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Sacked, not arrested Dissidence in BJP |
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Oil at
another high
Oil price crisis
Where extremism rules Oil shortage a myth,
says industry insider Delhi Durbar
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Sacked, not arrested An
enraged neta gathers his cronies, storms a police station and ransacks it, alleging mishandling of a rape case. One of his storm troopers has the audacity to fire at a constable and kill him. One thought that such things happened only in Bollywood films. But the unthinkable actually took place in Maharajganj in Uttar Pradesh on Sunday. All that Chief Minister Mayawati has done is sacking Minister for Fisheries Jamuna Nishad. That only establishes his guilt. There are said to be 23 cases pending against Nishad but this is the first time he has been named in a murder case. But anybody else would have been behind bars for the same crime. By not doing the same for him, Ms Mayawati is only demonstrating that laws are different for her ministers and ordinary people. This policy of discriminatory criminal justice may prove to be counter-productive. Even the policemen of the state of UP are believed to be restive. They have suffered many ignominies at the hands of politicians and their henchmen. In fact, many of the policemen are reportedly agitated because at times they have to be at the beck and call of known criminals at the bidding of politicians. But the murder of a policeman right there in a police station might very well prove to be too much for their liking. Before Nishad, another Mayawati minister Anand Sen Yadav had to resign after he was named in the abduction and murder of Sashi, a Faizabad political activist. Another minister, Dr Raghunath Prasad Sankhwar, also had to go after an FIR was lodged against him for alleged irregularities. Ms Mayawati must remember that she rode to power because Mr Mulayam Singh Yadav had got a bad name for the spate of crime in Uttar Pradesh during his regime. Her government must not acquire a similar reputation. People who voted for her can lose faith in her. Leaders have often to pay for the crimes of their appointees.
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Dissidence in BJP THE BJP has found a simple solution to the problem of dissidence in its Bihar unit. It allowed its party legislators to vote for or against Deputy Chief Minister Sushil Modi. The vote count showed that he commanded majority support in the state legislature party. So he will continue in his post, much to the chagrin of the dissidents who had been camping in the Capital to mount a campaign against him. Mr Modi’s problems began when he acquiesced in Chief Minister Nitish Kumar’s decision to drop some ministers, including those of the BJP. The dissidents believe that their leader is unable to protect the interests of the party as he, reportedly, cannot stand up to the Chief Minister. To assume that the vote would bring about stability in the state unit is not to understand the dynamics of dissidence. Caste sentiments and regional affiliations play as much a role as national and state issues in the BJP, as also in other parties in Bihar. The BJP is no longer a monolithic party whose adherents have a shared vision of the future as some people seem to think. Ideological purists and carpetbaggers co-exist in the BJP like in the grand old Congress party. Little surprise, the charges against Mr Modi ranged from the pedestrian to the personal with nothing even remotely associated with ideology or public issues. Unfortunately, for the BJP, the situation in other states is not any different. In Madhya Pradesh and Rajasthan where elections are due, the party has been suffering from dissidence. Uma Bharti may no longer be calling the shots but she has her supporters in the BJP who are not happy with the way the government is run. Ditto for Rajasthan In fact, even in a state like Kerala where the BJP has not succeeded in getting a partyman elected to the State Assembly, it is divided into several factions. For a party which has high ambitions of returning to power at the Centre, it will be suicidal to allow factionalism to flourish. Busy as Mr L.K. Advani is in preparing himself for prime ministership, he has no time to address the little problems partymen face that eventually lead to big issues necessitating voting. Even so, asking the state units to choose their leaders is an idea that should be followed by all parties.
