Look for options
The increase in the oil price to $60 a barrel has pushed most countries of the world to the edge. Since demand is outstripping supply and the capacity is tight in the Organisation of Petroleum Exporting Countries (OPEC) production facilities and US refineries, last week the price climbed to as high as $58.60 a barrel and then to $60 on Monday. If it further moves upward, the worse affected, needless to say, will be the poor developing countries of Asia and Africa. Since these countries have virtually no control over the crude markets of the US and the OPEC, they are sure to be confronted with an unprecedented crisis. After oil price hike, the price of foodgrains will increase and then the snowballing effect will cost the Third World dearly. Experts argue that among other things, the price rise has been aggravated by the gasoline demand in the US, now posting a three per cent yearly growth. It has also been reported that kidnapping of the six oil workers last week in Nigeria, an OPEC member, has also contributed to the hike. Therefore, the indication is clear: countries, especially with poor economies, have rough days ahead.
Nepal cannot escape the economic fallout of the hike. Given the low purchasing capacity of the majority of the Nepalis, the on-going political instability, and the decline in foreign aid flow, tourism and trade, the people will be hard pressed to cope with the overall impact. Therefore, it would be better for Nepal to look for and go big on alternative sources of energy like water, wind or biogas to close the gap between demand and supply. Biogas is one source that has already been successfully experimented in many parts of Nepal. Wind, the world’s fastest growing form of energy production, deserves serious consideration not only because of the petroleum price hike but also because it is a carbon-free alternative to fossil fuel. Take for example Denmark. This country now gets almost 20 per cent of its power from wind. Given the uncertainties surrounding the world oil price, Nepal would be well advised to harness its own energy sources. Unlike in the past, innovative ideas would have to be actively encouraged. Only through a strong commitment can Nepal ever hope to make a major breakthrough in this regard.