Morning Post said that
oil prices at the current level "will not stop the global recovery,"
though "inflationary pressures" may increase. Blaming "speculative trading" for
the surge in prices, several writers demanded international cooperation to
'A geopolitical quagmire'--
held "global geopolitical tension" ranging from instability in the
Middle East and Venezuela to the "ongoing financial crisis with Russia's
oil giant Yukos" responsible for hikes in oil prices. Many outlets noted the rebel threats aimed
against oil companies in Nigeria.
Nigerian papers dubbed these rebels "predatory gangs" who are
launching a "tide of armed gangsterism." Other Nigerian dailies lamented the
"economic sabotage" of oil smuggling that, as the independent Daily
Champion asserted, "attacks the nerve center of Nigeria's
economy." Britain's conservative Times
urged all oil producers to "use their wealth to create sustainable
growth" and thus maintain stability.
'China's thirst' is pushing oil supplies 'to its limits'-- Commentators cited the "soaring oil
demand" in India and especially China to explain the rise in oil
prices. "The real reason" for
the surge, held India's centrist Navbharat Times, is the "huge
increase in demand" that stems from "rapid economic growth in China
and India." Chinese papers backed
Beijing's decision to establish oil reserves to "cope with its economic
development and growing strength"; the official China Daily
suggested that Beijing "increase the strategic resource reserves, such as
oil reserves," because it and the U.S. are now the world's "two major
'Adopt energy conservation as a high priority'-- Editorialists backed measures to reduce demand
for oil. Japanese papers urged the U.S.
to "renew its undertaking for energy conservation" and the world
"to accelerate their energy-saving efforts." Dailies stressed the need to "apply
good-practice existing technology more widely," citing "alternative
energy sources such as ultra-heavy oil and liquefied coal." South Korea's independent Joong-Ang Ilbo
promoted nuclear energy as a way to be "more energy-efficient." Kenya's independent Nation advised
Nairobi to "harness and exploit alternative, more environmentally friendly
and certainly cheaper sources of energy" to avoid the "vagaries of
the oil market."
Prepared by Media Reaction Branch (202)
EDITOR: Ben Goldberg
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 37 reports from 16 countries over
24 September - 6 October 2004.
Editorial excerpts are listed from the most recent date.
Shock: OPEC Countries Must Not Spend It
All At Once"
An editorial in the conservative Times read (9/29): "The U.S., Britain and Norway have
absorbed oil wealth without surrendering to oil dependence, but few developing
countries have managed the same trick, tending instead to squander their
cyclical bonanzas on lavish infrastructure projects that generate as much
popular resentment as gratitude; or leaders simply embezzle the funds--offshore
oil ends up in offshore accounts.... The
challenge facing oil exporters is to use their wealth to create sustainable
growth that will outlive their oil. Meeting such a challenge usually requires
the discipline engendered by having no oil in the first place, but the
alternative is a very bumpy transition to whatever follows the age of
"Higher Oil Prices Are Just What We Need"
Associate Editor Hamish McRae commented in the center-left Independent
(9/29): "The most favourable
outcome [to higher oil prices] would be for the present high price of energy to
encourage the biggest users, the U.S. and China, to adopt energy conservation
as a high priority. Were they do to so,
they would have the oil market on their side.
Markets do work even if they sometimes do so in capricious and
unpredictable ways. In the short-term
all that can be done is to apply good-practice existing technology more
widely. The higher price should
certainly encourage everyone--businesses of course but also public sector
agencies and consumers--to do that....
In the longer-term the future prosperity of the world will depend on the
next technology that comes along behind oil.
We simply do not know what that will be.
What we do know is, that as coal was displaced by oil, so oil will be
displaced by something else."
"An Ominous Note"
Right-of-center Les Echos editorialized
(9/28): "If the prices stay as high
as they are it will have an impact on the economy. It will take at least a year
to recover from the consequences of the current prices.... A sword of Damocles hangs over the year
Torsten Riecke said in business-oriented Handelsblatt of
Duesseldorf (9/30): "The oil market
is one of the most transparent markets in the world. It is right that speculators are taking
advantage of the current situation. But
they are riding on this price wave as surfers do on real waves. The real driving force behind the increase in
prices are large-scale investment funds that hedge their portfolios against the
implications of high oil prices. It is
not a lack of transparency, but an increase in the risks for the economy and
companies that are driving oil prices....
That is why the G-7 finance ministers should not try to influence the
oil price with a few cosmetic corrections.
