Tuesday, December 16, 2008

Geopolitical Intelligence Report


Falling Fortunes, Rising Hopes and the Price of Oil
December 15, 2008

Oil prices have now dipped — albeit only briefly — below US$40 a barrel, a precipitous plunge from their highs of more than US$147 a barrel in July. Just as high oil prices reworked the international economic order, low oil prices are now doing the same. Such a sudden onset of low prices impacts the international system just as severely as recent record highs.

But before we dive into the short-term (that is, up to 12 months) impact of the new price environment, we must state our position in the oil price debate. We have long been perplexed about the onward and upward movement of the oil markets from 2005 to 2008. Certainly, global demand was strong, but a variety of factors such as production figures and growing inventories of crude oil seemed to argue against ever-increasing prices. Some of our friends pointed to the complex world of derivatives and futures trading, which they said had created artificial demand. That may well have been true, but the bottom line is that, based on the fundamentals, the oil numbers did not make a great deal of sense.

Things have clarified a great deal of late. We are now facing an environment in which the United States, Europe and Japan are in recession, while China is, at the very least, expecting to see its growth slow greatly. Demand for crude the world over is sliding sharply even as the Organization of the Petroleum Exporting Countries (OPEC) member states so far seem unable (or, in the case of Saudi Arabia, perhaps unwilling) to make the necessary deep cuts in output that might halt the price slide. The bottom line is that, while the breathtaking speed at which prices have collapsed has caught us somewhat by surprise, the direction and the depth of the plunge has not.

Prices are likely to remain low for some time. Most of the world’s storage facilities — such as the U.S. Strategic Petroleum Reserve — are full to the brim, so large cuts are needed simply to prevent massive oversupply. Yet any OPEC production cuts — the cartel meets Dec. 17 and deep cuts are expected — will take months to have a demonstrable impact, especially in a recessionary environment. And there is the simple issue of scale. The global oil market is a beast: Total demand at present is about 86 million barrels per day. This is not a market that can turn on a dime. A firm fact that flies in the face of conventional wisdom is that oil actually falls far faster than it rises when the fundamentals are out of whack. This has happened on multiple occasions, and not that long ago.

Falls occurred both in the aftermath of the 1990-1991 Persian Gulf War and as a result of the 1997-1998 Asian financial crises that were similar in percentage terms to the present drop. Until the balance between supply and demand is restruck — something not likely until a global economic recovery is well under way — there is no reason to expect a significant price recovery. The journey, of course, is not necessarily a one-way trip. Quirks in everything from weather to shipping to Nigerian riots and Russian military movements can set prices gyrating, but the fundamentals are clearly bearish. It will most likely take several months for the core features of the new reality to change much at all.
Low oil prices create both winners and losers on the international scene.

First, the winners’ list.

Far and away the biggest winner from drastically lower prices is the world’s largest consumer and importer of oil: the United States. The last two years of high prices have spawned a sustained American consumer effort to get by with less oil via a mix of conservation and a shift to better-mileage vehicles. Whether this purchase pattern in automobiles lasts is not at issue. The point is that it has already happened: Many Americans have already shifted to more fuel-efficient vehicles. Just as the 1990s obsession with sport utility vehicles artificially boosted American gasoline demand so long as those automobiles were on the road, so the new fleet of hybrids and smart cars will push demand in the opposite direction for a sustained period.

Overall U.S. oil consumption has plummeted by nearly 9 percent from its peak in August 2007 to November 2008, according to the U.S. Department of Energy. Combining this with the drop in prices since July translates into U.S. energy savings of approximately US$1.95 billion at a price of US$50 a barrel and US$2.1 billion at a price of US$40 a barrel. And that is daily cost savings. In recessionary times, that cash will go a long way to building confidence and stanching the recession.

Next on the list are the major European importers of crude: Germany, Italy and Spain. As a rule, European economies are less energy-intensive than the United States, but by dint of fuel mix and lack of domestic production these three major states are forced to rely on substantial amounts of imported oil. We exclude the other major European economies from this list as they are either major oil producers themselves (the United Kingdom and the Netherlands) or their economies are extremely oil efficient (France, Belgium and Sweden). Don’t get us wrong — the EU states are all quite pleased that oil prices have dialed back. Nevertheless, in terms of relative gain, Germany, Italy and Spain are the real winners. And with Europe facing a recession much deeper and likely longer than that in the United States, the Europeans need every advant age they can get.

