Rising oil prices

By Sreedhar

With crude oil prices crossing $ 100 per barrel in the beginning of 2008, quiet changes are taking place in the global order. Suddenly the major crude oil producing countries like those among the Persian Gulf countries and Venezuela in South America have started asserting themselves because of their financial clout with their newly acquired petrodollars, in the emerging global order. Many observers feel that sudden spurt in crude oil prices during the last two years is largely due to increased demand from the major economies of Asia, like India and China.

A quick look at the global crude oil prices during the past seventeen years, from 1990-1991 onwards it becomes clear that the prices of crude oil have gone up by more than 100 percent. If we compare it with 1971, the first year of crude oil price hike in the contemporary political history of the world, the price has increased by more than two thousand times. In the past crude oil prices increased because of political instability in the Persian Gulf Region like Yom-Kippur war of 1973, Islamic revolution in Iran in 1979, Iraqi invasion of Kuwait in 1990 and Operation Desert Storm in 1991. These are some of the examples which created certain amount of uncertainty in the supply of crude oil (though not in reality) by the major oil producing countries. According to many commentators the fear syndrome, a sort of physiological fest and not actual disruption of supplies, that resulted in sharp increased of crude oil prices.

In 2007, for instance oil had risen alongside gold after news of Benazir Bhutto's death, which unnerved financial markets. "Pakistan is a crucial country in the region and prospects of political uncertainty are leading to some nervousness (which is reflected in) gold, bond and oil prices rising and the dollar dipping," said Audrey Childe-Freeman, European economist at CIBC bank in London.

Bhutto's killing hit American stock markets, which were also depressed by weaker-than-expected US durable goods data. Oil had surged to one-month highs in the previous session following Turkey's raid on Kurdish guerrilla targets in northern Iraq.

"Turkish bombing of Kurdish guerrilla targets helped it on its way," said Kevin Blemkin, oil broker at MF Global. He said this had reminded the market of potential risks to crude supplies in the Middle East. Oil prices have risen 57% since the start of 2007 and touched a record high of $99.29 on November 21, boosted by concerns over shrinking supplies ahead of winter and weak dolar.

However, after the US invasion of Iraq in 2003 the prices of crude oil were gradually escalating but not in a geometrical proportion. The market disequilibrium in crude oil, demand outstripping supply, created quiet market turmoil. The main producers were not willing to make adjustments in their crude oil production to keep a check on prices. With the result in the past two years itself international spot market prices of crude oil have increased much more sharply than at any time in the past.

According to various estimates that are in circulation, by mid 2007 the Persian Gulf oil producers are almost sitting on a trillion petrodollar looking for investments at right places. If the trend continues in 2008 too, the Persian Gulf countries may gain upper hand in the capital flow across the globe. They may even attempt to gain control over some of the major transnational corporations. For instance, Abu Dhabi a small little island state managed to bailout Citigroup Inc from a major financial crisis by infusing $7.5 billion. Even before this deal, Bahrain, Kuwait, Oman, Saudi Arabia, Qatar and the United Arab Emirates, spent about $124.3 billion in the past three years in buying up foreign companies, real estate and other assets. Similarly most of the economic sanctions imposed on Sudan were brushed aside by the members of the European Community and major players from Asia because of new found oil reserves there and the resultant flow of petro dollars.

If this trend in petrodollars continues, global economy will experience a sea change in the next decade. The major oil producing countries specially those in the Persian Gulf will be the hub of economic activity like in the 1970s. At that time the developed countries were able to escalate the prices of manufactured goods and recycle petrodollars. The famous six times revision of an estimate of building a naval dockyard by US contractors in a span of twelve months is now part of the folklore among students of economics across the globe.

All this may not be possible any more in Persian Gulf now. There is a literate population in these countries who are well aware of market mechanisms. Like in the past they can not be fooled around any more on prices of manufactured goods. In addition, the radical Islamic groups have become the moral policemen of all the bureaucracy in the oil producing countries. This apart, now there are other players in the market like China and India who can offer stiff competition to consumer goods from the developed world. For instance Marks and Spencers in London may be a nice place for a holiday shopping but no one is thinking that it is the ultimate destination to acquire all consumer goods.

Now it became a public knowledge that some of the major Arab oil producing countries are financing terrorism and violence across the globe. The argument being advanced by these Arab financiers is that the radical Islamic groups are a response to the terrorism and violence created by Zionist lobby from 1948 onwards. "Terrorism has to be met by terrorism only" seems to be the logic behind the Arab world supporting radical Islamic groups. How far this is correct can be debated. But with their new found riches through the increased crude oil prices, they have taken the covert warfare to new levels.

