Heavy increase in price of petroleum is a worldwide problem, having an adverse effect on price of all the products in general. Transportation charges have increased causing every good or service to be less affordable. Specially, food items and travel charges have a remarkable rise in their prices. Why such a big scarcity? Are all the leaders of all the nations are incapable of finding a solution? Should we call it a failure of leadership?
The G-8 leaders are going to have a meeting in the next week, in Japan. Next to the global warming issue, rising oil-price is the most challenging problem before the leaders. They are also requesting to OPEC to produce more oil. They have tried to blame speculators for bidding the price up. It seems that this situation have been created by poor management between demand and supply. But if it’s a matter of imbalance in supply, than why things are getting out of control?
In stead of trying to make a balance between demand and supply, the leaders of big nations are making policy that allows the market to co-operate the fast rising oil-prices. They have a higher rate of oil consumption, with compared to that of the others. G-8 oil consumption appears to have peaked at 1681 million tones in 2005. It seems that they are not ready to make compromise in this regard. It is therefore the conscious decision of the developed countries to progressively deny poor people, access to oil and to energy in general. In a way, they are creating a new impoverished underclass, which is going to have dire consequences for our society. This is the outcome of G-8 policy and the leaders must bear responsibility for these consequences.
If the present situation continues to exist, than many more problems will also crop up. Production charges of all the commodities will rise further, charges of energy invested in farming will also rise. A much bigger food crisis is coming soon. Unemployment problem will rise and that will further widen the distance between earning capacity and spending capacity of people. The leaders are concentrating only on economic prosperity of the nation. They have a very narrow vision to foresee the consequences of increased oil-prices.
The solution seems to lies in reducing the use of oil in various sectors. There are some emergency actions required to reduce demand for oil and energy immediately. The voluntary reduction in demand should lower prices, reduce inflationary pressures and provide a few years breathing space. At least this will provide some time to make plans for reconstruction of power generation systems.
Source: theoildrum