Gasoline is about $3 per gallon in the US right now, and even in subway-and-bus New York you hear people complain about prices daily. Yet we say this from the comfort of the developed world, where SUVs are everywhere, we can buy any consumer product available, can eat to our heart’s content. High oil prices in the US are, for all intents and purposes, an inconvenience. In some undeveloped nations, it’s a story of life or death.
Senator Richard Lugar, chairman of the U.S. Senate Foreign Relations Committee, has an editorial out in today’s International Herald Tribune that points out what high oil prices are doing to Ethiopia, one of the world’s poorest countries. Having struggled with the burdens of drought, civil war, poverty, and AIDS, high energy prices are hurting the nation even more. Increased transportation costs are burdening the competitiveness of the country’s only major export, coffee. The prices of fertilizer are linked to energy prices. Drought relief is being hurt by shortages of truck fuel. Even paved roads are getting expensive as the price for oil-based asphalt continues to rise.
Lugar proposes some possible solutions: ethanol, international cooperation, and all the rest. That’s better than nothing—but when it comes down to it, it’s all a drop in the bucket.
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Comments to this entry
snow
June 10, 2006
1:24 pm
Catholicgauze
June 10, 2006
1:54 pm
IJ
June 10, 2006
4:44 pm
"Brookings":http://www.brookings.edu/printme.wbs?page=/pagedefs/c6c7cc24dad9ff3f549a96f20a1415cb.xml
_The United States needs the cooperation of other major consumers, specifically China and India, to reduce, if not eliminate the challenges posed by our so-called addiction to oil. Much of the recent discussion in Washington about the growing oil demand of China "“ and to a lesser extent India "“ has focused on the threats posed to the U.S. economy and foreign policy, but that often obscures the fact that the oil interests of China, India and the United States are also broadly aligned. National energy security depends on international energy security._
_The "Energy Diplomacy and Security Act," to be introduced by Senator Lugar . . . calls for China, India, and the United States to coordinate the release of strategic oil stocks, currently under construction in China and under discussion in India, to manage supply disruptions._
Senator Lugar's first problem is surely that the international community perceive the US administration to be unwilling to abide by international treaties/rule sets.
China Law Blog
June 10, 2006
7:14 pm
IJ
June 10, 2006
8:38 pm
"A blueprint for U.S. energy security":http://www.thehill.com/thehill/export/TheHill/News/Frontpage/060706/ss_chafee.html
_As a nation, America consumes 25 percent of the world's oil supply while sitting on only 3 percent of global reserves. The United States is importing 60 percent of its oil. These numbers just aren't sustainable._
That's why so many are scared.
Dr. Alfred Russel Wallace
June 11, 2006
1:04 am
snow
June 11, 2006
8:29 am
Ridiculous. Such perception would have almost no effect whatsoever on getting such an agreement, especially if the US was one of the lead authors of such a deal. Why would they go for such a deal, unless it was in their best interests? I would rather have the US not sign international deals than to sign them and then not follow them.
Certainly there is some perception that the US sometimes goes its own way, but to imply that it is only the US that breaks all the rules just doesnt make any sense at all. The Chinese, India and Russia are all considered faithful adherents of international agreements? It's only the US that occasionally goes its own way in the world?
IJ
June 11, 2006
8:46 am
In an atmosphere of mutual distrust, international ageements to share oil reserves would need to be independently enforceable.
Elizabeth
June 11, 2006
9:42 am
Uzbekistan did this through an extremely simple program. They just allowed large-scale import of hybrid cars, subsidized natural-gas filling stations, and let market prices for petrol reign.
Anyone who thinks we need the UN to manage that must think very little of the US government.
IJ
June 11, 2006
9:56 am
"Anyone who thinks we need the UN to manage that must think very little of the US government." "America Against the World":http://pewglobal.org/americaagainsttheworld/
Elizabeth
June 11, 2006
9:59 am
Thanks for the link.
I have to ask... have you ever had to work with the UN? Or even worse... from within it?
Nothing so special about America, but the UN is a dreadful mess.
IJ
June 11, 2006
10:26 am
In view of what's at stake, whatever the global rule setting and enforcing organisation is called it will need to be effective. National governments resist the audit of their effectiveness, even when parliament requires it. Effectiveness audit has been a no-go area for international public organisations, so far.
Elizabeth
June 11, 2006
10:34 am
That's true. However, note that public organizations such as Amnesty International, Reporters without Borders, IFRCRC, and others, have had MUCH more success in raising pressure on governments through their own audits, than the UN.
