Letter to the editor: OPECs time is up

Written by The Financial Express | Updated: Oct 27 2014, 06:52am hrs
OPECs time is up

Apropos of the column A world without OPEC (October 22), in the 1970s, soaring oil prices led to massive transfers of national wealth as oil prices quadrupled. America spends half a trillion dollars a year on imported oil. On the other hand, Saudi Arabia depends on petroleum for 80% of its budget, 45% of its GDP and 90% of its export earnings. When oil prices started their 20-year decline after the peak of the early 1980s, the global economy went on a two-decade growth spurt. Technologies then emerged to extract gas from shale and rock formations. With fracking, the US becomes the worlds largest producer of natural gas. The natural gas reserves in Russias Arctic region, at the current levels of price and consumption, would generate enough fuel to feed Europe for around 75 years, with a total value of almost $17 trillion. China, another major importer, may also become an exporter, given that it has the worlds second-largest reserve of shale oil. In all, some 38 countries have 4.8 trillion barrels of shale oil, making oil a common commodity. Shale oil can be developed inexpensively, at a cost comparable to the $50-60 per barrel and sliding down. Israel has 250-billion barrels in one basin near Jerusalem alone, an amount comparable to Saudi Arabias reserves and could develop its oil at a lower cost! The US devotes $50 billion of its military budget to patrolling the Persian Gulf to protect oil shipments. But gas has to be sent in pipes across sovereign lands and that makes for compulsive international diplomacy and multilateral pacts. We can then move away from oil wars into a mutually amicable world order with plentiful gas. And that is a bonus that we ought to treasure, more than oil! It is indeed the end of the OPEC if this happens.

R Narayanan, Ghaziabad

Aid too little

Prime ministers Narendra Modis special package of R745 crore for the relief and rehabilitation of the flooded-affected people of Jammu and Kashmir as against the Omar Abdullah governments appeal for R44,000 crore seems inadequate. It is akin to using a pinch of salt to season an ocean. It can be explained either by a total lack of understanding of the magnitude of the apocalypse-like disaster that struck the state or a total disregard for the post-flood reconstruction of the state. Had Modi spent Diwali with the flood victims at relief camps and the neighbourhoods devastated by the floods, he could have realised the woeful inadequacy of his aid to the state. Mercifully, Modis supporters defended the Prime Ministers announcement of the grant of assistance in Srinagar as just one installment of a comprehensive package. They should persuade Modi to converge with their understanding. The onset of winter in the Valley lends an added urgency to providing shelter to all those rendered homeless by the unprecedented floods.

G David Milton

Maruthancode, Tamil Nadu