Need Of A New Food For Oil Program

Wise counsel has a tendency to get rejected outright by the majority. This reality not only fails to dawn on the majority but is usually rejected by a majority among inte3llectuals also. This isolates the people with wisdom forcing them in to their own shells to the detriment of society. The society usually wakes up to the wisdom decades after the death of the sage. However, words of wisdom too have a tendency to explode and it is in this light that the following counsel needs to be read.

Those predicting a future crude price of US Dollars 200 per barrel are not doomsayers. They are the wisest of the lot even though very rare intellectuals would like to admit that. In fact the crude price has no upper limit and the way it has been soaring since formation of OPEC shows it to be capable of breaking through the roofs one after another ad infinitum.

It is ironical that the formation of OPEC in September 1960 had been welcomed by most believers of natural justice. It appeared to be the only way out for OPEC countries to prevent exploitation of their resources. However, once they realized their power, it has corrupted the mind. Thus the situation has changed from the original commendable desire to gain a proper price for crude to squeezing maximum out of rest of the world. Thus OPEC has deviated from its avowed objectives of securing fair and stable prices for petroleum producers and providing an efficient, economic and regular supply of petroleum to consuming nations. (Full Objectives can be seen at http://www.opec.org/aboutus/history/history.htm)

Those random increases in crude prices have made running any business activity anywhere in the world a speculative preposition. Any business using petroleum products as an essential part of its activity cannot afford to enter into a long-term contract at constant prices due to unpredictable crude prices and resulting uncertainties in the prices of all petroleum products. Employees cannot know how much they would be spending on commuting to and from workplace in next one year. Employers providing pickup and drop services also cannot plan their budget towards such costs.

Rising crude prices are the worst form of international terrorism, and none is realizing it. Furthermore, floating cash dollars in the cash based economies of Middle East and Africa are a tool without which most terrorist activities through out the world would not thrive. Banking in those countries is still in a nascent stage and cross checks on reporting of cash transactions are hardly ever carried out. Moreover, with American dollars being an acceptable currency in all those countries there is no need for any one to deposit dollars in a bank.

In a modern war, the goal is to throw into disarray the modes of transport and communication to force surrender. This attack by way of rising crude prices is throwing into disarray all long petroleum dependent projects with long gestation. Financial projections are bound to go hay-wire in such cases, which will throw into disarray the long-term repayment commitments. This will have a cascading effect on the long-term financiers of such projects. Ultimately it may result in collapse of financial institutions through out the world unless something is done NOW to remedy the situation.

Crude is a commodity and formation of OPEC made it a monopolistic commodity. A monopoly over such a vital commodity will give ideas to any one. The only consideration OPEC has while increasing crude prices is that at any point of time the sudden increase should not be so high as to provoke war. Growth in crude prices is a well documented recent history and reproduction of figures has been avoided here to retain brevity. A child armed with this information should be able to predict that crude prices are into a never ending spiral.

Oil producing countries literally extract proverbial oil from the sand. It’s a logical conclusion that they would have the shrewd business sense to extract best price for the limited resource needed by the whole world. Thus the upward spiral of crude prices is a never ending process. It has a little known historical analogy running into my family-lore. Indians of an ancient era had a monopoly over table salt and many spices. They used this monopolistic knowledge to sell those commodities at exorbitant profits. It made salt extremely precious in the countries of the Middle East. This profit taking had two consequences.

Firstly, people of those countries started valuing salt in a larger than life manner. Anyone who offered salt even once in food to somebody else immediately put the taker under an obligation that was to last through life. Salt has lost its value as the technology spread but the tradition of reserving a place of honor for the one whose salt one has eaten still remains among the people there.

Secondly, the money brought in by Indians of that era was hoarded in the form of gold. As the news of huge collection of gold in India spread, it invited unimaginably large number of attacks. This greed was also one of the main causes for a millennium of foreign rulers that generations of Indians suffered.

All that is history and I can say with absolute certainty that it represents a very little known part of history at that. I have had access to this as the story has been running into the family for generations, whenever greed of any businessman or business house became a subject matter of discussion. I have never seen it in print, but that does not deter me from putting this authentic knowledge to draw similitude with crude prices. In any case it appears a very reliable piece of information and explains the cause of extremely large number of foreign aggressions faced by India. It convincingly explains the large amount of wealth hoarded by Indians of those bygone centuries and the incentive looked for by the foreign aggressors.