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Oil at another high After
retreating to $128 a barrel, oil registered the biggest-ever one-day price hike last Friday to touch $139, creating turmoil in world markets. As the Arabs, the Russians and US companies keep getting fatter with windfall profits, the worried consuming nations are still debating the issue. The focus now is not only on what is behind the price rise, but also how to meet the challenge. The oil producers’ cartel, OPEC, has consistently rebuffed appeals for enhancing supplies to meet the growing demand and blames large inflows of speculative funds into commodities for the steep rise in the food and fuel prices. Friday’s $11-a-barrel jump lends credence to that view. The price surge does not appear demand-driven since major global economies are slowing down, some heading for stagflation and even recession. As returns from stock markets have declined, investors are pumping surplus money into commodity funds, which have got fresh investments of $ 260 billion, 20 times more than the 2003 level. Iran’s representative at OPEC has warned that the oil price will touch $150 by the end of summer. Libya’s representative too expects the current trend to continue. In Japan the G8 energy ministers as also officials from India, China and South Korea have talked of the need to promote energy efficiency. Countries will have to redraw their priorities, cutting consumption and wastage of the precious commodity and better targeting the subsidies. Though given on the pretext of helping the poor, subsidies actually benefit the better-off more. Price controls discourage users from conserving oil. The world has enough reserves of oil and other sources of energy, which require heavy investments for their extraction and refinement. The present dismal oil scenario is expected to divert funds in this direction. Just as the oil shock of 1974 had brought in energy-saving vehicles and energy-efficient technologies, the present situation may also force a fresh global look at the energy scenario.
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If you want anything said, ask a man. If you want something done, ask a woman. — Margaret Thatcher
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Oil price crisis
Galloping
prices of oil in the international market have severely impacted the financial health of the oil importing countries due to unprecedented inflationary pressure. Crude prices have more than doubled during last one year from $65 to an unprecedented level of $ 139 per barrel. All the financial pundits are perplexed at this exponential growth and nobody is clear as to when this price rise juggernaut will stop. Some officials associated with oil business are predicting that the oil prices will touch $200 or more. Various reasons such as; natural and man-made constraints in oil supply and demand, lack of spare capacity with oil producers, peaking of oil production, weakening of dollar and role of speculators are being put forward to explain this unimaginable price levels. One of the most frequently quoted reasons is the mismatch between supply and demand of oil. International Energy Agency March 2008 report showed that there has been a 3.8 per cent increase in oil supply during last one year, which was more than the average of five-year production levels. On the other hand , global oil consumption grew by just 0.7 per cent during this period, the weakest growth since 2001 and half of the last ten year average. In spite of this production increase, the oil price rose by 57 percent during this period and are continuously increasing. There appears to be some other reason than mismatch between supply and demand put forward by the analyst to explain the present surge in oil prices. Wall Street Journal has attributed the recent price rise to the lack of crude “cushion” in the system at merely 1 per cent amounting to 1 million barrels per day out of total consumption of 85 million barrels per day. Any bottleneck in production as a result of natural or man-made accidents or incidents create a scare in the market resulting in volatile sentiments. This has been effectively refuted by the current president of OPEC, who has emphatically stated that they have at present 3 million barrels per day excess capacity. If the figures of non-OPEC producers is added, the spare capacity is more than sufficient to take care of any major eventuality. Major oil users of the world like the USA, OECD states and Japan have created strategic oil reserves to tide over these eventualities. Approximately 4.1 billion barrels of oil are held in strategic reserves in the world.It appears that an artificial scare of low spare capacity is being created by the vested interest to further fuel the volatility in oil prices. Another theory being propagated by the oil analysts is that the world “oil reserves peak” either has already occurred or will occur in 2010/2015 and after that there will be downhill for the oil production capacity. Recent rigorous simulation and modeling done by EIA shows that peak will occur only beyond 2030 and there is no need to get alarmed . This conclusion is being sported by the fact that there has been a net addition of 277 billion barrels in the world oil reserves of 1317 billion barrels between 2000-2007 when net investment in oil exploration was very low. This shows that the prediction of oil doom is far fetched. The main question then is who is driving the oil price juggernaut, due to which during last three years world has paid an A look at the main oil players shows that there are three distinct entities, namely private companies, OPEC and non-OPEC countries. Due to nationalisation of oil assets by oil producing countries, nearly 77 per cent of the world production comes from national oil companies of different oil producing countries. Many of these have political agenda rather than commercial considerations. MNCs on their own have a limited role in manipulating oil production on large-scale as only 7 per cent of world’s oil reserves are in the countries which allow these MNCs a free hand. However, they have the resources and expertise in influencing market sentiments by planting distorted analyses through their present and former executives to create doomsday scenarios. To put oil constraint rumours at rest some oil producing countries need to substantially increase their production. Capacity of OPEC to drastically change the oil dynamics has reduced considerably as 65 per cent of the total world production at present is in the hands of non-OPEC members. Russia has the largest production levels and spare capacity to change the production dynamics. However, its oil production, which at one point even surpassed that of Saudi Arabia has reduced during last two years. It is debatable whether it was really due to peaking problems, as is being made or a deliberate act for escalating oil prices. The second option looks more plausible as Russia has been one of the greatest beneficiary of the boom in oil prices. It earns an additional $ 2 billion for every $1 increase in the international oil price. A few years ago Russian economy was a basket case with its defaulting on international loans payments and facing international humiliation. Thanks to the oil price boom Russia has become the new energy king and has one of largest surplus reserves of foreign exchange in its history. Putin has understood the role of oil as a most potent weapon and played a key role by his oil diplomacy along with Venezuela and Iran to turn its full impact on western economies with a more deadly impact than nuclear weapons
in the cold war. Saudi Arabia used to act as a spoilsport in earlier attempts to raise oil prices under pressure from the US. Now it appears to have given its tacit support to new dispensation of oil turks led by Russia to shore up its dwindling economy and insulate itself from reduced returns due to decline of US dollar by 13.4 per cent in the last year. OPEC claims that their net export revenue per capita is just 55 per cent of what it was in 1981 and there is scope for doubling the oil prices from 2007 level so as to strengthen their own economies. Thus, a figure of $ 200 per barrel is quite plausible in new future. Some of the OPEC members claim that they have subsidised the world economy for too long at their own expenses. This was the main reason that George Bush could not push Saudi Arabia to increase its production substantially to calm the oil price storm and had to come back empty handed. The telling impact of oil weapon has given flip to another idea of Putin to form a gas cartel on oil lines to push up gas prices in foreseeable future. Another faceless but deadlier player than OPEC has emerged on the oil scene in the form of speculators. Oil speculators have stockpiled via the future market the equivalent of 1.1 billion barrels of petroleum, which is eight times the oil the US has added to its strategic petroleum reserves over five years or the increase in demand of oil in China over the last five years, which is growing at the rate of 20 per cent per year. This appears to be one of the major causes of runaway oil prices. According to The Economist, about $ 260 billion has been invested in to the commodity market, which is up nearly 20 times from what it was in 2003. The stimulus has been a small margin of 5-7 per cent required in the US in the commodity market. The implications of this low margin are that the speculators with a mere $ 260 billion are able to take positions on approximately $ 5 trillion in the future market. It is estimated that oil accounts for more than half of these bets. It is alleged that the oil market has turned in to a gambling parlour. Four financial companies turned oil traders namely Goldmen Sach, J.P.Morgan Chase, Citigroup and Morgan and Stanley now determine the oil prices and only they are aware who is entering in the oil future market. It is also alleged that staggering oil earning by oil producers are being pumped into future market to further maximise their profits. Analysts also claim that investors ruined by real estate meltdown, stocks, shares and bonds during last one year have jumped into the oil market and are making up their losses. Cuts in US interest rate and