India, far removed from Europe culturally and geographically, sports a somewhat similar economic structure in that it boasts (or suffers from, based on your perspective) an industrializing base that is highly dependent on oil imports. Broadly, the Indians are in the same basket as Spain in that they are voracious energy consumers who have seen their demand skyrocket in recent years. Between the Nov. 26 Mumbai attack, upcoming federal elections and the energy price pain from earlier in the year, the government is desperate to pass on the cost savings to the population to shore up its support.

Then there are the East Asian states of South Korea, China and Japan (listed in descending order of how much each one benefits from the price drop). All import massive amounts of crude oil, but we put them at the end of the list of winners because of their financial systems. In East Asia — and particularly in China and Japan — money is not allocated on the basis of rate of return or profitability as it is in the West. Instead, the concern is maximizing employment. It does not matter much in East Asia if one’s business plan is sound; the government will provide cheap loans so long one employs hordes of people. One side effect of this strategy is that firms can get loans for anything, including raw materials they otherwise could not afford — such as oil at US$147 a barrel.

Therefore, high oil prices just do not affect East Asia as badly as they affect the West. Just as the East Asian financial system mutes the impact of high prices, the converse is true as well. In the West, energy consumers are not shielded from high prices, so lower prices immediately translate into more purchasing power, and thus more economic activity. Not so in East Asia, where the same financial shielding that blunts the impact of high prices lessens the benefits of low prices.

The order in which we listed the three Asian giants relates to how much progress they have made in reforming their financial practices. South Korea’s financial system is much closer to the Western model than the Asian model: South Korea hurts more as prices rise, and so will be more relieved as prices fall. China is in the middle in terms of financial practices, but it is also attempting to unwind its system of energy price-fixing as oil costs drop; due to subsidies being reduced, Chinese consumers actually may not be seeing much of a change in retail prices. Finally, Japan will benefit the least because its system is already highly efficient compared to the other two, so the price impact was less in the first place. One barrel of oil consumed in Japan generates approximately US$2,610 of Japanese gross domestic product (GDP), while the comparative figures for Korea and China are US$1,270 and US$1,130 respectively.

In short, the heavily industrialized Asians still benefit, but the impact isn’t as much as one might think at first glance. In fact, the biggest benefit to these states from cheaper energy is indirect — lower prices spur consumption in the West, and then the West purchases more Asian products.

And now, the losers.

Venezuela and Iran top this list by far. Both are led by politicians who have lavished vast amounts of oil income on their populations to secure their respective political positions. But that public approval has come at its own price in terms of economic dislocation (why diversify the economy if strong oil prices bring in loads of cash?), low employment (the energy sector may be capital-intensive, but it certainly is not labor-intensive), and high inflation (high government spending has led to massive consumption and spurred rampant import of foreign goods to satiate that demand).

Of the two states, Venezuela is certainly in the worse position. By some estimates, Venezuela requires oil prices in the vicinity of US$120 a barrel to maintain the social spending to which its population has become accustomed. Iran’s number may be only somewhat lower, but President Mahmoud Ahmadinejad is in the process of at least beginning to bow to economic reality. On Dec. 5, he announced massive cuts in subsidy outlays with the intent of reforging the budget based on a price of only US$30 a barrel.

It is an open question whether the Iranian government — and especially the increasingly unpopular Ahmadinejad — can survive such cuts (if they are indeed made), but at least there is a public realization of the depth of the crisis at the top level of government. In Venezuela, by contrast, the mitigation process has barely begun, and for political reasons it cannot truly be implemented until after a referendum in early 2009 on term limits that could allow Chavez to run for president indefinitely.

Next is Nigeria. In terms of seeing an increase in human misery, Nigeria should probably be at the top of the losers’ list. But the harsh reality is that Nigerians are used to corrupt government, inadequate infrastructure, spotty power supply and all-around poor conditions. Some of the perks of high energy prices undoubtedly will disappear, but none of those perks succeeded in changing Nigeria in the first place.

