Just about everyone is complaining about the high price of oil, but it does
not even reflect the environmental costs and is still insufficient to promote
the changes needed to ensure a less catastrophic future for humanity, experts
warn.
The "brutal and rapid" rise in the price of oil over the last few years has not
generated changes that would bring about the indispensable regulation of the
global economic system, but has merely given rise to "adaptations" that tend to
maintain the status quo, according to Gilberto Dupas, head of international
studies at the University of São Paulo.
Demand for oil will continue to grow because of "the spread of Western patterns
of consumption, especially in China and India," and the declining price of cars,
since in the automobile industry, "only global companies that produce them for
the price of 2,500 dollars will survive, accentuating the tendency to use
private transport," he told IPS.
Besides the soaring global levels of demand for food and energy, the logic of
profits "constantly promotes more creative destruction," with appliances and
other goods turning into obsolete junk "in ever-shorter technological cycles"
that require continuous upgrading and replacement, and thus lead to the
consumption of increasing amounts of energy and raw materials, he said.
The "only symptom" of the impact of record high oil prices is the widespread
inflation, which is especially marked in the case of food, reflecting "the
systemic dependence on oil," without the crisis being sufficiently severe to
prompt an in-depth questioning of the system itself, said Dupas, who is also
president of the Institute for International Economic Studies (IEEI).
The system has a tremendous ability to withstand pressure and changes, said the
author of the book "O mito do progresso" (The Myth of Progress), which analyses
who determines the directions taken by the system and its environmental and
social costs.
He questioned the global economic system’s capacity to recognise the crisis and
regulate itself in the face of the worsening situation, which is aggravated by
global warming.
The climbing prices of oil, copper and steel form part of a new phenomenon that
is likely to be long-lived, said Fernando Cardim de Carvalho, a professor at the
Federal University of Rio de Janeiro.
In the past, the industrialisation process of countries experiencing fast
economic growth, like the Asian tigers (Hong Kong, Singapore, South Korea, and
Taiwan) was based on cheap labour power "which ran out" when the country reached
a certain level of development. The local populations experienced a gradual rise
in living standards, which brought stability to the process.
But that isn't what is happening today, Cardim told IPS.
China, with its more than 1.3 billion people, represents "a structural force,
growing demand without any decline in sight," said the economist, who added that
there are always "new Chinas to repeat or maintain the momentum of the process,
which are both modern and underdeveloped at the same time."
"It is a phenomenon without precedents, which renders history useless for the
purpose of making comparisons," said Cardim.
Thus, China will remain competitive in the textile industry, which in the past
was a sector that relocated to poorer countries with cheaper labour, he said.
Argentina, Brazil and Chile depend heavily on their exports to China, whose
demand for copper and other commodities should continue to grow for a long time
to come, while prices will remain high.
With guaranteed growth of demand, the rise in oil prices should not be confused
with speculative bubbles, which would burst as a result of an increase in
interest rates, argued Cardim. But the high prices could lead to recession in
the short-term, encouraging the replacement of fossil fuels with other sources
of energy in the long run, he predicted.
In fact, oil prices have gone up steadily since 2003, unlike the oil shocks of
1973 and 1979, when prices surged in a very short time, followed by a levelling
off and even a downturn within less than a year.
With the high costs of transportation, energy and food, the world economy will
tend to experience at least sectoral changes, favouring greater local processing
of commodities, said Giuseppe Bacóccoli, an expert on oil in the engineering
graduate studies programme at the Federal University of Rio de Janeiro.
Brazil is one of the countries that will benefit, due to its abundant
commodities and energy sources, including recently discovered huge deep sea oil
fields, which will soon turn it into an oil exporter, he said.
In 1973 and 1979, Brazil was one of the countries hit hardest by the sudden
surge in oil prices, due to its heavy dependence on imported fuel, which spurred
a pioneer initiative involving large-scale production of ethanol fuel based on
sugar cane, to replace gasoline.
Taking advantage of the current opportunities requires "a well-trained
workforce" prepared to work together and make use of new technologies, as well
as commodities and cheap energy -- factors that favour Brazil, but not Africa,
for example, said Cardim.
Africa also faces another major obstacle: scarcity of iron ore, said Dupas.
In the short-term, the soaring oil prices will not modify the current system,
but will lead to a global economic recession, said Cardim. And in the long-term,
if prices remain high and global production of fossil fuels has indeed peaked,
replacing them with other sources of energy will prompt "a new industrial
revolution," he added.
One of the great hopes for abundant, clean energy, hydrogen, will only be
economically viable by around 2020, Bacóccoli predicted.