In the short term, nothing can be changed. That is why it is all the
more important that the large industrialized countries eliminate the imbalances
in the global economy. The IMF presented
a recipe to do this: America must
eliminate its vast budget deficit and the deficits in its balance of payments. And Europe and Japan should finally balance
their domestic demand. If the global
economy has straighten itself out again, it can also withstand a new oil price
"Africa's Oil--Africa's Crisis"
Michael Bitalla opined in center-left Sueddeutsche Zeitung
of Munich (9/30): "The unrest in
Niger is as old as the exploration of oil in the delta of the Niger River. And the latest unrest has by no means reached
the degree it had last year. That is why
the reaction of the markets surprising....
The feeling of uncertainty among oil traders is so great because the
significance of Africa's oil has drastically increased. The U.S. in particular plans to increase its
oil quota from Africa from 15 to 25 percent.
And African oil has only advantages.
It contains less sulphur and can easily be reprocessed. And the sea routes from Africa to the United
States are only half as long as the ones from the Gulf.... By exploring and producing oil, the African
continent could easily resolve its most serious problems...but oil exploration
has rather intensified problems. In
Nigeria per capita income has declined from 800 to 300 dollars...and the same
is true for the second biggest exporter, Angola.... In view of its raw material the African
continent is faced with a similar debacle like during the Cold War. At that time, neither the West nor the East
took care of democracy human rights, or market economy as long as the despots
stood on the right side. In the new
struggle for Africa, it is now not the right way of thinking but mineral
resources, and this struggle will intensify in the coming years. Even if the oil companies would commit
themselves not to producing oil in corrupt countries, companies would then
certainly get the license."
Center-right Thueringer Allgemeine of Erfurt observed
(9/29): "The threat of Nigerian
rebels against oil companies was the final straw that shocked the world. Everybody was nervous anyway because of the
attacks against Iraqi pipelines, the conflicts between the Russian government
and Yukos and the negative repercussions of the hurricane in the Gulf of
Mexico. China's thirst also pushed
Opec's capacity to its limits. None of
these causes will go away. China and
India will require more and more oil, as billions of people want to drive
cars. Those who save energy will win the
Center-right Frankfurter Allgemeine argued (9/28): "The U.S. government has now declared
its willingness to release part of the strategic oil reserve. But it is not President Bush and Energy
Secretary Abraham's goal to push down the high oil prices at the global
markets. They are only interested in
overcoming bottlenecks...caused by the most recent hurricanes along the Gulf
coast. Nevertheless, with this
initiative, the Americans' attention is directed to one aspect that has played
a role in the presidential election campaign for months: America's enormous dependence on oil,
primarily from the Gulf region.... The
voters are not interested in the reasons for this increase in prices; they want
cheap gas and heating oil. But neither
Bush nor Kerry can offer a convincing energy policy."
ITALY: "Oil Prices
Soar: 50 Dollars Per Barrel"
Centrist, top-circulation Corriere della Sera held
(9/28): "In addition to the
sabotage of Iraqi pipelines, the surge in oil prices can be attributed to new
signs of global geopolitical tension, beginning with the escalation of violence
in Nigeria--the world’s fifth leading oil producer--whose militia has announced
‘total war’ against the government starting October 1.... In Russia, the continuing tug-of-war between
the government and Yukos is causing instability in oil supplies.... G-9 leaders in Washington on Friday for the
annual meeting of the IMF and World Bank are increasingly concerned about the
effects oil will have on economic growth and inflation. This sense of alarm is
also felt in Italy and has resulted in an increase in oil prices.”
"Political, Not Economic"
Influential, left-leaning La Repubblica
declared (9/28): "The reasons for
the current high oil prices are more political than economic.... Factors contributing to it include the crisis
in Nigeria, where rebels are threatening oil concerns Shell and Agip, the
ongoing attacks on Iraq’s oil pipelines and the insecurity in Saudi Arabia. On
top of those geopolitical factors...are the hurricanes which have damaged
off-shore oil production in the Golf of Mexico and the ongoing financial crisis
with Russia’s oil giant Yukos.... All of
this compounds historically high levels of oil consumption and the imminent
arrival of winter."
"Price Of The Issue"
Natalia Gevorkyan observed in reformist business-oriented Kommersant
(9/29): "The outcome of the
November presidential election in the U.S. is the political price of current
games in the world oil market.
Paradoxically, the interests of a collective bin Laden correspond to the
interests of all those who are not interested in unilateral strengthening of
the U.S.' positions in the world. The
latter include, in particular, respected members of the G-8 group, who have not
joined the coalition, which means have not obtained their piece of the oil pie
in the Middle East. Moreover, they have
lost what they used to have. Naturally, oil price hikes have also dealt a blow
to them, but they have an explanation for their electors: we have nothing to do
with that, you should lay claims to America which has been bogged down in Iraq
and unable to start normal oil production there.... This is an unlucky coincidence a month before
the presidential election in the U.S.