In the process the entire war on terrorism started after the 9/11 seems to have lost its focus. The great powers are able to protect themselves from further terrorist attacks but were not able to crack down people responsible, the so called leadership, for the incident of 9/11. The evidence forth coming in the media indicate that the radical Islamic groups and their financiers have penetrated into almost all segments of the society across the globe. Many observers feel that this is one of the reasons for the limited success of the US led war on terrorism.

The present indications are that the major markets in the developed world are likely to go into a long recession affecting the consumer behavior and his purchasing power for a long time to come. This aspect of the global economy is not being realized by many observers. Unlike in 1973, now the Arab oil producing countries are not imposing any sanctions of crude oil supplies on any country. This time they are quietly increasing the price of crude oil to abnormal levels which is bound to have serious repercussions on the developed world. The world as such has no immediate answers to this quiet oil war launched by the Arab oil producing countries. After the 1971 Project Independence study it became clear to everyone that there is no effective substitute energy source material for crude oil in the foreseeable future. Therefore one has to live with crude oil as an important energy source material and all the countries started working out an energy source mix where crude oil will be kept to the bare minimum.-CNF

J&K producing 600 doctors every year
TALES OF TRAVESTY

By Dr. Jitendra Singh

In the last decade or so, the number of MBBS graduates that India produces every year has multiplied by several thousands and the number is going up each day. A small State like Jammu and Kashmir is itself producing around 600 MBBS pass-outs every year if one takes into account the strength in the State's four medical colleges in addition to those of the Jammu and Kashmir candidates who manage MBBS seats in colleges outside Jammu and Kashmir or sometimes also in colleges outside the country in Bangladesh, Russia etc. These figures, however, do not take into account the number of BDS dentists or alternative medicine like Ayurveda/Unani doctors that the State produces every year.

Where do all these over half a thousand MBBS boys and girls from Jammu and Kashmir go every year ? Do all of them or most of them succeed in securing a decent professional vocation for themselves ? Are most of them employed, underemployed or unemployed? With the erstwhile National Conference Government having reserved 50% MBBS seats in State's Medical Colleges for girls, where are the nearly 300 lady doctors who pass out each year ? How far does a degree of MBBS or MD per se in present day and time actually translate into a career boost for a male graduate or a matrimonial boost for a female graduate ? Are the dividends or returns for these young medical graduates proportionate to their enormous input in terms of both labour as well as monetary investment ? And, last but not the least, what is the best method these medicos or thier parents have planned to recover back 40 to 50 lakh rupees paid in case of a management quota seat ?

The consequences of unplanned education policy, which are already manifest in every other field of education, have now begun to show ramifications in the field of medical education as well. While this has emerged as a countrywide phenomenon, it is worrisome to note that in Jammu and Kashmir itself, there are at present atleast 3,000 doctors who are unemployed. And yet, many of the doctors' posts in periphery are lying vacant because as a result of administration's indifference, the young doctors are unable to adjust to inhospitalble living and working conditions for which they can be hardly blamed. At the same time, 50% reservation for women candidates in State's Medical Colelges has led to a quixotic crowding of female doctors with several households having a young daughter or a young daughter-in-law who is a ‘‘non-working’’ lady doctor.

Thoughtless reservation quotas first at the admission level and later at the recruitment level make it virtually impossible for many a meritorious candidate to become a doctor or to later secure Government job as a doctor. As a result, there is today a rapid mushrooming of young doctors who are doctors either through reserved quota or through donation. Another serious fall-out of this is that medicine which was once a profession of the best and the brightest is fast getting reduced to be a business of mediocres and no wonder, of late, with the arrival of new vocational avenues, more and more meritorious pass-outs from Class 12, particularly boys, have begun to opt for streams other than medicine.

With little possibility of Government jobs for young medicos, the entry of corporate hospitals and nursing homes in metros and sub-metros however offers an opportunity but not for all. On the other hand, to set up an independent private practice is not easy atleast in the initial years and therefore a young doctor who has spent lakhs to earn an MBBS and who is under social pressure to make quick fortune finds himself tempted to indulge in scandalous malpractices like sale-purchase of kidneys or unncessarily prescribed exorbitant investigations or surgeries without indication like unwarranted caesareans or needlessly prolonged indoor admisisons in private nursing homes.

In a confusing scenario like this, the bare minimum remedy is to (i) plan a medical education policy taking into consideration the number of doctors actually required for each region (ii) base the admissions to MBBS both in Government and private medical colleges purely on merit and abolish reservation quotas as well as private management quotas (iii) and above all, to launch awareness drive for parent counselling and student counselling at pre-medical level so that those who make a bid for a career in medicine should do so not simply for the sake of it but must first understand why they are doing so.

But the question is, will all the vested social, political and bureaucratic interests ever allow any remedy to happen ? And if not, then the question-mark is wide open. The common man has no answer. Umapathy has no redemption in sight, a La, ‘‘Manzil Bhi Nahin, Manzil Ki Justjoo Bhi Nahin......’’