INTERNATIONAL OIL PRICE YOYO

THE INTERNATIONAL OIL PRICE YO-YO!

BY KBINWAKEEL

The international price of crude oil had not long ago gone through the proverbial ceiling before mercifully coming down to a more reasonable level. As prices were shooting upwards, cynics had expressed the view that “sky is the limit”. Wags had even averred that even the sky might not be the limit! The question facing the man in the street - who is on the receiving end as always – is who or what is manipulating the whole wretched oil market?

On the face of it, the oil producing countries must have made a packet. Did they not, then, owe the hard hit non-oil producers a break? The fact that the international price of crude is going up and down like the proverbial yo-yo contains seeds of much deeper import than those evident at face value.

One element of the pre-Iraq invasion strategy that misfired was the one relating to the increased production of oil and the resulting easing of the world price of crude. One is hardly qualified to go into the mechanics of the fluctuations of the world price of crude. One thing is clear: it is the poorer economies that are the principal victims of the economic ramifications of the whole upheaval.

To understand the way these things work out in the so-called World Economic Order, let us look back a bit in history to the time of what can be termed as the First Oil Price War. This was the era when King Feisal bin Abdulaziz had caused reverberations on the world scene by first using the taboo phrase “Oil Weapon”. This call had subsequently given rise to the joint struggle of the oil-producing countries to demand a higher price for their black gold.

The industrialized countries took evasive action through diverting the ensuing negotiations into the multilateral forums. Once the issue came on the agenda of the multilateral forums, the industrialized countries gained a reprieve of a few years. By the end of ensuing years of multilateral negotiations that followed, the industrialized world came to terms with the regime of a higher world oil price. The respite afforded by the prolonged period of negotiations helped them to re-adjust their priorities in the international market.

The eventual casualties were the non-oil-producing developing countries who have yet to recover from the after effects of the tremors. Many developing countries had expressed the fear some time back that rising ratio of inflation had not only endangered national economy but also the budgets of the common folk. But, mere expression of fears is of little or no consequence. Their planners take the easy way out by passing the increase in the international price of oil on to the consumer. Can one hope that the world price of crude will remain stable at a reasonable level so as to give breathing space to a sizeable chunk of the world’s population?

THE INTERNATIONAL OIL PRICE YO-YO!

BY KBINWAKEEL

The international price of crude oil had not long ago gone through the proverbial ceiling before mercifully coming down to a more reasonable level. As prices were shooting upwards, cynics had expressed the view that “sky is the limit”. Wags had even averred that even the sky might not be the limit! The question facing the man in the street - who is on the receiving end as always – is who or what is manipulating the whole wretched oil market?

On the face of it, the oil producing countries must have made a packet. Did they not, then, owe the hard hit non-oil producers a break? The fact that the international price of crude is going up and down like the proverbial yo-yo contains seeds of much deeper import than those evident at face value.

One element of the pre-Iraq invasion strategy that misfired was the one relating to the increased production of oil and the resulting easing of the world price of crude. One is hardly qualified to go into the mechanics of the fluctuations of the world price of crude. One thing is clear: it is the poorer economies that are the principal victims of the economic ramifications of the whole upheaval.

To understand the way these things work out in the so-called World Economic Order, let us look back a bit in history to the time of what can be termed as the First Oil Price War. This was the era when King Feisal bin Abdulaziz had caused reverberations on the world scene by first using the taboo phrase “Oil Weapon”. This call had subsequently given rise to the joint struggle of the oil-producing countries to demand a higher price for their black gold.

The industrialized countries took evasive action through diverting the ensuing negotiations into the multilateral forums. Once the issue came on the agenda of the multilateral forums, the industrialized countries gained a reprieve of a few years. By the end of ensuing years of multilateral negotiations that followed, the industrialized world came to terms with the regime of a higher world oil price. The respite afforded by the prolonged period of negotiations helped them to re-adjust their priorities in the international market.

The eventual casualties were the non-oil-producing developing countries who have yet to recover from the after effects of the tremors. Many developing countries had expressed the fear some time back that rising ratio of inflation had not only endangered national economy but also the budgets of the common folk. But, mere expression of fears is of little or no consequence. Their planners take the easy way out by passing the increase in the international price of oil on to the consumer. Can one hope that the world price of crude will remain stable at a reasonable level so as to give breathing space to a sizeable chunk of the world’s population?