Naturally, the U.S. is not Spain where train explosions were enough to
change power in the country. Substantially more powerful levers and bigger
resources are required for playing games on the domestic political ground of
the world's biggest power. Perhaps, the
most serious ones such as oil."
"The World Can Live With High Oil Prices"
The semi-official English-language Gulf Times
declared (9/30): "OPEC believes
that there is already a surplus of 2mn barrels a day on international markets,
making it futile to try to increase the supply in an effort to bring prices
down.... However, experts agree that
OPEC's ability to produce additional oil is limited, with only Saudi Arabia
having excess capacity.... The price
surge that has taken place in recent weeks is a result, on the one hand, of
strong global demand and the expectation that will continue, and on the other
of worries about the reliability of the supply. Key issues in the last few days
have been the threat to oil production in Nigeria, the loss of supply because
of a spate of hurricanes hitting the Gulf of Mexico, the political and
financial problems plaguing Russia’s Yukos, the worsening situation in Iraq
and, to a lesser extent, uncertainty over Venezuela’s political prospects. In part, the problem is the result of a
disastrous mistake by Washington’s 'neo-conservatives' some of whom dreamed
that the occupation of Iraq would drive oil prices down to the lowest possible
levels. Instead, Iraqi output has been cut....
This unusual collection of concerns about many of the world’s main oil
producing areas has convinced speculators that the price can only rise
further.... The global recovery has
proven surprisingly resilient despite the cost of oil.... It may be that the energy price has shifted
permanently to a higher level as a result of a fundamental change in the
supply/demand equation. If so, it will be painful for the world to adjust but
it can do so and, if necessary, it will. Higher prices will also encourage the
development of more difficult reserves....
The current price is unusual but, when adjusted for inflation, it is
still below the highs reached in the 1970s and 1980s."
CHINA: "Crisis Looms
Due To Weak Dollar"
Jiang Ruiping said in the official
English-language China Daily (9/28):
"Many international institutions and renowned scholars have
recently warned that the possibility of a US dollar slump is increasing and may
even lead to a new round of 'U.S. dollar crisis.' Since China holds huge amounts of
US-dollar-denominated foreign exchange reserves, the authorities should
consider taking prompt measures to ward off possible risks. It is still too early to conclude if the US
dollar is heading towards a crisis. But it is an indisputable fact that it has
gone down continually. Its rate against the euro, for example, has dropped by
40 per cent since its peak period and it lost 20 per cent of its value against
the euro last year alone. It is becoming
more and more evident that the possibility of a further slump of the US dollar
is increasing.... Given the
deteriorating relations between the U.S. and the Arab world, quite a few Middle
Eastern oil-exporting countries have begun to increase the proportion of the
euro used in international settlement. Reportedly Russia is also going to
follow suit. If an 'oil euro' is to play
an ever increasing role in international trade, the U.S. dollar will
suffer. In China's case, its rapidly
increasing foreign exchange reserve will incur substantial losses if the U.S.
dollar continues to weaken.... The high
concentration of China's foreign exchange reserve in US dollars may also incur
losses and bring risks.... Besides,
investing most of its foreign exchange reserves in US treasury bonds also holds
great political risks. To ward off
foreign exchange risks, China needs to readjust the current structure,
increasing the proportion of the euro in its foreign exchange reserves. Considering the improving Sino-Japanese trade
relations, more Japanese yen may also become an option.... China could also encourage its enterprises to
'go global' to weaken its dependence on US treasury bonds. And using U.S. assets to increase the
strategic resource reserves, such as oil reserves, could be another
"Why Doesn’t The U.S. Use Its Oil Reserves"
Li Changhong wondered in official international Global Times
(Huanqiu Shibao) (9/24): “Behind
the highfalutin excuses [for not using oil reserves], the Bush administration,
which represents the oil monsters’ interests, is taking advantage of high oil
prices to let the oil monsters reap enormous profits.... This is undoubtedly the reason that the Bush
administration has repeatedly refused to use oil reserves. Not only not using oil reserves, but the Bush
administration even has added to the oil reserves by 100,000 barrels a
day.... Such behavior can only ‘add fuel
to the fire’ at a time when world oil prices are continuously climbing. In fact, if and when the Bush administration
wants to use oil reserves...other Western countries will have to respond. International oil prices will drop
accordingly and meanwhile at the same time this would exert pressure on OPEC
and send a warning to international oil speculators.... Certainly, although this would be beneficial
for the growth of the world economy, to require that President Bush, who has
built a career on oil, to make such a decision will in no doubt prove fruitless.”