The real impact on Nigeria will be that the government will have drastically less money available to grease the political wheels that allow it to keep competing regional and personal interests in check. Those funds have been particularly crucial for funneling cash to the country’s oil-rich Niger Delta region, giving local bosses reason not to hire and/or arm militant groups like the Movement for the Emancipation of the Niger Delta to attack oil and natural gas sites. With Abuja having less cash, the oil regions will see a surge in extortion, kidnapping and oil bunkering (i.e., theft). We already have seen attacks ramp up against the country’s natural gas industry: Within the last few days, attacks against supply points have forced operators to take the Bonny Island liquefied natural gas export facility offline. And since Nigeria’s militants never really differentiate between the country’s various forms of energy export, oil disruptions are probably just around the corner.

Russia is also in the crosshairs, but not nearly to the same degree as Venezuela, Iran and Nigeria. Russia has four things going for it that the others lack. First, it exports massive amounts of natural gas and metals, giving it additional income streams. (Venezuela and Iran actually import natural gas and have no real alternative to oil income.) Second, Russia never spent its money on its population. Thus, Russians have not become used to massive government support, so there will be no sharp cuts in public spending that will be missed by the populace. Third, Russia has saved nearly every nickel it made in the past eight years, giving it cash reserves worth some US$750 billion. The financial crisis is hitting Russia hard, so at least US$200 billion of that buffer already has been spent, but Russia still remains in a far better position than m ost oil exporters. Fourth and last, the Russians can rely on Deputy Prime Minister and Finance Minister Alexei Kudrin to (somewhat forcefully) keep the books firmly in balance. At his insistence, the government is in the process of refabricating its three-year budget on the basis of oil prices of below US$35 a barrel, down from the original estimate of US$95.

At the end of the losers’ list we have two states that most people would not think of: Mexico and Canada. Both have other sources of economic activity. Canada is a modern service-based economy with a heavy presence of many commodity industries, while Mexico has become a major manufacturing hub. But both are major oil exporters, and have been leading suppliers to the American economy for decades. So both are exposed, but their concerns are more about unforeseen complications rather than the “simple” quantitative impact of lower prices.

Mexico has purchased derivatives contracts that, in essence, insure the price of all its oil exports for 2009. So should prices remain low, Mexico’s actual income will be unchanged. We only include Mexico on the list of losers, therefore, because it’s quite rare in geopolitics that such planning actually works out as planned. Hurricanes and strikes happen. (Mexico also faces the problem of insufficient funds, expertise and technology to counter rapidly declining output, something that will leave it with a lack of oil to sell in the first place — but that is an issue more for 2012 than 2009.)

As for Canada, most of the oil it produces comes from Alberta province, the seat of power of the ruling Conservative Party. Right now, the Canadian government is wobbling like a slowing top. Seeing the Conservatives’ power base take a massive economic hit due to oil prices is not the sort of complication the government needs right now. In the longer term, Alberta recently increased taxes on oil sands projects. Oil sands extraction is among the more capital-intensive and technologically challenging sorts of oil production currently possible. Combine the tax changes with the nature of the subindustry and the recent price drops and there is likely to be precious little investment interest in oil dur ing — at a minimum — 2009.

Most readers will take note of the countries we have chosen not to include on the list of vulnerable states. These include the bulk of the OPEC states — specifically Angola, Iraq, Kuwait, Saudi Arabia, the United Arab Emirates, Qatar and Libya. All of these states count oil as their only meaningful export (except the United Arab Emirates and Qatar, which also export natural gas), so why do we feel such countries are not in the danger zone?

For its part, Angola only became a major producer recently. Nearly all of Angolan oil output is from offshore projects controlled by foreigners — shutting in such production is a very tricky affair for a country that is utterly reliant on foreign technology to operate its only meaningful industry. But the primary reason Angola is not feeling the heat is that most of its income has not been spent but instead has been stashed away due to a lack of the necessary physical and personnel infrastructure needed to leverage the income.

Iraq is in a somewhat similar position as far as finances are concerned. While Iraq has been producing crude for decades, its current government is only a few years old, and its institutions simply cannot allocate the monies involved. Despite massive outlays by both Iraq and Angola, their respective governments simply lack the capacity to spend, and so have stored up cash accounts worth US$26 billion and US$54 billion respectively.

