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Editorials | Article | Middle | Oped

EDITORIALS

Boiling point
Domestic oil price rise inevitable
W
ith the global crude oil price reaching an all-time high of $135 a barrel before retreating to $130 on Friday, the government has no option except to raise the domestic petroleum prices. The question now being debated in the Petroleum Ministry is not whether to ask for a price rise, but how much.

Mediclaim for the seniors
SC takes insurance companies to task
T
he Supreme Court has chosen to be on the side of the senior citizens. It has thoughtfully directed the Insurance Regulatory and Development Authority (IRDA) to frame guidelines on insurance mediclaim policies so that senior citizens do not get a raw deal.


EARLIER STORIES

Push for peace
May 23, 2008
EC cracks the whip
May 22, 2008
Blind to the murder
May 21, 2008
The fate of a whistle-blower
May 20, 2008
Mischief undone
May 19, 2008
Terror at Jaipur
May 18, 2008
Minority or not
May 17, 2008
SAD state
May 16, 2008
Times of terror
May 15, 2008
Free for all
May 14, 2008
Return of terror
May 13, 2008
Guns boom again
May 12, 2008


Vanishing birds
India’s losing battle – without fighting it
W
hile the decline in the tiger population has become the most visible face of the threat to wildlife in the country, it is a fact that many species of birds and animals have already vanished, and many are on the verge of extinction. The latest IUCN Red List 2008 has India figuring prominently in the list of countries where the number of threatened bird species is large.
ARTICLE

Coalition in jeopardy
No one seems to love Zardari
by Sushant Sareen
T
he decision of the PML(N) to withdraw from the cabinet — a Pakistani journalist has called it the first of three Talaqs — over the issue of judges’ restoration is more than mere political face-saving or posturing; it is in fact a sign of the fundamental change that is taking place in the character of Pakistan’s political forces, something that will have a deep impact on the future course of politics in that country.

MIDDLE

Generals and soldiers
by Harwant Singh
T
here was a time when generals operated at the firing line and in the very thick of the battle and soldiers could see them. Napoleon invariably positioned himself where the fighting was most intense and had a few horses shot under him. It was said that his presence on the battlefield equalled forty thousand troops. Addressing his troops before the battle of Austerlitz, he promised them that he would not expose himself to enemy fire. Such was his standing with the troops.

OPED

PU in dire straits
Central University status is a must
by D.N. Jauhar
P
unjab University Lahore was the fourth university set up in British India in 1882 after Calcutta, Bombay and Madras universities. The colonial Government had decided to set up the university at Lahore for oriental studies only. Sardar Dyal Singh Majithia, the founder of The Tribune, launched a movement against this decision of the Government demanding that the university should be a full fledged teaching and examining university, through his writings in The Tribune.

The negative fall out of competition
by Yash Pal
T
his is the “age of competition.” I have come to believe that this slogan and its operationalisation might be the reason that we are failing to create a self-confident and innovative manpower. Competitions are in the nature of races. Races are possible only on well defined narrow tracks. By forcing our young people to confine themselves to such narrow tracks while running these races, we are shaving off the personalities of many multifaceted individuals.

Hot oil: global production may peak soon
by Stephen Foley in New York
I
n France, fishermen are blockading oil refineries. In Britain, lorry drivers are planning a day of action. In the US, the car maker Ford is to cut production of gas-guzzling sports utility vehicles and airlines are jacking up ticket prices. Global concerns about fuel prices are reaching fever pitch and the world’s leading energy monitor has issued a disturbing downward revision of the oil industry’s ability to keep pace with soaring demand.





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EDITORIALS

Boiling point
Domestic oil price rise inevitable

With the global crude oil price reaching an all-time high of $135 a barrel before retreating to $130 on Friday, the government has no option except to raise the domestic petroleum prices. The question now being debated in the Petroleum Ministry is not whether to ask for a price rise, but how much. It may take a few days to reach a consensus on issues like the quantum of price hike, whether the Customs duty on oil needs to be reduced from 5 per cent to zero and how to treat the profusely bleeding oil companies. The Prime Minister has held out the promise that the oil companies will not be allowed to suffer.

The relentless rise in the oil price — doubling within a year — has unsettled economies worldwide, forcing governments to cut subsidies and raise prices. The US has repeatedly asked the oil-producing countries, especially Saudi Arabia and Russia, to raise production, but the producers’ cartel, OPEC, blames speculative investments in oil futures and weakness of the dollar for the oil spike. The price surge is also blamed on the militant attacks on Nigeria’s oil facilities, disruption of Iraqi production, hurricane damage in the Gulf of Mexico and the growing demand in China and India. The weakening of the rupee against the dollar in recent weeks has also raised the oil bill of India, which imports 70 per cent of its requirements.

