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High oil prices take a toll on the Gulf’s middle class

Robert F. Worth, International Herald Tribune
Even as it enriches Arab rulers, the recent oil-price boom is helping to propel an extraordinary rise in the cost of food and other basic goods that is squeezing this region’s middle class and setting off strikes, demonstrations and occasional riots from Morocco to the Gulf.

In Jordan, the soaring price of oil led the government to remove almost all its costly fuel subsidies this month, pushing the price of some fuels up 76 percent overnight. In a devastating domino effect, the cost of basic foods like eggs, potatoes and cucumbers doubled or more.

In Saudi Arabia, where the inflation rate had been virtually zero for a decade, it has reached an official level of 6.5 percent, though unofficial estimates put it much higher. Public protests and boycotts have followed, and 19 prominent clerics posted an unusual statement on the Internet in December warning of a crisis that would cause “theft, cheating, armed robbery and resentment between rich and poor.”

The resurgence of inflation has many causes, from rising global demand to the monetary constraints of currencies pegged to the weakening U.S. dollar. But one cause is the skyrocketing price of oil itself, which is creating unheard-of riches for governments in the Gulf even as it helps push many ordinary people into poverty.
(24 February 2008)

In Argentina, no assistance from region on gas needs

Alexei Barrionuevo, International Herald Tribune
Brazil has declined to cede any natural gas shipments from Bolivia to Argentina, which is struggling to find more energy sources to help it avoid supply shortages that could derail its fast-growing economy.

Argentina and Brazil are facing the possibility of short-term energy crises from a lack of natural gas needed to fuel industries and generate electricity for residents. Bolivia is sitting in the middle with the region’s largest gas reserves.

For Cristina Fernández de Kirchner, Argentina’s new president, finding solutions to the energy problems that the administration of her husband, Néstor Kirchner, helped create is among her biggest early challenges.

Bolivia, which has seen a rise in domestic energy demand, has struggled to meet its contractual obligations to supply gas to Brazil and Argentina. Brazil’s national oil company, Petrobras, which has a much larger contract with Bolivia, has been unwilling to divert any gas supplies to Argentina because of concerns here that Brazil could face its own energy shortfalls.
(25 February 2008)
Contributor Dr. Larry Hughes writes:
The energy problems in South America have largely been ignored by the “main stream” media. Bolivia’s inability to meet natural gas production requirements have resulted in a chain-reaction of energy problems downstream: Brazil won’t give up any of its quota to Argentina, causing Argentina to cut supplies to Chile. There were minor supply disruptions in Chile last winter [June 2007] — since it is unlikely that much can be done over the next few months, expect to see more energy-related problems in South America.

South America Gas Crisis Solution Fails

Bill Cormier, Asssociated Press
The presidents of Argentina, Brazil and Bolivia failed to resolve a natural gas dispute Saturday, but agreed to study how to divide Bolivian supplies to avoid an energy crunch, an official said.

Bolivian Energy Minister Carlos Villegas said the three leaders amicably discussed ways to divide up limited Bolivian supplies, but reached no immediate solution during talks at Argentine President Cristina Fernandez’s suburban residence.
(24 February 2008)

Energy For a Changing World: A Credible European Energy Strategy for the 21st Century

Euan Mearns, The Oil Drum: Europe
On Friday 22nd February, I attended the above conference in Aberdeen. With presentations from the EU Commission, The European Parliament, Scottish politicians and leading academics, this was a high profile event. There follows an account of the key issues raised by the various speakers together with my own observations and opinions on these matters.
(25 February 2008)