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Revolt in Nigeria fuels oil price rise

By Humberto Márquez

Caracas, Venezuela, Oct. 8 (IPS) — Fighting between the Nigerian government and an ethnic rebel militia in the country’s eastern oil-producing Niger Delta region helped drive the price of oil up to $53 a barrel this week in a market that analysts say is experiencing a “new order” marked by lower spare production capacity.

The price of US benchmark West Texas Intermediate (WTI) ranged between $52.42 and $52.80 a barrel in New York Oct. 8 after hitting the $53 mark on Oct. 7.

In London, the Brent crude price also set a new record, of $49.30 a barrel.

Prices for the week averaged $51.10 a barrel for WTI, $47.57 a barrel for Brent, and $44.13 a barrel (another new record) for the Organization of Petroleum Exporting Countries (OPEC) reference basket of seven leading types of crude, reported the Energy Ministry in Venezuela, the only Latin American member of the oil cartel.

“Continued concern over supplies, given the low levels of reserves, particularly in the United States, the decline in production in the Gulf of Mexico, and the instability in producer countries like Iraq and Nigeria were the factors prompting the rise” in prices, said an Energy Ministry report.

Venezuelan oil industry expert Alberto Quirós told IPS that prices were going up “due to a long list of elements that influence demand, which has grown much more than expected.” One of those factors, he said, is the fact that “only one million barrels of spare production capacity are left” in the world, which consumes 82 million barrels a day.

That surplus production capacity “is in Saudi Arabia, and how quickly it could place it on the market remains to be seen. For that reason, the jitters add at least $10 to every barrel,” said Quirós, a former president of Shell, the Dutch-Anglo oil giant, in Venezuela.

The analyst also noted that the new types of crude that have begun to be produced, especially due to the hikes in output by OPEC, are heavy, “which makes them easy to pump but difficult for the refineries to digest, which means they must make large investments to adapt, something that not only requires capital but also time.”

Refineries seeking to cut costs thus turn to lighter crudes like Nigeria’s Bonny.

Nigeria produces 2.3 million barrels a day, of which it exports 2.0 million — half of which goes to the United States.

The West African nation is the fifth largest source of oil for the US market, after Canada, Mexico, Venezuela, and Saudi Arabia.

But Nigeria’s oil industry employees are threatening to join labor strikes, although representatives of the oil workers say they will not shut down production.

The threatened walkouts would compound an already touchy situation in which an armed rebel militia from the Ijaw ethnic group is fighting for greater autonomy in Nigeria’s eastern delta region and a larger share of oil revenues.

The Nigeria Delta People’s Volunteers Force warned that it would declare an “all-out war” on the Niger Delta region, and recommended that all foreign oil workers leave the area. On Oct. 8, the group’s leader, Mujahid Dokubo-Asari, resumed peace talks with the government.

The market has read the situation as a threat to supplies, coming on top of the war and instability in Iraq and delays and disruptions to petroleum output and shipping in the Gulf of Mexico, an area that has been hit by four hurricanes in just two months.

OPEC President Purnomo Yusgiantoro insists that the world has enough supplies and says prices would fall below $40 a barrel if factors that do not involve the fundamentals of the market were eliminated, like the US-led war on Iraq.

OPEC is made up of Algeria, Indonesia, Iran, Iraq (although it has not participated since 1990), Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. The member states produce 30 million barrels a day and account for just over half of all crude sold on the world market.

The US Department of Energy stated in its latest weekly report that because global production capacity nearly matches demand, there is little flexibility in the markets to respond to the slightest interruption of supplies.

Furthermore, the reserves of the large consumer countries have not recovered fast enough or to the necessary degree. Although US inventories of crude grew by 1.1 million barrels to 274 million barrels in the week that ended Oct. 1, that total was 12.2 million barrels down from the level seen a year ago.

Another price-setting factor is the approach of winter in the industrialized North, where consumer nations need to stock up on heating oil, supplies of which depend on the refineries.

“I do not think that the global petroleum industry will have at its disposal, in the future, spare capacity equivalent to that of the 1990s,” Sadek Boussena, a special adviser to the Société Générale (SG), a French bank, wrote in an article presented at an OPEC International Seminar held in Vienna in September.

“The market should adapt itself to this ‘new order’ which implies among other things, as I mentioned earlier, a far higher volatility in crude oil prices,” he added.