hedging against fall in dollar and inflation has also diverted the attention of investors to commodity market. Seasoned oil analysts claim that out of $ 130 per barrel of oil price, $ 50-60 are the speculator’s premium. Some allege that there may be a tacit support of US government to oil speculators as strategic reserves are being filled to the brim at a time when the oil prices are touching new high, instead of using them to cool the runaway oil prices. Alternatively, it might be a precursor of some geopolitical event of staggering proportions in the Middle East, which is likely to further escalate oil prices. This shows that a tectonic shift for determining the international oil prices has taken place where oil producers and speculators are working as a cartel to fuel the oil price fire. The recent meeting of the major oil importing countries is a step in the right direction and they should join hands and devise ways to stem this new trend which will otherwise ruin the international monetary and political
system. The writer is Professor Emeritus, Panjab University, Chandigarh
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Where extremism rules
The US and its allies squandered an opportunity to cement alliances with tribal elders they regard as key to driving Islamic extremists out of havens along the Pakistan-Afghanistan border and now face a long and costly effort to regain influence there, counter-terrorism officials and diplomats say. The Pashtun elders, or maliks, wield enormous political and social power, especially in Pakistan’s largely ungoverned tribal areas bordering Afghanistan. But the United States and its allies in Islamabad and Kabul have not made it a priority to forge alliances with them, despite evidence that al-Qaida and the Taliban are growing stronger in their territories, these officials say. Once established, the militants have slain or threatened hundreds of these tribal leaders in a campaign that US officials say has seriously undermined counter-terrorism efforts. That missed opportunity underscores a fundamental US policy failure: Of the billions of dollars spent, little has gone toward counter-insurgency efforts such as working with tribal leaders to determine how to help their constituents, according to US, Pakistani and Afghan officials. As a result, they say, al-Qaida and the Taliban are doing a far better job of expanding their insurgency than the United States and its allies are of stopping it. Reversing the damage will require many years of aggressive counter-insurgency efforts, said one senior State Department official involved in South Asia issues. “It’s hard and an incredible contribution of resources, and you have to do it village by village,” said the official, who spoke on condition of anonymity, citing international sensitivities. “But you have to start somewhere.” Pashtun tribes have ruled large parts of Pakistan and Afghanistan for centuries, largely outside government control. Generally they are not militant Islamists, but under their tribal code they are obliged to provide sanctuary to anyone who requests it, including extremists. After the US-led forces routed the Taliban in 2001, most surviving militants slipped across the border into Pakistan. US officials pressed Pakistani President Pervez Musharraf to forge alliances with tribal leaders, especially when it became apparent that al-Qaida and the Taliban were gaining strength, said Henry A. Crumpton, who was the State Department’s ambassador at large for counter-terrorism from 2005 to 2007, and before that a senior counter-terrorism official with the CIA. But the US strategy, sharply criticised by a recent US Government Accountability Office audit report, did not require Musharraf to build bridges with tribal leaders, according to Crumpton and other current and former US officials and experts. Washington also provided more than $10 billion in mostly military aid, which the GAO report says was not adequately monitored. Musharraf used most of it for hardware best suited to battling its neighbour India. Infrequent military incursions into the tribal areas were usually followed by a quick withdrawal, angering the tribes and leaving potential allies vulnerable to accusations of spying for the government, according to US and Afghan officials, and members of the newly elected Pakistani government. As al-Qaida and the Taliban grew stronger, they turned on their hosts, killing tribal leaders who opposed extremist pressure to shutter girls’ schools, barbershops, shops selling videos and other trappings of Western culture. The State Department official estimated that between 120 and 140 senior tribal leaders have been killed in Pakistan, many in the past 18 months. Militants often leave notes pinned to dead bodies warning that anyone who crosses them will face the same fate. “Any tribal leader who has committed to the government is seen as a threat to the Taliban and al-Qaida, as betrayers of Islam,” said M. Ashraf Haidari, Afghanistan’s counselor for Political, Security and Development Affairs in Washington. “They can be targeted, and some have been killed.” As a result, many tribal