The rest of the Arab oil producers warrant a much simpler explanation: They’ve been fiscally conservative. While all have shared the wealth with their somewhat restive populations, none of them has repeated the mistakes of the 1970s, when they overspent on gaudy buildings and overcommitted themselves to expensive social programs. All have been saving vast amounts of cash, with the Saudis alone probably having more than US$1 trillion socked away. Tiny Kuwait officially has a wealth fund worth more than US$250 billion.

So while none of the Arab oil states are particularly thrilled with the direction — and in particular the speed — oil prices have gone, none of these governments faces a mortal danger at this time. What they are now missing is the ability to make a substantial impact on the world around them. At oil’s height the Gulf Arab oil producers were taking in US$2 billion a day in revenues — far more cash than they could ever hope to metabolize themselves. Bribes are powerful tools of foreign policy, and their income allowed them — particularly Saudi Arabia — to wield outsized influence in Iraq, Syria, Lebanon, and even in Beijing, London and Washington. So while none of these states faces a meltdown from falling prices, there are certainly some hangovers in store for them. It is jus t that they are more political than economic in nature, at least for now.

19 comments:

salama said...

January, what an intelligent and scary report. Scary in terms of the Global Economy downfall.

Developing news, the New York Times is reporting that,'OPEC is preparing to announce its biggest oil production cut ever,as producers struggle to contain a collapse in prices amid a global recession...'

It's really sad that, the Recession is building itself pretty well in peoples's mind. THEY ARE SCARED TO SPEND PERIOD
You would think that people are taking advantage of the changes especially on the oil prices but, none of that is happening.

Just yesterday, NPR (National Public Radio) reported that, in US more people are using public transportation rather than driving.
Not only with driving but also, as we've noticed how the retail sales have fallen to 3.8% in less than three months. And around the world, the developing countries are really getting a Hit.

Just as the recent CNN program about how the Planet is in Peril, people are turning to UNBELIVABLE means for food,e.g forest animals.

Will Nigeria with their oil ever be on winners side in this? It's becoming the Unusual of the business as usual in Nigeria. And, according to that Planet in Peril report, I was suprised to learn that some group members in the Movement for the Emancipation of Niger Delta(MEN) are government officials??!!, never thought of that, just wondered who's funding them.

Another one on the losser's list, Iran. The US must be watching them even more closely and trying to find ways to hit them even more hard. The recent Newsweek report said that for the US to be able to deal with one of its most difficult challenges(Iran), they have to hit their economy more directly. It's oil and natural gas-industries are the government's key sources of Revenue.

The sitting Iran's administration is definately in jeopard politically. I wonder if this will change their aim of going Nuclear.

Inno said...

Folks,

Smart governments tend to treat world oil prices like stock market prices. That is: Governments would buy a lot of oil when the world price is as low as it can go and then store the reserves as a cushion for negative high oil price shocks for the unknowns in the future. This applies to our nation as well. This is the only way the government can take care of its energy needs and use a portion of its reserves to rescue the private sector and the national economy as a whole in the event of unbearable future price hikes as with the experience of last year and most of this year.

But this is not an easy task for a net borrower country like Tanzania whose government budget continue to depend on foreign aid (about 40pc of GDP?) and from taxing an infant private sector and a cash- poor population (about 60pc of GDP?). With these facts, it's incomprehensible as to how the EPA mob had the courage of misappropriating a gigantic donor and taxpayers' sum without giving a damn about how that was going to affect our cash struggling nation. This EPA mob either knew for a fact that the laws of our land are lose and thus they could afford to bend them, or they are totally unethical and that's why they are mobs in the first place. Their act is just beyond self-fish!

Inno

Rash said...

Since the oil bubble started to soar i argued with many analyst that oil price was nothing but speculation. The world demand can't grow that high within a short period of time. Oil was priced around $60 a barrel in 2005, then within less than two years the price jumped to more than 140. My argument was what kind of demand growth was that?

Some other people said China is the problem, i asked them when did China economy started to grow? and why it didn't have a huge impact then?

The problem is speculator, the people who bid oil future contracts while they have nothing to do with oil. Those people made money either way, when price shoot high they go long, and when it drop they short.

