Fears Grow High Oil Prices Will Hit World Economic Growth

14/09/05

Fears grow high oil prices will hit world economic growth
By Brian O'Mahony, Chief Business Correspondent



FEARS are growing the 44% hike in oil prices over the past year will damage global economic growth.

Business in the US is getting pessimistic as oil per barrel hovers around $64 per barrel.

Pfizer Inc chief executive, Hank McKinnel, said: 'If oil prices remain high, consumers will be forced to continue to spend more on petrol and heating oil, and this could trim other expenditures.'

Hurricane Katrina and soaring energy prices may take the steam out of a worldwide rebound in manufacturing economists were counting on to spur growth later this year.

The hurricane is compounding the effect of the higher fuel costs that had started to weaken consumer demand and undermine manufacturing in August.

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Meanwhile, global oil production is near peak and is set to decline within a few years, a report warns.

This at a time when demand from 85% of the world is still rising while it is estimated a third of the world's oil now comes from declining oil fields.

Serious measures must be implemented to cut demand according to the report: 2007: Solving Peak Oil, which outlines the technical and policy steps needed to meet the challenge. It attempts to cope with the impending crisis and argues that tried and tested and cost-effective technologies can be implemented quickly to reduce oil consumption.

If done in line with falling oil supplies, it can prevent a major disruption of global transport without major disruption to society.

By 2010, oil production will have fallen to 82 million barrels of oil per day (mbpd) from 85mbpd at present.

It will be 65mbpd in 2020. Half of global oil consumption is used by the transport sector and the majority of that on our roads.


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Peak Oil in Guatemala and the U.S.: Energy Crises at Both Ends of the Development Spectrum

13 September 2005

In Brief:

Historian Gregory Nipper spent three months studying energy issues in Guatemala. In this article he explores the situation Guatemala faces as the second poorest nation in the hemisphere with respect to energy sources, shortages, related environmental problems, and new alternatives.

Gregory Nipper recently completed his studies at Portland State University. His master's thesis was on the history of the political conflict over Oregon's Trojan Nuclear Power Plant, which was the nation's largest commercial nuclear facility of its time.

Peak Oil in Guatemala and the U.S.: Energy Crises at Both Ends of the Development Spectrum
By Gregory Nipper

Each nation on earth has been transformed to varying degrees by the general abundance of energy from fossil fuels, and each will face many fundamental challenges as declining global production of petroleum can no longer meet demand. However, there will almost certainly be enormous variation in the changes and reactions on the part of eaach nation. Accordingly, energy problems and their near-future consequences in Guatemala reveal striking differences from those of the United States, and can show a great deal about the global scope of the problem of peak oil and how to respond to it.

In short, as the second-poorest country in the Western Hemisphere, Guatemala is at an extreme economic disadvantage in its ability to withstand and respond to large-scale challenges. Also, with an export-based agricultural economy, Guatemala's already precarious system will be dealt a severe blow by diminished international commerce from vastly higher transportation costs. Crucially, however, there are two interrelated factors which put Guatemala in a far better position than heavily industrialized nations: its meager consumption of fossil-fuels and its status as an agrarian society able to re-localize its base of food production.

In stark contrast, the United States by virtue of its wealth and economic power has attained the privilege of being among the very least sustainable societies in terms of energy consumption, resource management, and other related factors. The bigger they come, the harder they fall, as the saying goes.

Guatemala's energy crisis has developed within two related contexts.

First is the nation's debilitating poverty. Following centuries of plunder by foreign enterprises and Guatemala's own political elite, 75% of the population remains below the level of poverty. The overwhelming majority lack sufficient access to basic nutrition, health care, and education.

The second context is the brutal civil war that over a period of 36 years left hundreds of thousands dead, disappeared, or displaced. The war officially ended in 1996 but, due largely to the corrupt government's systematic failure to implement most crucial provisions of the peace accords, the society still struggles to make substantial progress.

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