CHINA (HONG KONG SAR): "Threat From Oil Prices Must Be Taken
The independent English-language South China Morning Post
editorialized (10/4): "If the
higher oil prices are, as some of the economic chieftains of the world assure
us, a short-term phenomenon, the damage may be limited to temporarily narrower
margins for the transport companies and other businesses that rely on oil. For the average consumer, there is no sign
yet that higher costs will be passed on; and for wider economies, the
inflationary pressures that could materialize are also some way off. That is the reassuring part. The less comforting news is that uncertainty
about supply is expected to continue, and spare capacity is at a record
low. Meanwhile, demand in economies such
as the U.S. and the mainland shows no signs of easing, and speculators are
thought to be more active in the futures markets than before, contributing to
the recent record prices.... The
concerns over next year's oil price levels are valid. Current growth assumptions such as the IMF's
are based on an oil price of less than U.S.$40 per barrel. We are now still far from repeating the
energy and stagflation crises of the 1970s.
But the next several weeks will tell whether the market finds a new
equilibrium and where that equilibrium is.
If it is much higher than US$50, we should expect to see next year's
growth assumptions revised downwards.
Oil prices remaining at these levels well into next year will not stop
the global recovery, but they do represent some potential roadblocks. Consumer buying and confidence could take a
hit, and the danger is that rising interest rates called in to fight
oil-induced inflation will deal the fatal blow.
If the IMF's measures for heading off a growth-derailing oil crunch are
to work, they have to be implemented soon."
"Preparing For The Worst"
Mass-circulation Chinese-language Oriental Daily News noted
(10/4): "Oil prices continue to
rocket, causing a great impact on the global economy. During last week's meeting of the G7,
financial chiefs also expressed their concern.
They issued a joint statement saying that the outlook of the global
economy was still good. The soaring oil
prices, however, had created risk for economic growth.... If oil prices continued to soar, this would
put pressure on Hong Kong's economic growth."
"Don't Exaggerate Impact Of Oil Prices; Saving Energy Is The
Independent Chinese-language Ming Pao Daily News said
(10/3): "Oil prices have surged to
U.S.$50 per barrel. Because of this, the
Asian Development Bank has lowered economic growth estimates for Asian
countries. There has been much
discussion on how high oil prices will affect the U.S. and Hong Kong
economies. We believe that the soaring
oil prices will definitely slow down economic growth. The impact, however, will not be
serious. According to Asian Development
Bank estimates, the soaring oil prices may last for seven quarters. Hong Kong is projected to have 5% economic growth
next year, with no more than 2% inflation.
The oil crisis of the 1970s will not repeat itself. Hong Kong political and business circles
should think about how to save energy and improve the efficiency of energy
"Indirect Impacts Of Oil Prices Will Be Bigger"
Independent Chinese-language Hong Kong Economic Times commented
(9/29): "People are most worried
about the impacts of high oil prices on the U.S. which is strong in appearance
but weak in reality. The first impart is
that the U.S. Federal Reserve said the risk of inflation was medium when it
raised the interest rates this month. It
means that the risk is not big, thus the pace of interest rates increase will
progress gradually. However, the surge
of oil prices will heighten the risk of inflation. It may compel the Federal Reserve to quicken
its pace of the interest rates increase.
The economic growth will be under pressure. The second impact is that the surge of oil
prices is tantamount to imposing oil taxes.
The U.S. is the number one oil consumption country. It has to pay the heaviest 'tax.' U.S. consumers have spent all their
force. The growth of consumption is
mainly due to the tax cut and the low interest rates which push the property
prices up. Now interest rates have begun
to rise and the tax cut has been over.
Thus, the soaring oil prices will hinder spending.... The U.S. is the locomotive of the global
economy. If the locomotive breaks down,
the whole world's economy including Hong Kong will have to suffer."
"High Oil Prices Will Not Tip Over The Economy"
Pro-PRC Chinese-language Ta Kung Pao remarked (9/29): "There is no doubt that the recovery of
global economy and the booming Chinese economy have stimulated oil demands and
intensified the tense situation in the international market. Nevertheless, there is no serious shortage of
supply. OPEC will also increase
production to cope with the increasing demands.
Judging from the basic factors, the soaring of oil prices will not last
long. And due to domestic and
geopolitics considerations, the U.S. has to suppress oil prices and it will not
allow the soaring oil prices to disturb the world economy and affect the U.S.
presidential election. Hence, the U.S.
has already decided to use its strategic oil reserve and its allies, such as
Saudi Arabia, have promised to increase production. In brief, it seems that the fluctuation of
oil prices is due largely to speculation.
