Timothy Bankroft-Hinchey: WESTERN EUROPE HALTS AS PETROL DRIES UP Pravda.ru jury returns verdict on who is responsible

Furious at the recent increases in oil prices, the populations of the UK, France, Germany and Belgium are blockading the oil refineries, ports and are setting up road-blocks in the streets. The protesters demand that the governments, and not the consumers, support the fluctuations in international crude prices. Fuel tax – the eye of the storm In the UK, for instance, 70% of the final price of petrol and diesel is destined to the state in taxation. Every time the price of oil rises, the government increases the price that the consumers have to pay, instead of absorbing the cost in its profit margin. In a surge of popular initiative, the people of the UK have virtually brought the country to a halt. Teachers cannot drive to school, food cannot reach supermarkets and some shops are rationing what consumers can buy. This provoked the Prime Minister, Tony Blair, to order the police and army to escort the fuel tankers (lorries) so that supplies can reach their destinations. However, to date only a small part of the supplies has managed to arrive. Tony Blair refuses to decrease the price of fuel because reactions of this kind cost the state millions of pounds in lost revenue and create a precedent for future action by cartels. With drivers in Spain and Morocco threatening to copy the spontaneous public demonstrations of outrage elsewhere in Europe, Portugal by contrast is an oasis of calm, but at what price ? To appease the normally pacific Portuguese, the Socialist Prime Minister Antуnio Guterres has refused to increase prices further. This has cost the State 120 billion PTE (600 million USD) since March. This “social peace” package will continue to lose revenue in taxation to the rate of at least 5 bn. PTE (25 million USD) every month. Responsibility Faced with another major oil crash, the fourth since 1973, let us present the main suspects to the jury to see where the responsibility lies. Let the case begin. The suspects : Oil reserves OPEC Oil Exploration Companies Market Operators The USA

Oil Reserves In 1979, official reports forecast that by 1999, the world’s oil reserves would be exhausted. Today, BP Amoco announced that at current production rates, there are sufficient reserves of oil to supply the world’s needs until 2041. Two thousand new wells are discovered every year, some of which are dry, but others hold massive reserves, such as the ones discovered recently off the coast of Angola. Verdict : NOT GUILTY OPEC In 1960, the Organisation of Petroleum Exporting Countries set up OPEC, a cartel whose aim it was to control the price of oil. The intention was to guarantee greater profits for the oil-producing countries. High prices send the industrialised countries into economic recession and cause political shockwaves. Low prices cause social unrest in the OPEC countries themselves. This week, OPEC increased its production quota for the third time this year, reacting to pressure from the Western European countries. It should be remembered that in 1999, production by non-OPEC countries exceeded that of OPEC by 260 million tonnes of crude (1,670m T vs. 1,410 m. T) Verdict : NOT GUILTY Oil Exploration companies After the First Oil Crash in 1973, when OPEC temporarily stopped selling oil to the Western Countries, the oil exploration companies increased their off-shore projects, making more oil available. Verdict : NOT GUILTY The Market Operators These operators make their living by speculation operations in international commodities markets, such as the International Petroleum Exchange in London. They speculate about the price of a barrel of oil in three months’ time. Fearing a cold winter this year, they predicted an increase in demand and this speculation sent prices up this week. Verdict : GUILTY THROUGH NEGLIGENCE The USA Half of the oil wells discovered are in the USA. This means 1,000 new wells, every year. Most of these are immediately sealed as the USA pursues a policy of strategic management, using the reserves from other countries and keeping its own for the future. While it is the prerogative of each country to pursue its own interests, by forcing Saudi Arabia and the other OPEC countries to produce as much as possible, and simultaneously placing an embargo on the oil from Iraq, the USA is being manipulative and intrusive. Iraq has the capacity to produce 10 million barrels per day in the short term, which would certainly bring down the price of crude. Strategic management of America’s own oil reserves keeps its citizens calm during the storm which other countries have to endure. Verdict : GUILTY THROUGH INTENT

Timothy BANKROFT-HINCHEY Correspondent of PRAVDA.Ru