UNITED States and Iran have blamed each other for the unprecedented high oil prices and panic in global markets. As the crude prices shot to an all-time high of $75 per barrel, Washington and Teheran traded barbs accusing each other of fuelling the oil price crisis at a meeting of oil producing nations in Doha, Qatar this week. And experts are already talking about crude prices going as high as $100 a barrel!
As the international community anxiously looks to the Opec for help, the organisation of oil producing nations has made it clear it can do little to check the rising oil prices. Opec is right, of course. This is not a crisis brought about by the Opec so it cannot really do anything to arrest the oil prices. The price crisis is not a result of the demand and supply problem. So even if the Opec steps up its output, it is not going to calm the nervous energy markets. Besides, the Opec is already producing crude to its maximum capacity. More to the point, even if the oil producing nations increase their output, where are the refineries to turn this crude into refined, usable oil?
The responsibility for this state of affairs lies with the rich, industrialised world that is the biggest user of oil. The world's biggest oil consuming country, US, does not have enough refineries to turn crude into final marketable oil. Without enough facilities to refine crude oil, there is no use raising the production levels. What would you do with the crude even if you raise it to, say five million barrels a day - something that Saudi Arabia had done some time ago? The fact is, the industrialised countries have not invested sufficiently in refining facilities.
So it is not correct to attribute rising oil prices to shortage of crude. In fact, there is more production of oil today than was the case a decade ago. The production is going up, the consumption is going up, but refining facilities are not growing accordingly. Why? Setting up new refineries and increasing the capacity of existing ones is not easy. It involves huge investments, environment regulations and time. But there's another explanation too: Since Bush won his two elections with the help of the big oilmen of Texas, he may be encouraging the conditions that in turn help the president's rich friends.
In any case, it would be wrong to blame the Iran crisis alone for high oil prices. It could be one of the several factors affecting global economy. Which is not to suggest the world community should stop trying to resolve the Iran question peacefully. If not for global peace, the world should push for a peaceful resolution of Iran issue in its collective economic interests.
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