It is anticipated that the situation will continue to last for some
"Establish Oil Reserves; Fluctuating Oil
Prices Disturb China"
Independent Chinese-language Hong Kong Economic Journal
observed (9/28): "Some analysts
believe that the surge in oil prices is more or less due to market
speculation. In other words, these
record high oil prices are being caused by 'man-made factors.' The fundamental reasons for the high oil
prices, however, are rising global demand for oil and restricted supply from
oil producing countries. High oil prices
may therefore become a long-term phenomenon....
Countries with oil reserves maintain that the reserves should not be
easily tapped. When Bill Clinton was the
U.S. President, he triggered strong domestic debates by using U.S. oil reserves
to combat record high oil prices. Thus
if China establishes oil reserves, it should not use them to adjust oil
prices. Instead, the reserves should be
used only in case of emergency such as war, which could lead to sanctions or
the cutting off of oil supplies. China
has become a big economy and now plays an important role in the international
arena. Its establishment of oil reserves
is therefore a move to cope with its economic development and growing
strength.... China observed that
fluctuations in the oil market following last year's U.S. invasion of Iraq did
not affect Japan, which has maintained oil reserves for thirty years. Since establishing such reserves will take
time, China's internal consumption, trade and investment will still be affected
by high oil prices in the short run."
JAPAN: "Oil Prices
Should Be Curbed By International Cooperation"
Top-circulation moderate Yomiuri urged (9/30): "The surge in oil prices would deal a
severe blow to the U.S. and China, the two major oil consumers in the
world. We expect G-7 finance ministers
to send out a clear message to market players that they should stop speculative
trading but instead regain stability in the market. The structural change in global oil supply
and demand has partly caused recent record-high oil prices. Rapid economic growth in China and India has
boosted global oil consumption and major oil-producing countries and major oil
companies have remained extremely cautious about the increase in oil production
since the nightmarish price drop in 1999.
In addition to the deteriorating situation in the Middle East, the lack
of investment in oil field development caused the recent hike in oil
prices. It may be time for us to explore
alternative energy sources such as ultra-heavy oil and liquefied coal. However, in the short run, oil-consuming nations
need to accelerate their energy-saving efforts.
We hope the upcoming G-7 talks would serve as an opportunity to advance
"Consumer Nations Must Act"
Liberal Asahi editorialized (9/29): "The global economy has been reinforced
by expanded consumption in the U.S. and China's economic development, both of
which are vulnerable to rising oil prices.
As their economies have begun to already slow, the surge in oil prices
would deal a blow to the two economic giants.
In an upcoming financial ministerial in Washington, G-7 ministers must
jointly ask OPEC and other oil-rich states to increase their oil production. The U.S. must also make extra efforts to
bring stability to the Middle East....
The U.S. must also renew its undertaking for energy conservation by
curbing oil demands through a hike in gasoline tax and by augmenting strategic
"Rising Oil Prices Casting Dark Shadow Over Global
Business-oriented Nihon Keizai argued (9/29): "We cannot overlook negative effects on
the global economy from the continuing rise in oil prices, because the latest
surge is likely to accelerate inflationary pressure and undermine economic growth. Ministers from G-7 nations and China are
expected to meet in Washington shortly to coordinate policies for sustainable
growth. Because China has become a major
economic player in terms of energy consumption, the upcoming gathering will
become a great opportunity to discuss measures how to deal with the oil
"Dilemma Of Oil"
Muslim-intellectual Republika averred
(10/1): "On the one hand, for some
countries in the Middle East and Brunei, the oil price increase has clearly
been extremely advantageous.... The
increase has become a disaster for oil importing countries, such as China,
South Korea, Japan, Malaysia, the Philippines, Singapore, Thailand, and
Indonesia. It is worried that the continued increase of the oil price will
affect the growths of Asian economies which have been good recently."
"Oil Price Rages"
Bandung-based Pikiran Rakyat maintained
(9/30): "The threats of Nigerian
militants to sabotage foreign oil companies in the country have pressured the
oil price to quickly increase up to 50.47 US dollars per barrel.... Such an increase has not been
surprising.... Not surprising because in
the last three years world politics and security have indeed been extremely
unstable due to the war on terrorism sponsored by the US and Britain. Western
unilateralism has made the world more insecure."
The editorial of independent, Chinese-language Oriental
Daily News read (10/4): "The
rise in petrol, diesel and gas prices at the beginning of October has already
triggered price increases in several goods and services relating to
transportation trade. Among them are the
hiking fees of school bus fares for children, which have affected most
families.... While the Consumer Affairs
Ministry said it will monitor and regulate the prices of some controlled items,
the fact remains that when the transportation cost has increased, it would be
better for the government to develop a free market competition system so that
the supply and demand of goods can be regulated gradually. This would be a better government policy
instead of controlling the prices of essential goods. In this way, all businesses can then learn
to survive during this oil crisis."
