The world runs on oil; or is it run by oil?

Wednesday, March 09, 2011    

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The world runs on oil. Or is it run by oil? The latter, in our view, is the reality. Indeed, oil has been one of the most important factors determining the course of history over the last century.

The fighting over control of oil supplies explains many of the major events during the period. Big wars have been fought over oil supplies or areas thought to have undiscovered oil. Who controlled oil supplies has been a decisive factor in military and naval victories and in the difference between poverty and prosperity.

The quest to control the oil supplies of Iraq, some have argued, was among the most important motivations for the United

States invasion. Billions of dollars and thousands of lives later, there is no exit from this no-win quagmire.

It explains why democratic governments like Britain retain diplomatic relations with a regime as disreputable as that of Lybia's Gadhafi and why the US steadfastly supports the oligarchy of the House of Said in Saudi Arabia which produces 10 per cent of the world's oil.

The struggle over oil supplies is destined to intensify because commercial exploitable deposits of oil will not be able to meet the projected demand within the next decade. Demand is accelerating rapidly due to the growing needs of China and India and the failure to develop affordable technology to use the everlasting and inexhaustible solar energy.

Based on the trend, oil prices will escalate to unprecedented heights and this will be aggravated and intensified, if there are disruptions in oil supplies even in Libya which produces about 2 per cent of the world's output.

Oil explains a great deal in the Caribbean and in policy towards the Caribbean. The declining interest in the Caribbean — exhibited so clearly by the foreign policies of the USA and Britain — has to do with the lack of oil in this region apart from natural gas in Trinidad.

The maritime demarcation dispute between Barbados and Trinidad is not about flying fish, but has to do with the possibility of oil and/or natural gas in that area.

Most recently, the Caricom Heads of Government were in a conundrum trying to make a statement on events in Libya. They could not do the Caribbean proud because several of the smallest countries were either beholden to Gadhafi or planning to present their well used begging bowl.

Similarly, the dependence of some Organisation of Eastern Caribbean States (OECS) governments on Venezuela's Hugo Chavez ruined Trinidad's moment in the world's spotlight. They followed obediently behind Chavez to block the possibility of the Declaration at the Summit of the Americas held in Port-of-Spain.

Apart from the embarrassing subservience and the prostrating mendicancy are the questions of whether very small, island states can be fiscally viable and can they in any sense be sovereign states?

The prospect of high, fluctuating and steadily rising oil prices is an ominous harbinger of a prolonged global economic crisis. It could destroy the prospects of growth and poverty reduction in energy importing countries, especially developing countries such as Jamaica. Higher oil prices would hit growth, the cost of living, tourism, the balance of payments deficit, the budget deficit and the debt stock.

Why are we not getting more excited about alternative energy, such as solar power? It seems to us that the time for talk and excuses is now well past.





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