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Groups defend plan to swap IMF gold for third world debt

By Paul Weinberg

Toronto, Canada, Oct. 8 (IPS) — Objections by Canada, a major gold producer, may have played a part in the failure of the world’s richest countries to adopt a British proposal to use the proceeds from a revaluing of the gold reserves of the International Monetary Fund (IMF) to relieve the debts of the poorest countries.

Canadian civil society groups say that Finance Minister Ralph Goodale should have been “more cautious” in his response to the informal proposal floated by the British Chancellor of the Exchequer, Gordon Brown.

“In responding negatively, what [Canada] was trying to do was reassure Canadian producers that the signals they got were that the Canadian government would not support this,” says Derek MacCuish, coordinator of the Social Justice Committee, based in Montreal.

Attending the annual meetings of the IMF in Washington in early October, Goodale stated that the Canadian government wanted guarantees that any revaluing of IMF reserves would not harm the gold mining companies.

“We need absolute assurances [that revaluing the gold] should not be disruptive to the international gold industry or international markets for gold,” the Canadian finance minister told the Toronto Globe and Mail on Oct. 4. “It must be handled in a way that does not cause disruption to the gold mining industry.”

Brown’s proposal did not appear to go anywhere at a gathering where debt cancellation was also on the table in very different plans outlined by Britain and the US, although no action was taken.

George Milling Stanley, a representative of the New York-based World Gold Council, an industry group, told IPS that what had been floated with little detail by Brown “has been discussed in a very minor way during the recent meetings. But there is no particular proposal on the table that anybody has shown any interest in following.”

Gold producers have indicated that the revaluing of any of the substantial gold that the IMF holds in reserve, now valued at a fraction of the current market price of $415 an ounce, would depress the market price for the metal and hurt their bottom line.

However, Michael Bassett, the coordinator of the Ottawa-based Halifax Initiative Coalition, an umbrella grouping of Canadian civil society organizations, believes “the concerns around the gold market are overblown.”

When the IMF revalued about 12.9 million ounces of its gold in 1999 and 2000 — a process that technically involved the sale of the gold to Mexico, which was then sold back to the IMF — “there was no negative impact on the world gold prices”, Bassett told IPS.

At today’s gold prices, he added, any revaluation of a slightly higher amount, 14 million ounces, would yield a net gain of about $5.3 billion, which is enough to write off the debts owed to the IMF by countries covered by the Heavily Indebted Poor Countries (HIPC) program of the IMF and World Bank.

The Halifax Initiative takes the position that revaluing a portion of the IMF’s total reserves of 103 million ounces of gold is an important first step towards the overall goal of debt cancellation.

Regarding other debts owed to the World Bank and other multilateral institutions by these same countries, the Halifax Initiative urged in an open letter to the Canadian government that World Bank resources, including loan loss provisions and its retained earnings, could be used to cover the additional amount owed.

Bassett says that the indebted countries are stuck on a “treadmill” where they have already paid more than the original amount borrowed from the international financial institutions and the burden of annual debt servicing payments are compromising any serious development efforts.

An industry analyst with the Washington-based Earthworks, which focuses on the impact of mining on communities and the environment, says that the unloading and sale of gold by various central banks in certain rich countries, chiefly Britain, Holland, and Australia, had a greater dampening affect on world gold prices than the revaluing done by the IMF.

Payal Sampat says the gold lobby won an agreement with the central banks in 1999 “not to unload more than a certain amount of gold.” She notes that this arrangement is likely to continue following renegotiations this year among the same parties.

But Sampat says that gold is a “relic” from the post-war period when the gold standard determined the value of national currencies — a formulation that ended in 1971.

And she wonders how long public institutions like the central banks can avoid gaining access to the enormous cash that could be generated through the sales of the huge amounts of gold now stored in vaults.

At a time when gold is valued at a historic high of $415 an ounce, Sampat told IPS: “There is more gold, whether it is held by banks or private investors or families than has been identified underground.”

With the extraction of one ounce of gold generating an average of 79 tons of waste, including toxins like sulphuric acid and cyanide, gold mining also has had a devastating impact on the health and environment of communities around the world, Sampat adds.

“Gold is possibly the most polluting industry in the world, and 80 percent of all gold is used to make jewelry,” she noted.