"It Is Not Proper For Consumers To Expect
Leading government-influenced Berita Harian
opined (10/2): "Due to the surging
demand for oil as winter is drawing close, world oil prices have risen to over
$50 per barrel. Worse still, the crisis
in Iraq have finally compelled the Malaysian Government to raise petroleum
prices.... We are actually more
fortunate when compared to prices elsewhere....
The continued subsidies from the government means it might have to
reduce spending on development sectors and projects for people's
well-being. In reality, the government
should not transfer allocations from important sectors. Taking such matter into consideration, Najib
reminded consumers not to focus on the five sen increase in oil price, but on
the government's loss in taxes, the government subsidies that are too heavy and
may jeopardize the country's budget. In
reality, consumers in Malaysia are still fortunate compared to vehicle owners
in Singapore, Thailand and other countries.
The low rates of petroleum prices here have made consumers from the two
neighboring countries fill their tanks in our border areas."
"New Energy Strategy Needed"
Independent Joong-Ang Ilbo declared
(10/4): "Hurricane damage in the
southeastern U.S., renewed security fears in Nigeria and a host of other
factors have caused crude oil futures to rise sharply.... Oil prices might drop briefly, but we can't
expect prices to fall to the levels we knew in the past.... We can't stress enough the effect of oil
price increases on the economy. Oil
price hikes are fatal to factory operations and business management, and lead
directly to a rise in consumer prices.
High oil prices discourage people from spending and influence nearly all
fields, including exports and economic growth.
In short, life gets tougher for everyone.... Korea imports most of its energy resources,
so we must hurry with our preparations to soften the blows caused by a world of
high oil prices. We must restructure
our industries to become more energy-efficient and implement new energy-saving
policies.... It is only thanks to
nuclear energy that we are not suffering from a shortage of energy. The government must work harder to convince
the public of the necessity of nuclear energy.
It must also encourage voluntary participation in saving energy. We must also work to diversify our energy
imports and develop alternative energy sources.
The government and the oil industry should not repeat their old habit of
kicking up a fuss when the oil prices rise, then quickly forgetting about the
matter.... The future of our country
depends on how efficiently we adjust to the era of high oil prices."
"Oil Prices Skyrocket"
The influential centrist Hindi-language Navbharat
Times held (9/30):
"International crude oil prices have touched a record high. But neither is there any report of the
economy being affected by the hike, nor is there any sign of worry. Perhaps the world has become capable of
withstanding rising trends in the oil prices, or it has accepted the inevitable
in the absence of any alternative....
But economists have started predicting global depression. Instability in West Asia, political
instability in Nigeria, their effect on the U.S. production and the problem in
Iraq are said to have caused shortages in oil supply. Increasing demand for oil in the fast
developing country China and India's growing economy are also
responsible.... The real reason is due
to the huge increase in demand.... What
makes matters worse is that the prices are unlikely to be brought under control
in view of the crisis in Iraq and the U.S. presidential elections. The oil market is under tremendous
pressure.... The 25 EU countries consume
one-fifth of the world's supply. It
would, therefore, be more practical to work out a system of fixing the oil
price.... Regardless of the reasons for
the price hike and whatever method is used for deciding the oil prices, the
government must ensure that the consumers are not adversely affected by
Challenge From Niger Delta"
The Abuja-based independent Daily Trust observed
(10/6): "Originating in classic
guerrilla fashion as small bands in the rural areas, these hoi polloi
fragmenting into predatory gangs, have smartly anchored their rebellion in
resource control and self determination as answers to their prolonged
immiseration, exploitation and state neglect, a clever mask for their real
ideological essence which is rent seeking.
These insurgency groups are, therefore, correctly speaking, rascals but
it is the Nigerian state that has given them opportunity.... Every section of the country may not have oil
or strategic cities through which it can shut down the country or bring the
government to a humiliating negotiation but once this model of getting an
ethnic group into power becomes a fad, nothing would stop the invention of
impeccable reasons for that. Dialogue is
always welcome but kid gloves can be dangerous."
"Dialogue, Not War"
The Lagos-based independent Comet concluded (10/6): "The spate of armed insurrection in the
Niger Delta reached a head last week with Asari Dokubo giving an ultimatum to
the Federal Government, and asking for the ejection of foreign oil companies
and the transfer of the control of oil resources to the Niger Delta people,
failing which he would blow up oil installations and seize oil fields.... In reaction to this development, President
Olusegun Obasanjo made a spirited effort to stem the tide of armed gangsterism
in the Niger-Delta and restore the confidence of the international community in
his ability to control the situation....