OPEC enjoyed $147, they forget that there is no free lunch in Wall Street. UAE exposed themselves in huge oil investment without even calculating risk, now they're suffering big time.

I think the saga is just started, Barack Obama is planning to do massive investment on altenative energy. American Big Three are under pressure to build more hybrid car. Many countries thinks about clean coal technology when it come to energy. I think it is a good signal for OPEC to learn that they can't use oil as weapon.

January, my question kwako ni. When will Tanzania adopt pricing model which will fluctuate relative to the world market price. One liter of oil is cheaper than water battle in many countries, however in Tanzania the story is different. Government need to close loopholes that OILCOM and his buddies enjoyed for years.

Rash said...

Since the oil bubble started to soar i argued with many analyst that oil price was nothing but speculation. The world demand can't grow that high within a short period of time. Oil was priced around $60 a barrel in 2005, then within less than two years the price jumped to more than 140. My argument was what kind of demand growth was that?

Some other people said China is the problem, i asked them when did China economy started to grow? and why it didn't have a huge impact then?

The problem is speculator, the people who bid oil future contracts while they have nothing to do with oil. Those people made money either way, when price shoot high they go long, and when it drop they short.

OPEC enjoyed $147, they forget that there is no free lunch in Wall Street. UAE exposed themselves in huge oil investment without even calculating risk, now they're suffering big time.

I think the saga is just started, Barack Obama is planning to do massive investment on altenative energy. American Big Three are under pressure to build more hybrid car. Many countries thinks about clean coal technology when it come to energy. I think it is a good signal for OPEC to learn that they can't use oil as weapon.

January, my question kwako ni. When will Tanzania adopt pricing model which will fluctuate relative to the world market price. One liter of oil is cheaper than water battle in many countries, however in Tanzania the story is different. Government need to close loopholes that OILCOM and his buddies enjoyed for years.

Mchangiaji said...

Reading through the report, I came to conclusion that, OPEC do not have any control on price of oil and yes! so do the BIG Oil companies who had recently reported massive increase on profits in US. And given their own predicament circumstances under the current situation, they both stand to loose than gain!

And again, I think it is nothing to do with Supply and Demand!

So who is then control the price of oil in the world market ?

Guys,

Did you see how dollar plunge in value against Euro just yesterday based on SPECULATION on Interest Rate cut by FEDERAL RESERVE. It is SPECTACULAR!

Yesterday 1Euro = $1.27
Today 1Euro = $1.40

for a common person that is 13 dollars EXTRA per 100Euro. it is music to their ears to most of small businesses particularly Europe/Tanzania.

By Mchangiaji

Anonymous said...

Jan,
You have to excuse me on this one. Seems like an interesting read, but the length of it is putting me off venturing into reading it at the moment. If I spend time going through the whole thing, digesting it, proposing and writing a suitable comment ... I believe I will be the next candidate on the short list to be made redundant at my workplace!
Companies are laying off people like mad out here! I don't know about the trend back home.
I will soon be forwarding my CV ... even better ... asking you to post it on your blog and see if I can get myself a decent job back home!
Having said that, I will spare some time over the weekend and go throught the report.
Cheers man.

Anonymous said...

Jim Rodgers on Tanzania

Hi Jan and your followers.Just saw this article on Investor's Chronicle(IC) and thought it may make a good read.
The question is how do we prepare ourselves for these challenging but optimistic times , surely these protective measures we are trying to impose to our neighbours are very short term.
Have a good day
Kaakufui



