Manipulating price?

Is someone forcibly keeping WTI (West Texas Intermediate) low? Given the trouble in Libya, why is it only up by  only 10%?

If they are, then year end price will be around 120, and not 150. Nevertheless, oil prices are irreversibly on an upwards trajectory. We may see short term falls, but no long term decrease in price. No turning back from here.

As oil prices increase (somewhat irreversibly) the price of food in the West are going to go up- for the very simple reason that their farms and delivery system is so oil dependent.

If the food prices rise in the West, there will be more food exports to the West from the countries that produce food for cheaper. Because the Western countries typically have more purchasing power (for the moment), the prices of food are going to go up globally.

It is critical then that the countries that are import-dependent just because imports are cheap must focus on food production in their own countries. They are in for big trouble if they don’t manage that within next one-two years.

The West is too used to getting oil for cheap (sometimes at a gunpoint.) The true price of oil is not reflected in the price an average user pays at a petrol pump. At around $3/gallon (less than $1/liter), oil is cheaper than coke in the US. No doubt US is intoxicated with oil.

The price is paid by people in oil producing countries. From the Iranians to Egyptians to Venezuelans to Ecuadorians.

The pressure for cheap oil has global implications too. The economy in the US is so transport dependent, that four/five major food producers provide meat for the entire country. Food at any store has on average traveled more than 500 miles. To grow 1 calorie worth of food, US spends more than 10 calories in burnt oil. There is no public transport to speak of. All that add up to make close to one fifth of world’s carbon emissions. Yes- the US alone produces about 20% of world’s carbon emissions. (China  22%/1.4billion, US 19%/.3billion, EU 14%/0.5billion.)

That can not be true forever. It has to change.

I am happy that oil prices are rising because of the ongoing revolutions.

Our economies are far more energy efficient. Food typically comes from the neighboring regions, unless there is a justification for brining them from afar. Eastern economies are much more robust with regards to high oil prices. Europeans are comparatively well off too.

Let us welcome the new era of expensive oil. I hope and wish to see $150/barrel by the year end, and $200-300/barrel in three years (adjusted for inflation.)

Let me also take the opportunity to express my best wishes for my struggling brothers and sisters.

Crunch comes to Washington

Can I feel happy that I predicted the crunch in the US six months ago? It happened sooner than I expected. :)

By the way, protectionism is not going to save US economy in the long term because of some systemic faults. The crisis in Europe is going to go back to the US in two years time, while Asian economies will continue to grow.

If you know any related articles, please share.

Al Jazeera English gains cachet in U.S. during Egypt rallies

Mubarak’s Fall Prompts Double Takes by Anchors

Al Jazeera English Blacked Out Across Most Of U.S.

Al Jazeera gains popularity during uprising

Egypt coverage gives Al Jazeera surge in US viewers

UPDATE: Here is a collection by AJE itself.

HP G62-347NR and Ubuntu

I tried a new HP laptop G62-347 NR, which features an AMD Athlon 2.2 GHz 64bit dual core processor with Ubuntu.

My impressions of both the laptop and it’s compatibility with Ubuntu are positive.

The keyboard is a bit awkward. Usually the ‘Ctrl’ key is at the bottom left. Here it’s left but one. Gets in the way sometimes.

Other than that, it’s first class stuff. Wide screen, and flawless with Ubuntu.

Cheap too.

Image from aljazeera.net

Garment workers are staging mass demonstrations and strikes in Bangladesh. A major part of Bangladesh’s foreign currency reserve comes from the contracts the country gets from foreign garment companies. The workers are demanding that their minimum salaries be increased from about 45 USD a month to 70 USD a month. (Factories are not honouring even the existing minimum wage.)

There are some concerns about viability of that demand. The argument goes as follows: if the salaries are increased to 70USD/month, then the businesses won’t be profitable anymore.

That’s entirely untrue. Paying 70USD to a worker in a month is not going to make the businesses unprofitable. What the businesses are worried about is that their profits will decrease.

One must remember that income disparity in Bangladesh is extreme. There are the very rich who send their children abroad to study, buy foreign cars and smoke foreign cigarettes. Most Bangladeshis don’t have money to buy enough food.

Because there is so little infrastructure and heavy (or otherwise) industry in Bangladesh, the rich don’t spend in their own country. When they spend, they help foreign economies and foreign companies.

If minimum salary is increased then the poor will have more money at hand, and they will spend them on basic necessities- causing that money to flow in the local economy. Helping local businesses/producers and manufacturers. Evantually the quality of life of the middle class will also rise because of the general increase of income.

So I’m all for the increase.

At another level, however, a more urgent problem is Bangladesh’s tax structure and the tax collection system. If the wealthy pays their fair share of taxes, then that money goes to the government and is spent locally. Good thing is (Alhamdulillah), the government is solvent at the moment and not dependent on foreign aid.

Wa’Allahu ‘Alim.


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