Without digressing anymore from the subject of crude prices, we need to look up as to who are the beneficiaries. First beneficiaries are OPEC and their people. The US is and will continue to be the largest provider of technology, capital goods and many services to those countries. Almost all of those countries allow US Dollar as a parallel currency and a free convertibility from or into their local currency. US exports coupled with flood of dollars keep it insulated to a very large extent against the rising crude prices passing its rising inflation to off shore countries.

US and its western allies also have a virtual monopoly over Arms and Ammunition and can use it as a counter weapon to retain their purchasing power for the crude. US also plays its role as an international policeman with selective arm twisting (e.g. Iraq) to get what it needs. It’s the rest of the world that suffers.

Thus the real beneficiaries are OPEC and the real losers are the developing countries. We are in the age of civilized people with UN guarding against wars, unless it happens to be a war promoted by US. Rest of the countries of the world cannot declare war on OPEC and solve this problem. As a true Gandhian I can never ever advocate violence in any form. But, then the question that needs to be answered is, “What can those poor countries do?” The answer is, “A whole LOT.” The increasing crude prices are a hit below the belt for poor countries. So, they need have no qualms of conscience in giving a hit above the belt in retaliation to OPEC.

If anyone or any country thinks that appeasing OPEC or ethnic groups from Middle East in that country is going to solve its problems, then such thinker will be eventually proved guilty of genocide of its entire people. You cannot appease a man-eater, and you can never appease a greedy business, if it is absolutely certain of its monopolistic position. It has to be handled in a typical outdated manner of, ”An eye for an eye” or else Indian slogan of, “A stone in response to a brick.”

For a fact entire Middle East grows little food, produces very little milk and is largely dependent on imports of food and clothing for its survival. An association of “Exporters of Essential Commodities to OPEC (tentatively named EECO)”, which will set the price at which essential commodities can be sold to OPEC. This would solve the problem in an equally simple manner just as formation of OPEC had solved the problem of getting best prices of crude for OPEC. This will require a lot of politicking, a sacrifice of short-term vested interests and a well coordinated and researched action by the suffering countries.

To begin with the ideas expressed here will be trashed. Then implementation problems will be elaborated upon. Still, and that is the reason I have keyed in those words, there is a chance that in a few years and possibly before extinction those suppliers of food to OPEC will see reason and come together to implement those very ideas in letter and spirit.

I can predict with almost absolute certainty that a fatwa will be issued against me for propagating these ideas. That does not deter me because survival of civilization depends on the ultimate implementation of these ideas even if I do not survive to see the same. That civilized intelligentsia will balk at them, then laugh at them and after letting it fade from public memory some think tank will re-propagate it, claiming full marks for the originality of the idea is all the incentive I require. For, that would ensure their implementation sooner or later.

EECO, if and when formed, can take up crude prices of early 1960 as the base and work out then prevailing prices of all essential commodities pricing them in terms of barrels of crude per unit of sale. This parity with barrels of crude can be maintained for all exports to the OPEC for ever thereafter. This will put an end to ever rising spiral of crude prices and hammer some sanity into OPEC Heads’ heads. The idea does appear un-civilized at first glance, but the rest of the world has to just consider whether it can avoid starvation if crude prices soar to 1,000 dollars per barrel or even 10,000 dollars per barrel. This tit for tat solution is a necessity and sooner we accept the reality, better it would be for the civilization at large.

I honestly respect the American commitment to “freedom of speech” which recognizes my right to put those ideas on this blog, even though some of its people may wish to kill me for the same. I also recognize the dangers of expressing such biting and hard hitting ideas. However, I am too sure of this being the only way out after spending a couple of months in those countries, studying the mindset of their people and undertaking a thorough study of “Quran-e-sharif” along with “Shariyat”.

Non-violence taught by The Bible and practiced by entire Christian world can never match the violent challenge to survival brought about by a shrewd monopolistic business. This is equally true of Gandhian non-violence which is a consolidation of Vedic, Jain and Buddhist ideologies of non-violence. Moreover, as a rational person I fail to see any violence in those ideas. It is forming a cartel called EECO to meet the challenges posed by OPEC.