Investment banker Goldman Sachs has predicted the oil price to reach $200 a barrel in two years. The warning cannot be dismissed lightly. The country needs a long-term strategy to face the grim reality. Taxes on oil, especially the state levies, have to be cut further. Alternative sources of energy have seldom got the required attention. Public transport needs to be in the top gear to limit the use of personal vehicles. Green taxes can also help to control the burgeoning number of personal cars. Moreover, higher oil prices, reflective of the global trend, will drive people to conserve oil. It is not a bad idea for everyone.
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Mediclaim for the seniors
SC takes insurance companies to task

The Supreme Court has chosen to be on the side of the senior citizens. It has thoughtfully directed the Insurance Regulatory and Development Authority (IRDA) to frame guidelines on insurance mediclaim policies so that senior citizens do not get a raw deal. The Bench consisting of Justice S.B. Sinha and Justice V.S. Sirpurkar took some public sector insurance companies to task for harassing the elderly. These companies refuse to provide medical cover to the elderly even on offer of regular payment of annual premium. The Bench appreciated the fact that the insurance companies should not be put to “undue burden” following changes in the statute as also the policy decisions of the government. At the same time, it ruled that the state-run companies should not act in an arbitrary and unreasonable manner while dealing with senior citizens. While a private company is bound by the statutory regulations operating in this field, the state-run companies are also bound by the directions of the General Insurance Corporation and the Central Government. The insurers cannot abdicate their social responsibility of helping the aged, the Bench said.

Unfortunately, these companies have generally been unfair to senior citizens. In old age people need health insurance most and yet, they are denied mediclaim cover. The shabby treatment meted out to an old man who petitioned the apex court is heart rending. He underwent angioplasty twice in three years. Though he got the expenses reimbursed, the insurance company demanded a whopping 300 per cent hike in the premium! Even when the patient agreed to pay the hefty premium, the company, without the slightest compunction, decided to exclude heart ailments from his insurance cover, rendering the very purpose of insurance redundant. The Bench strongly deprecated this inhuman action of the company and directed the IRDA to intervene and stop the errant company play foul.

Last year, an IRDA-appointed expert panel recommended that senior citizens should not only be allowed to buy cover up to the age of 65 or higher but also guaranteed renewal of their cover without any upper age limit. However, the IRDA is yet to take action on the report. The Supreme Court order reinforces the principle that senior citizens are an asset and not a liability to society. The insurance companies would do well to change their mindset.
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Vanishing birds
India’s losing battle – without fighting it

While the decline in the tiger population has become the most visible face of the threat to wildlife in the country, it is a fact that many species of birds and animals have already vanished, and many are on the verge of extinction. The latest IUCN Red List 2008 has India figuring prominently in the list of countries where the number of threatened bird species is large. While Brazil tops the list with 141, India ranks seventh with 88 species. Thirteen of these are in the “critically endangered” category. These, as expected, include four species of vultures, besides other birds like the Himalayan Quail, the Pink-headed Duck, Baer’s Pochard and the Spoonbilled Sandpiper.

The bad news has been filtering in for quite some time now. The flock of Siberian cranes visiting Bharatpur is already extinct, with the last sighting sometime in 2003. The neglect of wetlands is taking its toll — only those in national parks receive some protection. Other wetlands are vulnerable to pollution and steady invasion. As for the vulture, bird lovers fear that they may be extinct in a decade’s time. Organisations like the Bombay Natural History Society are fighting in vain against practices like the use of diclofenac on cattle, which is killing off vultures.

The IUCN, the International Union for Conservation of Nature and Natural Resources, has in fact listed a total of 560 species in India that are critically endangered, including 247 plant species. Mammals, at almost a hundred, and birds, top the list. These figures were even provided to the Lok Sabha in a written reply by the environment and forests ministry. But without drastic course correction, India will continue to fight a losing battle to conserve its wildlife. The focus on the tiger is a healthy one, as it is an “umbrella species” — protecting the tiger means protecting its habitat, which in turn protects numerous other species. But it is not enough. India’s natural wealth is immense, and we are in dire danger of frittering it all away.
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Thought for the day

A little knowledge that acts is worth infinitely more than much knowledge that is idle. — Kahlil Gibran
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ARTICLE

Coalition in jeopardy
No one seems to love Zardari

by Sushant Sareen

The decision of the PML(N) to withdraw from the cabinet — a Pakistani journalist has called it the first of three Talaqs — over the issue of judges’ restoration is more than mere political face-saving or posturing; it is in fact a sign of the fundamental change that is taking place in the character of Pakistan’s political forces, something that will have a deep impact on the future course of politics in that country.