By investigating, raising awareness, and lobbying both in the UN and through other supernational organizations, they have gotten a lot more done in terms of regulation than the UN has.
Plus... they are much less corrupt. I would say that an organization more independent than the UN needs to take this on and lobby strongly within national governments and within the UN to get norms observed.
Pressure on individuals through democratic processes is preferable to the UN's threatened sanctions, as well, in my opinion.
Tagore
June 12, 2006
8:34 am
germanicus
June 12, 2006
2:16 pm
IJ
June 12, 2006
2:45 pm
Article 18 of the treaty deals with 'SOVEREIGNTY OVER ENERGY RESOURCES
Paragraph 1: _The Contracting Parties recognize state sovereignty and sovereign rights over energy resources. They reaffirm that these must be exercised in accordance
with and subject to the rules of international law._
After 9/11, the US administration said it would not be complying with international treaties. On balance, it looks as though Russia is being urged to sign up to a concept the US no longer supports.
snow
June 13, 2006
1:26 am
IJ, did they actually say this, or do you mean the repudiation of treaties such as Kyoto, intl crimial court? I never heard that they made any kind of blanket statements such as this, only that they bailed on the signing of 2,3,4(?) treaties. If so, that hardly means that the US is giving up on all international treaties.
Elizabeth
June 13, 2006
10:08 am
alec
June 13, 2006
4:51 pm
Listen, the only good in terms of future energy policy in regards to international markets to come out of DC would be from the State Department. Though Lugar is trying with good intentions, the culprit behind oil prices is the inelasticity of the energy markets on the demand side in industrialized nations that consequently drives prices up accordingly in the rest of the world.
Curzon
June 13, 2006
6:47 pm
Too true. The influence that Washington, ExxonMobil, President Bush, Detroit, and the Iraq War have on the price of oil are all pretty irrelevant when you consider that skittish investors, oil traders, and the growing demand for energy worldwide are what really drive the price of oil.
germanicus
June 13, 2006
7:53 pm
Elizabeth
June 14, 2006
8:37 am
That's not the same as the whole organization consisting entirely of individual idiots.
And yes, you are probably right about the Twelve Labours of Hercules. I don't even know what they are but I'm guessing that practically anything would be easier.
On a final note, I didn't mean to bash the UN per say- my point was that the measures required for rationally diversifying energy resources are well within the power of the United States (and most other rich- and middle-income country governments).
Joe
June 14, 2006
11:16 am
germanicus
June 14, 2006
12:55 pm
alec
June 14, 2006
4:38 pm
The sequence of events is high energy demand (coming primarily out of India / China with America still intaking a high amount per capita) combined with limited resources means a major increase in price. Volatility in the amount of strategic reserves along with political instability in major oil producers also fuels increases. The price is being gauged in the sense that nothing along the production line has led to increased prices (aka it still costs the same to export a barrel of oil 5 years ago as it does today). However, it is not 'gauging' because demand has not tailed off as price has been increased (this is a term referred to as perfect inelasticity, where a good will be consumed at almost the same level regardless of price). So at $3 a gallon, the American consumer will purchase almost as much gas as they would have at $2 a gallon. The economists (and I suppose foreign policy analysts) worst nightmare is this trend will continue up to $4 and $5 a gallon.
germanicus
June 14, 2006
6:07 pm
Curzon
June 15, 2006
3:21 am
Answer: essentially unchanged. Exxon makes record-breaking profits every year. They're just a great business.
snow
June 15, 2006
7:08 am
The majors will have to get their reserves from much more difficult conditions, meaning their profit margins will be far less than they are now and if the price drops, they could lose money on extraction costs.
snow
June 15, 2006
7:17 am
IJ
June 17, 2006
7:56 am
On international cooperation, he set out two points of view. On one hand:
_the new energy realists believe that a laissez faire energy policy based solely on market evolution is a naive posture--especially when most of the world's oil and natural gas is not controlled by market forces._
And on the other:
_We also must recognize that we live in an energy interdependent world, and America's efforts to lessen its own petroleum use will not have their maximum potential geopolitical impact if other countries simply consume the oil we save, keeping markets tight, prices high and the producers in control. It is by working with other major consumers, such as India and China, to develop sustainable alternative energy supplies that we can best improve our own energy security. At the same time, we must be realistic and acknowledge that oil will remain an important energy source. Therefore, it is in our interest to work with the oil-producing countries toward better investment climates, greater political stability, improved environmental controls and other measures that will enhance the security of supplies. *At the coming G-8 meeting, energy will be at the top of the agenda.* This will be an important forum where the United States can take the lead and explain to other nations that we are in a new energy era._