>From: "Mark Jones" <[EMAIL PROTECTED]> >Reply-To: [EMAIL PROTECTED] >Status: > >[You heard it first here. where for two years we've argued that the big boom >is all about klow commodity prices and the crushing of working class >resistance, and precious little to do with technology. Mark Jones] >---------------------- >From The Guardian 2 March 2000 >Oil cartel lights a match that could explode the 90s boom > >The price of 'black gold' has soared. Commentators are asking: is the fourth >petroleum crisis about to dawn? > >Larry Elliott, Dan Atkinson and Jane Martinson >Thursday March 2, 2000 > >A taste of the bad old days impinged on the hi-tech high-growth "new >economy" last week when 300 angry American truck drivers effectively >blockaded the centre of Washington. Their gripe? A 55% jump in the price of >fuel in the past few weeks. >The spectre of a fourth oil crisis is starting to haunt the cosy late-90s >world of internet cafés, endless growth and shrinking dole queues. The price >of crude oil has soared 150% in a year, and the 11-nation group of key >producer states - the Organisation of Petroleum Exporting Countries (Opec) - >is once again prime suspect. > >For those who recall the early 70s, it is just like old times. Big producers >cut supplies, oil prices soar. This time the man acting as Washington's >fixer is not Henry Kissinger but the US energy secretary, Bill Richardson, >currently trying to talk Opec and other oil producers into opening the taps >so prices can fall. > >"We cannot sustain this imbalance between supply and demand without risking >serious reprecussions for the world economy," he warned at a congressional >hearing in Washington yesterday. > >Opec meets next month to decide whether to change the cuts of 4.3m barrels a >day it agreed in March last year - its most successful quotas in nearly two >decades. Optimists hope that having enjoyed a year of high revenues the >cartel will ease the quotas and let the price drift down to $18 or $20 a >barrel, against the near-$30 (£18.75) seen recently. > >Panicky western politicians know that an economic golden age was torpedoed >once before by rising oil prices. > >Back in the autumn of 1973, the global economy had enjoyed its fastest and >longest period of expansion: helped by cheap oil, the 30 years since the war >had seen huge increases in prosperity, full employment and the growth of >welfare states. > >Then came the increase of more than fivefold in oil prices triggered by the >1973 Yom Kippur war - in which Syria, Egypt and Iraq caught Israel >off-guard. - which provided the final ingredient in a witches' brew. > >In Britain, where the coal miners were already on strike, the lights went >out as an energy-rationing measure and the International Monetary Fund came >in as the exchequer ran into trouble; in America, President Ford advised the >population how to grow its own food; everywhere unemployment and inflation >soared. Tough economic policies were brought in to to crush inflation. > >Further oil shocks followed - in 1979-80 and during the Gulf war over Iraq's >occupation of Kuwait in 1990-91. But afterwards, life returned to what many >economists saw as normal. The oil price fell below $20 a barrel, helping to >rekindle growth in parts of the west, particularly the US. > >Opec - its members fighting with each other and perennially breaking the >production quotas they agreed - found itself unable to prevent the price of >petroleum going into freefall after the 1997 Asian financial crisis, when >demand fell off for the abundant oil washing about. > >By the start of 1999, the oil price had fallen below $10 a barrel - which >(adjusting for inflation) meant it was trading at half the levels seen in >the 50s. There were reports of supertankers roaming the seas, unable to find >a home for their cargoes. Every day, the world was pumping nearly a million >barrels more than it needed. > >Opec stared into the abyss and stepped back. In March last year, it agreed >that 10 members would cut their output - Iraq, the 11th, was excluded - and >so would Mexico, Norway, Russia and Oman, so-called Nopec members. Together, >the two groups would reduce production by about 5m barrels a day. For once, >they defied sceptics and mostly stuck to the curbs. > >Opec's target was a "fair price" of $18-$20. The cartel succeeded beyond its >wildest dreams: by last month the price was brushing $30. > >Everyone was caught on the hop, not least the US. It has turned to the >stocks it accumulated during the glut of 1997-99. Using these prevented the >higher market price from feeding through into an already overheating >economy, but this breathing space is running out - hence Mr Richardson's >efforts at shuttle diplomacy to talk to key world producers in recent days. > >On a national radio phone-in show in the US this week a caller by the name >of Bill - a commercial greenhouse owner from New York state - fumed on >behalf of many Americans: "Frankly, I've been crucified by the heating-oil >situation over the last month and a half. My costs have doubled ... And I'm >sitting here pretty angry." > >Few analysts expect things to settle down in the near future in the US, >which consumes 18m barrels oil a day or 23% of the world's oil output. The >price of oil could fall, if forward prices on the Nymex exchange are any >guide, but not, it appears, till September. > >It will cut little ice with US voters in an election year to be reminded >that - due to their country's low taxes on fuel - US energy prices are >exceptionally low compared to those the rest of the world is paying. A >gallon of unleaded petrol for a car costs on average $1.36 (86p). > >It is too early to say whether we are in for an action replay of the 70s. >There are as many differences as similarities: 25 years ago, inflationary >strains were there even before Opec moved, while this time the European >Union is only just start ing to grow at decent levels after its self-imposed >austerity in the preparation for monetary union; and Japan has yet to >recover from the bursting of its stock-market bubble of a decade ago. That >said, there are those who warn that a "fourth oil shock" is on its way. > >Andrew Oswald of Warwick University argues that the three sharp rises in oil >prices since the war - in 1973-74, 1979-80 and 1990 - were all "followed by >a slump ... and a sharp and then sustained rise in global unemployment". >Pricier energy will end the recent boom. > >Mark Redway, analyst at London stock broker Greig Middleton, is cautious, >believing the price will come down gently after the March 27 Opec meeting >and settle at an historically modest $20-$25 a barrel. > >A sharply different view of the future comes from David Fleming, a prominent >environmental policy analyst: the real oil crisis has yet to come. > >"Opec's power is going to increase very substantially," he said, as the >cartel's share of world oil reserves - oil that is still in the ground - >moves over the 50% mark. This is happening because non-Opec countries are >exhausting their oilfields more quickly. > >It is "not possible that we can survive that without a dramatic increase in >the price of oil", Dr Fleming said - yet leaders in the west "are totally >refusing to take this thing seriously ... this denial is grossly >irresponsible". > >Under Dr Fleming's analysis, the energy crunch in the 70s was eased by the >discovery of big new oil fields, but this time round "there are no more >Alaskas, there are no more North Seas". > > > > --- from list [EMAIL PROTECTED] --- __________________________________ KOMINFORM P.O. Box 66 00841 Helsinki - Finland +358-40-7177941, fax +358-9-7591081 e-mail [EMAIL PROTECTED] http://www.kominf.pp.fi ___________________________________ [EMAIL PROTECTED] Subscribe/unsubscribe messages mailto:[EMAIL PROTECTED] ___________________________________