Quite clearly, Nawaz Sharif wants the PPP-PML(N) coalition to confront the Pakistani establishment head-on and force through measures that undo all the unconstitutional and illegal measures taken by the previous regime under the command of President Pervez Musharraf. Partly because of a personal grudge, but more because he wants to deal a body blow to the establishment, Nawaz Sharif would like to make an example of President Musharraf by prosecuting him on charges of subverting the constitution.

He is not willing to wait to strike at the establishment, and his haste is quite understandable. In the flush of victory in the general election, the PPP-PML(N) coalition has a golden chance to shake up the system without any fear of retaliation by the establishment. But every day that passes reduces the ability of the popular political forces to take on and vanquish the establishment.

Asif Zardari wants to do everything that Nawaz Sharif wants, but without getting into needless confrontation with an establishment that he still considers to be powerful enough to block the path of the democratic forces in Pakistan. Zardari would prefer to bide his time, chip away at the power structure by putting his own men in control of the administration, win the confidence and trust of the military, get the requisite majority needed in parliament to amend the constitution, and drive a wedge between the establishment and its political flunkies. If at all, Zardari will make his move only after tying up all loose ends. It is of course another matter that he might have lost the chance by then.

In their own way, both Nawaz Sharif and Asif Zardari are right and this is at the root of their failure to agree on a strategy to achieve their common political goals. Unlike Nawaz Sharif, Asif Zardari appears very skeptical about the possibility of people pouring out on the streets in defence of the coalition in the event that any precipitate action to restore the judges leads to a dismissal of the government by the president. He is not ready to take this risk just yet. More than the National Reconciliation Ordinance under which corruption cases against him have been scrapped, it is the mounting economic crisis, the uncertain security situation, the US pressure on the party to avoid a confrontation with the president and the fear of establishment that that is weighing heavily upon him.

There is another reason why the PPP is avoiding an executive order to restore the judges. The PPP feels that this will set a very wrong and extremely dangerous precedent, one that governments in future can employ against institutions of the state. In any case, an elected government cannot and should not copy the methods of a military dictator even if this is to undo a patently and blatantly unconstitutional action of a dictator.

The issue is, however, no longer about observing constitutional proprieties. The battle today is for snatching power from the establishment and placing it in the hands of popular political forces. The PPP is paying a huge political price for failing to appreciate this fundamental point. Already, the ire of the public and the civil society has started shifting from President Musharraf towards the PPP and its leadership. Asif Zardari is fast becoming as hateful a figure as President Musharraf.

In a bid to extricate itself from the difficult corner that the PPP has been pushed because of its inability to live up to commitments it made on the issue of judges’ restoration, the party has made the strategic error of reminding its detractors that it fought its election not on the issue of judges but on the issue of “roti, kapda aur makan”. Party spokespersons try to deflect criticism on the judges issue by accusing the media of concentrating only on the issue of judges and ignoring issues like rising inflation, food and energy shortages, the problem of terrorism in the NWFP and Balochistan. In the process the PPP is shooting itself in the foot.

One of the first lessons of politics is that when in trouble try and deflect public attention. It is, however, a monumental mistake to deflect attention to an issue on which you have nothing to show. By concentrating on the judges issue, Nawaz Sharif has won kudos for his “principled stand” and escaped any blame for the economic mess that confronts the government. The PPP on the other hand is facing opprobrium on the judges issue and every time it deflects attention to the economy or terrorism, it is confronted with its complete failure to get a grip on these issues. Despite being in power for two months now, the PPP is behaving as though it is still sitting in the opposition. A classic case if ever of the Punjabi saying: “sau ganda vi khada, sau chhitter vi khada” (getting a hundred lashes and eating a hundred onions)!