What the Niger Delta insurgency implies is that the country is
confronted with well defined problems and the way to resolve them is not
through war but peaceful means."
Olusegun Adeniyi wrote in the independent
Lagos-based This Day (9/30):
"Because Americans love oil, the other god beside dollars, it is
not surprising that a news item from Nigeria has become a major staple for all
the local television networks.... It has
helped to push the prices of crude oil to an all-time high of $50 per
barrel.... The news item...is that 'some
rebel groups in oil producer Nigeria have declared war on the federal
government'.... From my understanding of
the situation, this so-called rebel group may be no more than some bandits who
feed fat on the tragedy of the Niger Delta people by encouraging violence which
in turn help to fuel their illegal oil bunkering so I know the situation back
home cannot be as bad as it is being painted here.... But I am also aware there are deep-rooted
problems at home.... Nigeria remains a
very poor nation despite our enormous endowment and potentials as well as the
capacity of our people.... What we have
been subsidizing for years are corruption, weak governance, rent seeking and
plunder and we cannot continue on that road....
How do we address the growing poverty in which we cannot even feed
ourselves?.... We do not need the coming
anarchy. It should be averted."
"The Missing M. T. African Pride"
The Lagos-based independent Daily Champion
maintained (9/28): "The M. T.
African Pride, an oil vessel which was arrested for illegal oil bunkering in
Nigeria's territorial waters, disappeared recently in mysterious circumstances.
The disappearing act remains a national embarrassment. But beyond this, the development raises
questions which critically border on national security.... On August 17 last year, the Navy impounded
the DWT tanker reportedly laden with 15,000 barrels of crude oil. Also
impounded about the same time, for similar offence were five other
ships.... The apprehension of the ships
had seemed a remarkable development. Over time, illegal oil bunkering has
become a thriving enterprise in the country...that attacks the nerve center of
Nigeria's economy. These unholy alliances exploit the weaknesses of the
country's surveillance and control systems, then use vessels and manpower from
outside to cart away their loot. Without doubt, illegal oil bunkering requires powerful
local forces to pull the strings and execute this lucrative act in economic
sabotage. Unfortunately over the years
those involved in the illegal oil business seemed to be above the law. More
often than not, the perpetrators of the business go away free while the
government continues to lose large sums of its revenue.... No wonder the business of illegal oil
bunkering has been booming. The arrest
of M.T.Africa Pride had seemed both a major hit on the bandits and a loud
statement that government is truly on the trail of the criminals. The embarrassing disappearance of the
detained ship is in itself a negation of this hope.... The reputation of the government and indeed that
of the nation is at stake.... Even
between the Navy and the Nigerian National Petroleum Corporation (NNPC), there
is still a dispute over the exact quantity of crude oil the missing ship was
carrying. The Navy said the vessel had 15,000 barrels of oil as at the time it
was arrested. The NNPC said only 6,700 barrels of oil.... The case of M.T.Africa Pride must not be swept
under the carpet. Everything must be done to unravel this national
"Missing MT African Pride As National
The Lagos-based pro-labor independent Vanguard
concluded (9/28): "It was a bemused
nation that was greeted with the news of a missing vessel, MT African Pride,
last month. The vessel had earlier been arrested by men of the Nigerian Navy
for engaging in illegal bunkering in the nation's coastal waters. It was reported that about 15,000 barrels of
crude oil estimated at N20 billion were found.... It is, therefore, baffling that the ship
disappeared after its arrest....
Maintenance has since turned into disappearance. We consider this entire saga a national
shame. The allegations and counter allegations will lead to nowhere. What we
know is that it is the duty of the Nigerian Navy to protect and administer the
goings-on on the Nigerian waters. And this includes vessels or ships operating
thereon.... The Nigerian Navy has an
explanation to offer Nigerians for the disappearance of MT African Pride from
the Nigerian coastal waters. Everything
points to top flight conspiracy by high ranking government officials. Bunkering
is not a trade for the poor. The powerful and influential are the ones who
engage in it.... A government that
professes to fight corruption must do everything to get to the root of this
national shame. A ship is not a needle in a hay stack to disappear like that.
Saboteurs behind this ignoble act should be searched for, apprehended and
sanctioned in accordance with the laws of the land."
