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Gulf currencies may drop dollar peg
Dianaa Elias, Associated Press via Business Week
Kuwait’s decision to stop pegging its currency to the dollar last year hasn’t completely tamed inflation, but experts say many of its oil-rich neighbors will follow, desperate to fight inflation.
Oil is priced in dollars on the world market, but many Gulf countries rely on government-subsidized imports priced in euros and other currencies that have been rising against the greenback. This relationship has pushed up the price of imports, a dilemma that could get worse as fears of a recession in the U.S. and related interest rate cuts continue to push down the dollar.
(17 March 2008)
Gas shortage to double cost of electricity
Karen Remo-Listana, Emirates Business 24/7 (UAE)
The cost of power generation is set to shoot up by at least 100 per cent in the next two years making electricity an even more expensive commodity, industry sources told Emirates Business.
According to a senior official, the current electricity fee will soon be unjustified to the detriment of the plant operators as the price of gas – the ideal feedstock for power generation and water desalination plants – has already been increased by tenfold in less than a decade.
(16 March 2008)
Venezuela wants euros for some fuel exports
Brian Ellsworth, Reuters
Venezuela is requiring payment in euros for some fuel exports, an industry source told Reuters on Thursday, a sign the OPEC nation may be easing away from the plummeting dollar.
A trader on Thursday told Reuters he had purchased an oil products cargo under a contract issued recently.
“Everyone who has that contract has to pay in euros,” said the source, who asked not to be identified.
(13 March 2008)
Mexico leftist seizes oil reform to drive comeback
Catherine Bremer, Reuters
A firebrand Mexican leftist whose 2006 presidential bid sent jitters through Wall Street is back, leading protests against energy reforms after a year in the political wilderness. Andres Manuel Lopez Obrador jammed Mexico City with protest camps for weeks after the July 2006 election, claiming his defeat was rigged, but he then fell from the radar screen as President Felipe Calderon took power, pushing through laws and battling drug cartels.
Now the anti-capitalist has seized on opposition to Calderon’s oil reform plans to launch a comeback that could decide whether he survives to get another shot at the presidency in 2012 or fades away for good. Lopez Obrador has an army of followers among the poor. Thousands came out late last month to cheer on his first big rally against talks in Congress on letting more private capital into Mexico’s oil sector, under state control since 1938.
(16 March 2008)
Stalking the Arctic
Alex Stein, Guardian
Instead of watching Arctic powers lay claim to its resources, the world needs a treaty on sharing the region
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… Writing in Foreign Affairs, Scott G Borgerson explains how global warming is “opening up access to massive natural resources and creating shipping shortcuts that could save billions of dollars a year” in the Arctic. Extraordinarily, however, in a world already belching out more bureaucracy than it can handle, there are no clear rules governing the region.
There are five Arctic powers – the US, Canada, Russia, Denmark and Norway. In 2001, the UN rejected Russia’s planned annexation of 460,000 miles of Arctic waters, although this didn’t prevent Russia from sullying the North Pole with its flag. It even flew bombers over the Arctic Ocean, for the first time since the cold war. Next up was Canada, which announced funding for new patrol vessels, a deep-water port, and a cold-weather training centre. Stalking the sidelines are Denmark and Norway, although don’t think that their Scandinavian temperament means they don’t want a piece of the pie. As for the US, its relative indifference can surprisingly be traced to its impotence, primarily because it has only one icebreaker, and even that isn’t prepared for Arctic missions.
… Global warming harms the entire planet. If the melting of the ice will provide some unexpected benefits, shouldn’t those be used to fund problem-solving elsewhere in the globe? Only the UN should be allowed to plant its flag in the Arctic … Multilateralism for the benefit of the entire globe is the only way forward.
(13 March 2008)
