17th September 2000

The rich eating more to starve the poor

The United States and other Western nations — which account for about 20 percent of the world's population but consume over 80 percent of its resources — were chided at the 1992 Earth Summit in Rio for their extravagant lifestyles.

Just before the historic summit, then President George Bush was told that American consumers need to cut down on their overconsumption of food, energy and consumer products in order to protect the world from environmental degradation.

The argument was that an average American family of four, for example, consume much more than an average extended family of eight or ten in India or Mexico.

Overconsumption was, therefore, as destructive as overpopulation. But the US kept pointing its finger at developing nations urging them to curb their population growth while refusing to yield to the consumption demand.

"The American lifestyle is not up for negotiations," Bush exclaimed.

The American economy, after all, thrives on overconsumption, and Americans would, therefore, continue to consume recklessly irrespective of what the world thinks of them.

A proposal for an international conference on unsustainable consumption has been kicked around for years. But it has been strongly opposed by Western states.

Even during the global oil crisis of the mid-1970s, Americans hardly changed their lifestyles — except to temporarily abandon their gas-guzzlers in favour of mid-sized compact cars.

In Texas, the joke was that death-row prisoners at that time were hanged instead of being sent to the chair — only because the prison warden wanted to save on electricity. A rare example of energy-saving.

The world oil market, this time around, is enjoying a boom as the price of a barrel of crude escalated to $35 last week, up from about $12 in 1998.

The dramatic rise in oil prices in the world market is now threatening to have a serious impact both on the US and on the world economy.

But instead of cutting down on consumption, the US is badgering its oil producing allies such as Saudi Arabia and Kuwait to increase production in order to keep prices low.

The rise in oil prices is attributed to a policy of deliberate production cuts by the 11 members of the Organisation of Petroleum Exporting Countries (OPEC).

US Energy Secretary Bill Richardson has called on oil exporting nations to increase production that would force prices down. "My hope is that OPEC seriously considers increasing production,' Richardson said.

Secretary-General Kofi Annan admitted last week that the price hike has relieved the financial pressures in major oil exporting countries.

"But the potential of a serious impact on inflation and interest in major importing countries remain," he added.

Annan pointed out that in the past, sharp increases in oil prices have triggered economic recessions that hurt all countries, including the oil exporters.

Annan said the poor segments of the developing countries will be hardest hit with an attendant rise in the price of other essential goods such as fuel, food and transport.

Venezuelan President Hugo Chavez, who is expected to host a summit meeting of OPEC nations later this month, defended oil producers.

Addressing reporters, he said that OPEC is not the ogre it is portrayed to be.

Although OPEC at onetime had a monopoly of about 60 percent of world oil production, it now accounts for only about 40 percent of the market, he said.

Chavez said there are many independent oil producers, for example, in places such as Texas and Oklahoma, and also non-OPEC oil producers such as Norway, Russia and Mexico.

Chavez said high prices are also due to two factors: intermediaries and speculators "who make more money than oil producers" and high local taxes charged by individual countries. He said that in some instances over 50 percent of the price of oil is due to high local taxes.

The price of petrol in the US is still the cheapest in the Western world because it costs $1.71 per gallon (yes, the US is perhaps the only country in the world which has refused to go metric) compared with $4.37 per gallon in Britain, $3.76 in France and $4.02 in the Netherlands.

The local tax is only 22.8 percent of the price of gasoline in the US compared with 76.2 percent in Britain, 69.1 percent in France and 67.9 percent in Germany.

Cheaper gasoline in the US has facilitated the average American family to have three to four cars, including an energy-inefficient sport utility vehicle (SUV).

It is also a subsidy for the US automobile industry to mass produce cars for an ever-growing, insatiable American market.

But last week, even at $1.71 per gallon, American consumers were still demanding cheaper gasoline.

And this being a presidential election year, US politicians were feverishly taking up their cause.