"Lessons From Rising Oil Prices"
The independent Nation declared
(10/3): "With oil prices having
soared as high as they have done, and with no immediate prospect of any relief,
it must have been heartening to hear that President Kibaki is trying to
negotiate a deal with Saudi Arabia to cushion Kenya against the high
prices.... However, let nobody think
that we are out of the woods on this issue yet. There is always the possibility
that the deal could fall through or even be rejected by the Saudis.... Basically, in the long run, what countries
such as Kenya will have to do to save themselves from being constantly
bludgeoned by the vagaries of the oil market is to harness and exploit
alternative, more environmentally friendly and certainly cheaper sources of
energy.... The reality on the ground is
that almost all our energy needs are oil related and oil prices will be getting
more expensive before they get cheaper....
It is feared that food prices, and the cost of manufactured goods could
also rise because of higher energy and so will transport costs.... It would seem that oil prices will remain
high as long as the security situation in Iraq, and more recently in Nigeria
(Africa's largest producer), continues to be of concern.... In the final analysis, unless we strike oil
or find some way to get really cheap oil for use in our economy, the solution
will lie in actively pursuing alternative sources of energy."
"Oil Hits A Perfect Storm"
David Olive concluded in the liberal Toronto
Star (10/2): "With each
dramatic leap in the world oil price, North Americans...have reason to worry:
Are we on the brink of another energy crisis, with unsettling implications for
runaway inflation and stalled economic growth?
Will we have to embrace disruptive changes in both consumer behaviour
and industrial use of scarce energy resources?
While there's no easy answer to those questions, the smart bet is not to
fret about the short-term impact of this week's historic rise in the world oil
price.... There is ample reason to take
seriously the longer-term implications for energy security.... The most recent price run-up has the earmarks
of an anomaly, a perfect storm of threats by Nigerian rebels to disrupt
production, damage to Gulf of Mexico rigs from Hurricane Ivan, continuing
sabotage of Iraqi oil installations and a traditional low in U.S. oil
inventories.... And all that comes
against the backdrop of soaring oil demand from the world's two fastest-growing
economies, China and India.... The
longer-term outlook is more troubling....
Even at its somewhat less dynamic economic growth rate forecast for next
year, China is destined for decades to have a near-insatiable appetite for
oil.... Even moderate sustained
increases in Chinese and Indian demand will put tremendous pressure on the
world supply structure. Most troubling,
though, is the factor of political risk....
The dilemma is that today's biggest discoveries, and the bulk of global
production, are tilting toward regions notable for varying degrees of political
instability.... In short, the global
industry is gradually evolving into a geopolitical quagmire, pitting industrial-nation
consumers against peasant farmers whose lives are disrupted by oil rigs and
pipelines without any significant benefit apart from the occasional
Western-built clinic, school or summer camp....
Long before the world runs out of oil, disputes escalating into warfare
over the ownership of oil reserves and the benefits accruing from them will
make supply disruptions commonplace....
The Nigerian rebels' warning this week was directed not so much at the
regime in Lagos as the rest of us, as we enter a long struggle over the morally
legitimate ownership of the world's oil wealth, and how to deal with the
unequal sharing of its blessings."
The Booming Times Are Back"
Alfredo Toro Hardy commented in leading conservative El
Universal (9/30): "All the
indices seem to indicate that Venezuela is on the threshold of booming
times. Besides experiencing the highest
economic growth in the region over this year, a number of structural reasons
announce a sustained period of high oil prices and of important investments in
the energy sector. First, most
specialists think that the oil prices will remain high over the next four
years. Second, we can now find a gap between
the rise in the oil consumption and the accelerated decline in the level of the
reserves. Third, new sources of oil are
not being found. Fourth, the lack of new
sources prompts an adequate development if the existing reserves. Fifth, the bituminous oil and gas reserves
become vital areas of development.
Sixth, in addition to the 78 billion barrels of oil in conventional
reserves, Venezuela has the world's sixth largest gas reserves. Seventh, the world press and international
oil companies increasingly turn their attention towards Venezuela's hydrocarbon
reserves. Eighth, the impact of high oil
prices anticipates an important and sustained period of economic growth. Ninth,
this economic growth will inevitably come along with the strengthening of
Venezuela's geo-strategic position."
"A Large Gas Station"
Alexander Guerrero E. wrote in leading conservative El
Universal (9/30): "The evidence
in these years of high oil prices shows an intense decline in the investment in
the oil sector and a loss of private capitals in the non-oil sector of
Venezuela. This has the socioeconomic
impact of a new million people unemployed and another million underemployed
people in the informal market. The loss
of capital in the non-oil sector has reached such levels of gravity that the
markets' perception, also evident in the economic and political relations, is
that Venezuela is only an oil-producing country and that's all, which is a
grotesque economic degradation. This is
the reason why our neighbors see us a large gas station, regularly
visited by ships and airplanes to fill up their tanks. To some extent, this is what the diplomatic
corps credited in Caracas reflects."