leaders have become more strongly supportive of the Taliban and al-Qaida, or are reluctant to take action against them, the US officials and experts said. It has also thwarted development and outreach efforts in both countries, particularly US-sponsored projects. “It’s like an old-fashioned gang war. And at the end of the day, al-Qaida had the money and the guns, and they won the gang war,” said Rep. Adam Smith, D-Wash., who led a fact-finding delegation to the region last month as chairman of the House Terrorism and Unconventional Threats and Capabilities Subcommittee. “It will be very hard for us to find people to work with,” said Smith. “Al-Qaida has successfully killed off people who might have opposed them.” After followers of Baitullah Mehsud, a young militant, killed several prominent leaders of his own tribe in South Waziristan, Mehsud rose to power and influence in the tribe. He then helped create a coalition of tribal-based militants known as Tehrik-e-Taliban that US and Pakistani authorities say are responsible for a wave of attacks on troops, civilians and government officials in both countries, including the assassination of former Pakistani Prime Minister Benazir Bhutto in December. US officials are now concerned that the new Pakistan government is negotiating peace accords with Mehsud and other pro-militant tribal leaders, fearing that will allow al-Qaida and the Taliban to solidify their safe haven. And some US lawmakers oppose continued funding for Islamabad, including money earmarked for tribal security forces that they fear have been compromised by the Taliban and al-Qaida. “We don’t want to strengthen the Pakistani tribes if they’re going to misuse the additional military support,” Sen. Carl Levin, D-Mich., chairman of the Armed Services Committee, said in May on his way back from Pakistan and Afghanistan. At the same time, at Washington’s urging, Pakistan and Afghanistan are making efforts to cultivate influential tribal leaders and encourage them to expel foreign al-Qaida fighters and the local pro-Taliban militants who support and protect them, according to Smith and current and former officials from the three countries. Husain Haqqani, Pakistan’s new ambassador to Washington, said the government is reaching out to those it believes are still open to expelling al-Qaida and Taliban fighters. Haqqani said continued US aid is critical to the new government’s plans to offer incentives such as new schools and roads. But many fear that such efforts may be too little too late. Members of al-Qaida and the Taliban have become well-entrenched in recent years, often marrying into local populations. Crumpton said the US and its allies need to move much more aggressively because tribal leaders could form the backbone of a counter-insurgency effort. He cited the example of Afghanistan, where the CIA, with help from a few hundred US special forces soldiers, managed to topple the Taliban in 2001 by forging alliances with influential tribesmen. Crumpton oversaw that effort. “It will be harder now,” he said. “We had such a huge window of opportunity from 2002 to 2004,” before al-Qaida and the Taliban regrouped. “It has not closed, but it is smaller.” One State Department official familiar with South Asia said al-Qaida and the Taliban are in effect daring the US to try. They are spreading word that the US will abandon Pashtun tribesmen in both countries, just as it did in 1989 after they worked closely with the CIA and US military to expel Soviet forces from Afghanistan, the official said. By arrangement with
LA Times-Washington Post
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Oil shortage a myth, says industry insider There
is more than twice as much oil in the ground as major producers say, according to a former industry adviser who claims there is widespread misunderstanding of the way proven reserves are calculated. Although it is widely assumed that the world has reached a point where oil production has peaked and proven reserves have sunk to roughly half of original amounts, this idea is based on flawed thinking, said Richard Pike, a former oil industry man who is now chief executive of the Royal Society of Chemistry. Current estimates suggest there are 1,200 billion barrels of proven global reserves, but the industry’s internal figures suggest this amounts to less than half of what actually exists. The misconception has helped boost oil prices to an all-time high, sending jitters through the market and prompting calls for oil-producing nations to increase supply to push down costs. Flying into Japan for a summit two days after prices reached a record $139 a barrel, energy ministers from the G8 countries yesterday discussed an action plan to ease the crisis. Explaining why the published estimates of proven global reserves are less than half the true amount, Dr Pike said there was anecdotal evidence that big oil producers were glad to go along with under-reporting of proven reserves to help maintain oil’s high price. “Part of the oil industry is perfectly familiar with the way oil reserves are underestimated, but the decision makers in both the companies