Even worse from the point of view of the PPP is the fact that it is today being seen as the party of the establishment. One long-standing oddity of Pakistani politics is that the PPP has always had an anti-establishment image but its policies in government have always been pro-establishment, while Nawaz Sharif has always been seen as a pro-establishment politician even though he has challenged the establishment every time he has come into power. This gap between perception and action is now closing with the PPP acquiring the image of being the establishment’s party and Nawaz Sharif emerging as the icon of anti-establishment political forces. Association with the establishment does bring a lot of benefits, but only as long as the party serves the interest of the establishment, after which the establishment junks it like toilet paper. For proof see how the Chaudhry cousins are being pressured to quit the leadership of the PML(Q) so that the party can be made palatable for the PPP.

If indeed Asif Zardari wants the PPP to be co-opted by the establishment, then he is on the right course. But if he is serious about changing the system, restoring supremacy of parliament and making the establishment subservient to popular political forces, then he must follow Nawaz Sharif’s line. While this might lead to the demise of the government, it will at least ensure that the party keeps its core political support base intact. Asif Zardari’s proposal of bringing in a resolution for restoration of the judges before a joint session of both houses of parliament has left open a small window for him to recover lost political ground. The joint session can debate the entire judges’ issue and then adopt by an overwhelming majority a resolution for restoring the judges. The government can then issue an order to the police to fulfil the will of parliament.

Revolutionary change through the ballot box is still possible. The question is whether the PPP wants to live up to its image as a ‘People’s Party’ or whether it wants to get co-opted by the establishment.

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MIDDLE

Generals and soldiers
by Harwant Singh

There was a time when generals operated at the firing line and in the very thick of the battle and soldiers could see them. Napoleon invariably positioned himself where the fighting was most intense and had a few horses shot under him. It was said that his presence on the battlefield equalled forty thousand troops. Addressing his troops before the battle of Austerlitz, he promised them that he would not expose himself to enemy fire. Such was his standing with the troops.

Even during World War II many generals often positioned themselves with the leading troops. Rommel and Patton, to mention only two, were the shining example. In our own context, Rajinder Singh Sparrow, as GOC of our armoured division, was frequently seen manoeuvring his jeep amongst the leading tanks during the tank battles of Phillora in 1965 on the Sialkot front. On the Punjab front, Harbaksh Singh as army commander, frequently set aside his personal safety and was often seen right at the front.

Presence of such senior officers upfront has electrifying effect on the troops and creates an invisible and enduring bond between them, especially when they are victorious, though not always so. Troops know when they are needlessly thrown into battle and avoidable casualties are inflicted on them.

During the American Civil War, Joe E Johnston (a lesser known general) commanded one part of the Confederation army, while the other was commanded by that famous and most respected general in US history, Robert E Lee.

As commander of the Confederation forces in Georgia, Johnston conducted a long and skillful retreat against Sherman’s superior forces, never winning a battle but giving Sherman a bloody nose, now and then in that long retreat. The President finally sacked Johnston for his continued retreat.

At the Confederate memorial service in Atlanta, he was assigned an open carriage, escorted by the governor’s cavalry. The parade had hardly begun, when a voice from the crowd shouted, “that is Joe Johnston, yes old Joe.” Dozen men , ( by now de-mobilised ) then hundred burst from the crowd and surrounded the carriage, stretching out their hands to their old commander.

Someone unhitched the horses, the men took hold of the traces and pulled the carriage through the length of the parade route, cheering him widely. The evidence of their devotion nearly caused the old man to break down. Witnesses saw tears coursing down his weathered cheeks.

When Johnston died Sam Watkins of First Tennesse Regt offered the most appropriate epitaph, “Such a man was Joe Johnston and such his record. Farewell old fellow! We private loved you because you made us love ourselves.”

Those who served in his army remembered him as, “one who would do whatever was necessary to ensure that they were well fed and well shod and he would never throw them into battle thoughtlessly.”
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OPED

PU in dire straits
Central University status is a must

by D.N. Jauhar

Punjab University Lahore was the fourth university set up in British India in 1882 after Calcutta, Bombay and Madras universities. The colonial Government had decided to set up the university at Lahore for oriental studies only. Sardar Dyal Singh Majithia, the founder of The Tribune, launched a movement against this decision of the Government demanding that the university should be a full fledged teaching and examining university, through his writings in The Tribune.

The visionary who gave a newspaper, a college and a library to the society succeeded in persuading the colonial government to reverse its decision (an impossibility those days). Thus Punjab University Lahore became a university like Calcutta.

In the aftermath of the tragic partition of the province of Punjab, the East Punjab Government set up Panjab University with the difference of spelling in “Panjab”. Most of the faculty which migrated from Lahore remained part of Panjab University, Shimla, which had its scattered units at Solan, Hoshiarpur, Delhi, Amritsar and Jalandhar. Panjab University then got its permanent home in Chandigarh.

