The oil catastrophy continues: high prices hit poor countries hard
Oil prices are breaking records again. Crude at $101 per barrel may be fun for wealthy people, because it means they can act green a bit - walk more, take the bus for a change, have a laugh at the pump, talk about Peak Oil and climate change, buy a hybrid. But for the least developed countries, where the few internal combustion engines that work are crucial for development, this is no joke. This ongoing energy crisis is a true social and economic disaster.
Farmers there are on the brink. They can't choose not to harvest. They can't afford not to irrigate. They can't choose not to have their products trucked to market. All these operations require affordable fuel and reliable supplies. Without this most basic of inputs, they go broke and fall back into miserable subsistence farming. An excellent source illustrating how this dynamic is playing out across the developing world is Energy Shortage. Check the large number of daily headlines, and you will see farmers from Nepal and Bolivia to Indonesia and Cameroon struggling to deal with disastrously priced fuel. Be prepared for some tough stories, because high energy prices and physical fuel shortages frequently cause protests that end in deaths, have diesel-powered hospitals closed with dramatic consequences, or result in entire economies grinding to a halt.
According to the UN's recent report "Sustainable Bioenergy: A Framework for Decision Makers", recent oil price increases have had devastating effects on many of the world's poor countries: of the 50 poorest, 38 are net importers of petroleum and 25 import all their petroleum requirements. The study found that some now spend up to six times as much on fuel as they do on health, while others spend double the amount allocated to poverty reduction on fuels [note, this was the situation with oil at $65pb]. Imagine that in Europe or the US.
Another report, by the African Development Bank, shows that for the wealthiest countries (non-oil producing OECD), oil imports make up less than 2% of GDP, whereas for energy-intensive African oil importing nations this was more than 10% of GDP in 2006. The consequences of record prices -- knowing that oil demand is inelastic and that abundant low cost liquid fuels are crucial to development -- are: reduced farm outputs, increased food insecurity, reduced economic growth, growing inflation, increasing unemployment, restraints on mobility, the destruction of the effects of debt relief, loss of trade capacity, drained budgets and cuts in social spending. Of course, the poor are hit first and hardest (previous post).
Luckily many of these countries - whose populations largely consist of rural communities who would welcome new market opportunities - have a substantial capacity to produce efficient, sustainable and low-cost biofuels for local use, without endangering food supplies in any way (in fact, as the daily headlines over at Energy Shortage show, lack of fuel and high oil prices are a leading cause of local food insecurity). There is absolutely no reason whatsoever for these countries not to invest in the sector. One could even go so far as to say that -- given the catastrophic social, health and economic costs of high oil prices -- not investing in these viable alternatives comes down to contributing to the creation of a man-made disaster [entry ends here].
energy :: sustainability :: biomass :: bioenergy :: biofuels :: oil :: crude :: fuel shortages :: developing countries :: energy intensity :: inflation :: poverty :: development :: man-made disaster ::
Farmers there are on the brink. They can't choose not to harvest. They can't afford not to irrigate. They can't choose not to have their products trucked to market. All these operations require affordable fuel and reliable supplies. Without this most basic of inputs, they go broke and fall back into miserable subsistence farming. An excellent source illustrating how this dynamic is playing out across the developing world is Energy Shortage. Check the large number of daily headlines, and you will see farmers from Nepal and Bolivia to Indonesia and Cameroon struggling to deal with disastrously priced fuel. Be prepared for some tough stories, because high energy prices and physical fuel shortages frequently cause protests that end in deaths, have diesel-powered hospitals closed with dramatic consequences, or result in entire economies grinding to a halt.
According to the UN's recent report "Sustainable Bioenergy: A Framework for Decision Makers", recent oil price increases have had devastating effects on many of the world's poor countries: of the 50 poorest, 38 are net importers of petroleum and 25 import all their petroleum requirements. The study found that some now spend up to six times as much on fuel as they do on health, while others spend double the amount allocated to poverty reduction on fuels [note, this was the situation with oil at $65pb]. Imagine that in Europe or the US.
Another report, by the African Development Bank, shows that for the wealthiest countries (non-oil producing OECD), oil imports make up less than 2% of GDP, whereas for energy-intensive African oil importing nations this was more than 10% of GDP in 2006. The consequences of record prices -- knowing that oil demand is inelastic and that abundant low cost liquid fuels are crucial to development -- are: reduced farm outputs, increased food insecurity, reduced economic growth, growing inflation, increasing unemployment, restraints on mobility, the destruction of the effects of debt relief, loss of trade capacity, drained budgets and cuts in social spending. Of course, the poor are hit first and hardest (previous post).
Luckily many of these countries - whose populations largely consist of rural communities who would welcome new market opportunities - have a substantial capacity to produce efficient, sustainable and low-cost biofuels for local use, without endangering food supplies in any way (in fact, as the daily headlines over at Energy Shortage show, lack of fuel and high oil prices are a leading cause of local food insecurity). There is absolutely no reason whatsoever for these countries not to invest in the sector. One could even go so far as to say that -- given the catastrophic social, health and economic costs of high oil prices -- not investing in these viable alternatives comes down to contributing to the creation of a man-made disaster [entry ends here].
energy :: sustainability :: biomass :: bioenergy :: biofuels :: oil :: crude :: fuel shortages :: developing countries :: energy intensity :: inflation :: poverty :: development :: man-made disaster ::
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