Soaring Gasoline Prices Hit World Economy, Politics as Well

Though Growing Fast, Pakistan Has Little Institutional Capacity to Handle the Crisis Fueled by High Oil Prices

The oil marketing companies in Pakistan have increased prices of motor gasoline, HOBC, light diesel and kerosene oil up to 7-15 % for the fortnight effective from 1st October. The reason behind this development is said to be the soaring crude oil prices in the international market that have witnessed upward trend since 2001.�

The daily crude oil production of 1.5 million barrel in the Gulf of Mexico has completely stopped. A total of 20 refineries accounting 4.8 million barrels a day were shut down last weekend while seven have no restart timetable. Experts say the prices may go higher touching the figure of $ 70 per barrel by the end of this year.

Two deadly hurricanes in the Gulf of Mexico have hit Orleans, Texas and Louisiana worsely affecting oil refineries and bringing down their yield as lower as 20%. Qatrina and Rita have become yet another factor to raise oil prices in the international market when the world economy has yet to come out of the shocks generated by the US-led war on terror.

Oil prices are shooting up since 2001 when they used to hover around $ 25 per barrel. The US got its innocence hurt through attacks on twin-towers that year allegedly by Al-Qaeda elements sheltered by Afghanistan. After sprinkling this poorest nation of the world with Daisy-cutters, it moved to oil rich region, Middle East, to oust a chronic dictator Saddam. Violence could not be confined to only Iraq, however. Algeria became subjected to civil war while Saudi Arabia witnessed deadly acts of sabotage.

As the war erupted in the areas adjacent to the oil-rich regions of Middle East and Central Asia, the oil prices shot up. War risk charges raised the supply cost. From oil firms to the shipping companies, all benefited this growing business. The coffers of the OPEC countries- Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela- simply overflowed.