and the countries are not exposed to the reasons why proven oil reserves are bigger than they are said to be,” he said. Dr Pike’s assessment does not include unexplored oilfields, those yet to be discovered or those deemed too uneconomic to exploit. The environmental implications of his analysis, based on more than 30 years inside the industry, will alarm environmentalists who have exploited the concept of peak oil to press the urgency of the need to find greener alternatives. “The bad news is that by underestimating proven oil reserves we have been lulled into a false sense of security in terms of environmental issues, because it suggests we will have to find alternatives to fossil fuels in a few decades,” said Dr Pike. “We should not be surprised if oil dominates well into the twenty-second century. It highlights a major error in energy and environmental planning n we are dramatically underestimating the challenge facing us,” he said. Proven oil reserves are likely to be far larger than reported because of the way the capacity of oilfields is estimated and how those estimates are added to form the proven reserves of a company or a country. Companies add the estimated capacity of oil fields in a simple arithmetic manner to get proven oil reserves. This gives a deliberately conservative total deemed suitable for shareholders who do not want proven reserves hyped, Dr Pike said. However, mathematically it is more accurate to add the proven oil capacity of individual fields in a probabilistic manner based on the bell-shaped statistical curve used to estimate the proven, probable and possible reserves of each field. This way, the final capacity is typically more than twice that of simple, arithmetic addition, Dr Pike said. “The same also goes for natural gas because these fields are being estimated in much the same way. The world is understating the environmental challenge and appears unprepared for the difficult compromises that will have to be made.” Jeremy Leggett, author of Half Gone, a book on peak oil, is not convinced that Dr Pike is right. “The flow rates from the existing projects are the key. Capacity coming on stream falls fast beyond 2011,” Dr Leggett said. “On top of that, if the big old fields begin collapsing, the descent in supply will hit the world very hard.” By arrangement with
The Independent
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Delhi Durbar After their very public spat, civil aviation minister Praful Patel and Planning Commission deputy chairman Montek Singh Ahluwalia have called a truce. A conciliatory Ahluwalia rang up Patel recently to enquire if the minister was annoyed with him. Patel was at his forthright best and told him that he was indeed upset at the planner’s public outburst about the conditions at the Delhi airport. Not one to mince his words, the minister told Ahluwalia that since he had addressed him through the media, he had also chosen to respond through the media. The two had locked horns when Ahluwalia called for an explanation from the developers of Delhi international airports for the delay in the project after he had a harrowing experience at the airport. This obviously did not go down well with Patel who promptly dashed off a letter to Alhuwalia to remind him that it was the Planning Commission which had delayed the award of the contract for the moderinsation of the Delhi airport. The dispute has been put to rest now that the two have made up.
Groundwork When Prime Minister Manmohan Singh wrote to all his Cabinet colleagues last week asking them to cut down on their foreign travel, information and broadcasting minister Priyaranjan Dasmunsi promptly instructed his staff that henceforth he should be booked in economy class even on his domestic travels. He then followed it up with a personal letter to the Prime Minister giving the details of all his tours abroad in the last four years, underlining the point that most of these trips were at no cost to the exchequer as they were paid for by those who had invited him. In Dasmunsi’s case, most of his trips abroad were paid for by the International Football Federation as the minister also doubles as the head of the Indian football body. Essentially, Dasmunsi is laying the ground to get approval for his forthcoming trips to Vienna, for the EuroCup Football final, and to Beijing for the Olympics.
Junk galore Central ministries are obviously far too busy to pay any attention to the disposal of their junk material. Small wonder then that a casual visitor to Shastri Bhavan, which houses all the social sector ministries, is greeted by strange notices wherever one goes. Pasted all over the pieces of junk furniture dumped on every floor of the building, these notices make desperate appeals for help. They read: “The ministries/departments concerned are requested to remove this scrap from the open spaces in the corridors and auction it; else we will be forced to dispose it of.” The notices are signed by the Central Public Works Department. Needless to say, these pleas go unheeded. Contributed by Anita Katyal, Vibha Sharma and Aditi Tandon
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