Jim Rogers on emerging markets
Created: 18 November 2008
Written by: Jonathan Eley
The 19th century belonged to Britain, the world's foremost imperial power. The 20th century belonged to America, the land of the free. The 21st century belongs to Asia, and more specifically, China. Why? Because, as Jim Rogers pointed out in the first installment of our three-part interview, that's where the money is. Much of the west is practically bankrupt, running huge trade deficits, and strangled by taxation and bureaucracy. Much of Asia has a trade surplus, low debt and huge foreign exchange reserves.Mr Rogers, who is originally from Alabama, moved from New York to Singapore in 2007 precisely for these reasons. "I like being in Asia, it's very dynamic, everything works, it's got very high standards," he says. And, of course, Singapore is relatively close to his favourite emerging market - China.He was quick to spot the potential of China back in the 1980s, when the rest of the world still regarded it as an orthodox Communist state. "I came across this guy out in the desert, he started out by selling bread to farmers at 5 o'clock in the morning. By the time I across him, he had a a restaurant and a little hotel," he says of a 1988 motorcycle trip to the country. "We were told they were all a load of bloodthirsty Communists, yet here was this guy with this little empire and he was making lots of money. Next time I went back, in 1990, he had two hotels and two restaurants...it was clear to me that there were a lot of stories like this."Mr Rogers thinks the practical difficulties of investing in China are overplayed. He generally invests in B-shares, which are listed on China's domestic exchanges but open to foreigners, as well as Chinese shares traded in Hong Kong and Singapore. "You cay buy exactly the same share outside of China that you can buy inside it, but at a discount....That discount is going to disappear some day, because some day, you're not going to have all these crazy different classes of shares."I ask how he squares his enthusiasm for China with his more general and well-publicised loathing of big, interfering governments, given that the Chinese government is both big and interfering. "You could make the argument that the American government is gigantic given what's happened over the past six months; they've taken over gigantic parts of the American economy - likewise in the UK," he counters. "And at least you can still sell short in China, which is more than you can do in many so-callled capitalist countries."What about the others?China is the only emerging market in which he has remained invested recently. "I had sold out of all other emerging markets...because there were all these MBAs on airplanes flying round the world looking for new emerging markets. They were all being over-exploited." He is looking for new entry points. "I'm just sitting and watching because during this period of forced liquidation, some of these emerging markets are going to go down by more than they should simply because they went up more than they should have."What's on his watchlist? Taiwan is one new candidate. "I've never bought Taiwan before in my life, but there is peace now," he says, referring to the frequent tension between China and its small nationalist neighbour in the past. He believes that the two Koreas will be unified far sooner than many people think, and points out that despite its vile regime, Myanmar is also starting to open up. "It's got 70 or 80 million disciplined, educated people, lots of natural resources, and it sits right between India and China. What better location is there than that?"What about Africa, I ask? "There are huge opportunities in Africa. If there were six of me, two of me would be in Africa now. Angola is going to be the largest producer of oil in Africa sometime within the next year or two, overtaking Nigeria. Tanzania is making dramatic changes, too".One area he's rather less keen on is Russia, believing that the break-up of the old Soviet Union is far from over. He points to what Russians themselves are doing: "They're getting their expertise and capital out of Russia, whereas the Chinese are pouring money and expertise back into China...The Chinese see the opportunity. In Russia, they see the problems," he remarks, concluding that "I wouldn't put anyone into Russia right now."The politicisation of business in Russia has detracted from one of its great assets - its huge natural resources. That's especially disappointing for Mr Rogers since, alongside emerging markets, his enduring long-term buy is commodities.

Inno said...

Hi Rash,

I know you addressed your question on local oil prices to January but please allow me to cheap in my remark. As far as I know the dynamics of economics, the local oil prices in Tanzania is affected by diseconomies of scale and local tax regulations on oil imports.

Whether the marginal revenue (the difference between price after tax and the price that consumers pay at local pumps) obtained by local oil suppliers is too large or not that's a totally different discussion. There is a lot that goes on between oil clearance and to the gas pump and the lack of transparency to general public about what goes on creates a loopholes for cheating the public. The consumers on the streets are price takers and unfortunately suckers!

Inno

Rash said...

Thanks Inno,
I think you hit a home run. We need Consumer Protection Act. I think our government forget that imposing high tax on supplier is not a solution, because supplier push all that burged to consumers.

Tanzania we do have bureaucracy in every section of the government. We're running the country like mgahawa somewhere in Kwashemshi.

I hope one of these days someone will figure out that Watanzania needs help. Gasoline price have effect on every aspects of economy. I wounder why our CPI is in 20%. Someone somewhere in the government need to do his homework.

Anonymous said...

January and Co.

Najua hii issue haihusiani na mjadala mzima wa hii topic, lakini ningependa kuiongelea japo kidogo, hususan kwa wengi ambao wanaishi nje ya nchi.