The Reorganisation of States in 1966, resulted in the further shrinking of Punjab by carving out Haryana, with hilly areas going to Himachal and the capital city of Chandigarh becoming a union territory. The Re-organisation Act recognises Panjab University as an Inter-State body corporate with the Vice-President of India as its Chancellor.

After the Haryana Government’s decision to disaffiliate all its colleges from Panjab University in the early seventies, and Himachal getting statehood in 1976 and setting up its own university, the colleges of Punjab and Chandigarh remained affiliated to Panjab University. As per the statutes the funding of Panjab University is provided by the Central government, and the Punjab government, in the ratio of 60:40.

The university can legitimately be proud of its glorious past and its contribution to civil society. For the last three decades, a slide in standards has been silently taking place. The financial health of the university started deteriorating about two decades ago. Deviating from the statutory duty to contribute 40 per cent of the non-plan budget of the university, the Punjab Government started paying a fixed amount as their financial responsibility. The university could survive with budgeted assistance from the central government.

Then the Punjab Government started giving eight per cent yearly increase on the fixed amount. Thereafter even this meagre eight per cent yearly increase stopped. This encouraged the Union Territory also to stop this increase. Resultantly, the Punjab Government is paying a fixed Rs 16 crores per year to the university against its share of 38 crores. The Central Government is paying Rs 33 crores through the Union Territory against its share of Rs 58 crores (60 per cent of total deficit of Rs 96 crores for 2008-09).

The indifference of the Punjab Government towards the financial health of the university can be gauged from the fact that no representative of theirs attended the meeting of the Board of Finance in which the budget for 2008-09 was to be passed.

To overcome this financial crisis, the university devised the means of offering NRI sponsored seats at very high fee rates, increased the fee of the students, increased the charges for different entrance tests, and started some self-financing courses where a student has to pay Rs one lakh plus as fee. Now, after the court decision that selling of NRI-sponsored seats is illegal, the resources have shrunk further.

The financial ill-health of the university can be gauged from the fact that 85 per cent of the non-plan budget goes towards salaries. With the meagre 15 per cent left, the university cannot even get its buildings repaired which are now more than six decades old.

The financial crunch has not only increased the burden on the students but has adversely affected research in the university. A university is not known by the number of graduates it churns out but by the quality research which is pursued therein. Research has been the casualty of the financial crisis of the university.

In this grim scenario, a ray of hope emerged when the Central Government realising that a very low percentage of the population is getting university education, decided to set up 30 central universities which included upgrading of some of the existing ones. At the behest of the Teacher’s Association, the Central Government sympathetically considered the case of Panjab University.

Being a pioneer institution, the Central Government made up its mind to declare Panjab University as a Central University whereby 100 per cent funding will be done by the central government.

The central government asked the Punjab Government if the Rs 16 crore it will save from Panjab University will be spent on other universities in the state of Punjab. The non-response of the Punjab government to this letter and the dragging of the issue to the political arena has proved to be an impediment in this great institution becoming a central university.

There are many benefits of becoming a Central University. The entire financial liability will be of the Central Government. The saving of Rs 16 crore per year by the Punjab Government can be fruitfully spent on other universities which are also facing financial crises. Full funding by the Central Government would inject new life in the dried out laboratories for equipment and research material. Students and their parents will not be burdened by frequent fee hikes and hefty fees for self-financing courses. As per the XI Plan each research student will get Rs 5000 per month as scholarship to attract talent towards research.

It will help the university in retaining its talented faculty which otherwise is shifting to other central universities. It is time that the Punjab Government come out of its political shackles as education and politics are not partners. 

The writer is Professor, Department of Laws, Panjab University, Chandigarh

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The negative fall out of competition
by Yash Pal

This is the “age of competition.” I have come to believe that this slogan and its operationalisation might be the reason that we are failing to create a self-confident and innovative manpower.

Competitions are in the nature of races. Races are possible only on well defined narrow tracks. By forcing our young people to confine themselves to such narrow tracks while running these races, we are shaving off the personalities of many multifaceted individuals.

The judges of the races work hard to define the rules and shapes of the tracks such that the results can be given in a few digits. Qualities outside the track parameters are disregarded.

We are looking for cloned individuals, and the premium on being successful in the race tends to produce only limited robots. Those who fall outside the boundaries are sacrificed and damaged badly. Rich and innovative personalities, some with charming quirks, are not wanted.