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African feminist, enviro champion takes peace prize

By Jim Lobe

Washington, DC, Oct. 8 (IPS) — Human rights and environmental activists are hailing the award of the 2004 Nobel Peace Prize to Wangari Maathai of Kenya as fitting recognition of the growing role of civil society in transforming national and international politics, particularly in Africa, over the last several decades.

The 64-year-old Maathai, who has gained a global reputation for courage and integrity in her efforts to save forests and end the autocracy and corruption in Kenya, was informed of the award in her hometown of Nyeri, near Mount Kenya, morning of Oct. 8.

She is the first African woman to be awarded the coveted prize since it was created more than 100 years ago.

“The recognition of African women and their contribution to peace and development is long overdue,” said Salih Booker, the executive director of Africa Action, a fusion of several groups that led the anti-apartheid movement in the US during the 1970s and 1980s.

“Wangari really represents a different face of African leadership from the heads of state, the foreign ministers, and the generals — all men — that we’re used to seeing,” he added. “She represents the real grassroots movements that have joined environmental concerns with human rights to try to make society and government meet the needs of the people in an ecologically sustainable way.”

Chiefly known for her leadership of the Green Belt Movement — a campaign to protect and plant millions of trees in Kenya and elsewhere in Africa — Maathai has worked professionally as a university professor. In December 2002, she was elected to Kenya’s parliament and was appointed by President Mwai Kibaki as Deputy Minister for Environment and Natural Resources last year.

The Green Belt Movement has long been seen as a model of grassroots education and mobilization that has not only planted some 25 million trees throughout Africa, but has also championed biodiver-sity, soil conservation, and equal rights for women and girls. She has fought for rural people against mining and other industrial interests that have tried to encroach on their land.

Maathai has also always taught the relationship between the scarcity of natural resources and violent conflict. “The environment is very important in the aspects of peace when we destroy our resources and our resources become scarce, we fight over that,” she told the BBC Oct. 8.

For her efforts, she was often harassed and persecuted, and sometimes beaten or thrown in jail.

“For the first time in history, the Nobel Committee has recognized the war on Planet Earth by conferring upon her the Nobel Peace Prize,” the international environmental group Greenpeace said on Oct. 8. “Throughout her struggles, she’s used the power of non-violence and creative resistance to foil crimes against the planet.”

“In a world in which Cold War warriors like Henry Kissinger can receive the prize, and leaders like Tony Blair and George Bush can be nominated for killing tens of thousands of civilians on false pretenses, it’s good to see real acts of peace acknowledged,” the Amsterdam-based group said. “She’s our kind of Peace Prize winner.”

“Wangari Maathai is indeed a very distinguished African environmentalist who has made an incredible contribution to improving the environment and society, not only in Africa but in the world as a whole,” said Meena Rama, chair of Friends of the Earth (FoE) International.

“This is a great testimony to the resolute struggles of a great woman,” added Nnimmo Bassey, who heads Nigeria’s FoE chapter.

New York-based Human Rights Watch (HRW) said it was also pleased with the choice.

“She’s done more than anyone else to put the environmental issue on the agenda and one of her great strengths was to insist on working from a civil-society base [and] keeping close to the grassroots,” said Michael Clough of HRW’s Africa division.

“From a human rights standpoint, that’s the most-important contribution she’s made in terms of building civil society in Africa,” he added.

The peace prize, which will be formally awarded in Oslo on Dec. 10, International Human Rights Day, provides the recipient with some $1.3 million.

“Some of [the money] will definitely go towards the environmental programs,” she told reporters in Nyeri. “I have to make a budget and think about the things I will do — just like rich people [do].”

Maathai has received a number of international environmental awards over the years, including the Goldman Environment and Sophie Prizes.

The Nairobi-based UN Environment Program (UNEP), which officially recognized her work in 1987, also hailed the Nobel Committee’s decision.

“Proffessor Wangari Maathai is a leader whose example should inspire us all, especially the women and children of Africa who should so much of Africa’s burden of poverty, conflict and environmental degradation and who do so much deserve role models to show them the way to a better future,” said UNEP’s director, Klaus Toepfer. “Prof. Maathai is just such a role model.” “Wangari herself outlasted [former President] Daniel arap Moi, Kenya’s long-time dictator and, in doing so, represents the triumph of civil society leadership over the official leadership in Africa, which has been largely repressive.”