All this effort on the part of the official measuring and grading systems is aggressively helped and encouraged by the large coaching industry. This industry can succeed only in producing robotic clones, sometimes destroying the diversities of well-rounded human beings.

You could not coach a Rabindranth, Prem Chand, Einstein, Mozart, Tim Bernas Lee, or the inventor of the first desktop computer. We seem to have decided that we do not want any mediocres of that category! We only want a tunnel-visioned industrious variety at this stage in our development!

The sad thing is that we are doing all this with a feeling that we are engaged in a great educational venture. It is possible that a whole generation of beautiful young people is being sacrificed.

Only when we learn to teach and evaluate in a manner such that all coaching becomes redundant and superfluous, we would have arrived. There seems to be a conspiracy that we do not move in that direction.

I wonder who is conspiring?
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Hot oil: global production may peak soon
by Stephen Foley in New York

In France, fishermen are blockading oil refineries. In Britain, lorry drivers are planning a day of action. In the US, the car maker Ford is to cut production of gas-guzzling sports utility vehicles and airlines are jacking up ticket prices.

Global concerns about fuel prices are reaching fever pitch and the world’s leading energy monitor has issued a disturbing downward revision of the oil industry’s ability to keep pace with soaring demand.

Thursday’s warning from the International Energy Agency sent the price of a barrel of oil to a new record for the 13th day in a row. The latest high – $135 for a barrel of light sweet crude – was reached in New York barely five months after the price hit $100. Experts in London and on Wall Street predict that prices will rise to $200, regardless of the protests of consumers and the complaints of politicians. It is simple economics, they say: supply and demand. The former is short, the latter growing.

Consumers are feeling the pinch in almost every area of their daily lives. The pain is felt most obviously at the pumps. In Britain, the price of petrol has risen to an average of 114p for a litre of unleaded – £5.15 per gallon. In the US, where drivers pay much lower prices, gasoline is more than $4 a gallon.

Beyond that, energy bills are rising for households across the globe, hitting the poorest the hardest. British Gas, the nation’s biggest gas and electricity supplier, is mulling further price rises, on top of the 15 per cent average increase it introduced in January.

Airlines which once limited fare increases to temporary “fuel surcharges” are now raising ticket prices and – as American Airlines did this week – starting to charge for checked baggage. Meanwhile, manufacturers are putting up the price of goods to compensate for higher energy bills at their factories, ending many years of price deflation that began when firms started transferring production overseas.

“The high-priced energy environment is being driven by the fact that demand has outstripped supply,” US President George Bush’s Energy Secretary, Samuel Bodman, told the US Congress yesterday. “We have sopped up all the available spare oil production capacity in the system ... and there is no silver bullet that will immediately solve our energy challenges or drastically reduce costs at the gas pump.”

The world uses about 87 million barrels of oil a day, about a quarter of it in the US. Saudi Arabia is the only country thought to have the capacity to pump oil faster. Meanwhile, China is in the throes of an industrial revolution that demands ever greater supplies of crude, yet global production has stagnated for two years.

The Saudi government rejected a recent appeal from Mr Bush to increase production, saying there were no oil shortages at present. Economists, though, worry that shortages are around the corner, as mature oil fields wind down.

The International Energy Agency (IEA) said on Thursday that it might have overestimated the capacity of the oil-producing nations to open new fields to keep up with growing demand over the next decade. Global production, which the IEA previously reckoned could reach 116 million barrels a day by 2030, might not even make 100 million.

Fatih Birol, the IEA’s chief economist, said the oil industry had entered “a new energy world order” where it was harder to keep supply and demand in equilibrium. “When the price went up as a result of the Iranian revolution, demand went down,” he added. “But what has happened in the last few years has not been in line with economic theory.

The price of oil went up sharply between 2004 and 2006 and demand actually increased. That may seem bizarre but it is the result of new buyers coming in, such as China and the Middle Eastern economies where fuel is subsidised by government and rises are not reflected on the consumer side.”

Goldman Sachs, the leading investment bank, said this month that the oil price could rise as high as $200 over the next year and would remain consistently above $100 until there was a significant fall in US demand.

There are small signs of that happening. Yesterday, Ford said it was cutting vehicle production by more than it announced earlier this year. It will make the deepest cuts in its SUV and pick-up truck businesses because US consumers are increasingly switching to lighter, more fuel-efficient vehicles.

By arrangement with The Independent
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