Kuna ugonjwa mmoja mbawa sana ambao unaitwa CJD ambao unalead to Mad Cow disease, labda niongelee kwa ufupi, Ugonjwa unaathiri UBONGO wa Ngombe na kuufanya kama sponji au godoro maneno ya rahisi, ambayo kwa ufupi unakula ubongo na kufanya kama mashimo ndani. Njia pekee ambayo unaweza kuupata ni kwa kula ubongo wa ng'ombe aliyeathirika. Ni ugonjwa ambao hauna DAWA, Hakuna chochote kinachowezwa kufanywa kutibika.

Sasa, cha kusikitisha na kuogopesha zaidi, biashara ya nyama ya ng'ombe ni biashara kubwa sana marekani, na hali kadhalika kwa Uingereza na nchi nyengine za Ulaya. Media hawayaongelei sana kulinda hii sekta ya biashara hii.

Ubaya wa ugonjwa huu, unakaa tulivu katika mwili wa binadamu hadi miaka 20-30(wataalamu mutanisaidia) na ni tabu sana to diagnose, watu wengi sana wamepata vile vile kwa kupata transfusion ya damu toka kwenye kuathirika, sasa baada ya miaka yote huyo kustay dormant hapo unaanza kuchomoza kwa kuonyesha athari zake, na hivi lately, the doctors misdiagnosis kwa kujua kwamba ni ALZHEIMER, in actual fact ni CJD,

Wataalamu wanadau, wengi wa ngombe ambao wamekuwa affected ambao watu walikua wanakula ni miaka ya 80's na 90's, inasemekana ikifika 2020, kutakuwa na kama epidemic ya gonjwa hili huko Ulaya na MArekani.

Kwa wengi tunaoishi huku, kuna vyakula vingi ambavyo ni processed food, kama vile burgers, sausages, nk, ambayo hatujui kama uti wa mgongo au ubongo contents zipo ndani ya hivi vyakula.

Imeripotiwa hivi sasa umeeanza kurisurface again in UK.. Kwa hiyo naomba wote tujihadhari, ulinzi pekee ni wewe mwenyewe na hautosikia kwenye media.

Zaidi Google CDJ, au misdiagnosis of CJD, upate mafunzo zaidi.

Ni huo tu mchango wangu.

January Makamba said...

Guys - this is a very good debate. There are a couple of things that have been raised. One is this strategic oil reserve for our country. There was an argument some time back that, with the strategic importance of oil, and given its price volatility, therefore the potential to wipe out all anti-poverty gains, we should have some tanks in ground holding milions of galons of oil.

The cabinet considered it, but IMF nixed it, saying that for a poor country such as ours, where vaccines for kids is an issue, storing oil in the ground is a luxury we cannot afford. Then, it was argued that storing oil in the ground is not a wise use of resources, in that that is money that could be invested, create wealth and therefore guard against whatever danger that may loom ahead. You make your call.

But another issue that is important for us to consider is that how do we allow the oil trade to not conform to the free market rules. Why do allow a cartel (OPEC) in oil business while one of the basic rules of free market is that there shouldn't be cartels.

I also think that it really is dangerous for the global economy to be so much dependent on one commodity...whose price is subject to manipulation, and speculation.

Here at home, we are trying to grapple with the idea of free market on a commodity that is imported by very few people. EWURA says that it is not empowered to do pricing...but if we define petroleum and diesel as utility (as in other countries), certainly there is room for price regulation. I read about calls by EWURA that prices at the pump should be lower than it is today...goodluck to them.

There were also plans for TPDC to start importing oil so that we can have "correct" prices at the pump. Let us see how that evolves.

Interesting in Bongo these days: diesel is expensive than petrol, and all of these are cheaper upcountry (say Mbeya) than in Dar.

Inno said...

January,

We are sick of IMF patronizing developing states! They should work with our local experts as equals instead of coming in with "I know better" attitude.

Inno

Rash said...

I don't have respect on majority of International organizations such as World Bank, IMF and UN. I think majority of this organizations cares about their dues and nothing else.

Oil price is a national security issue, so we need to do what we think is right inorder to protect our nation. Oil price skyrocketing is causing high price of other good and services, and we as a nation can't afford a double digit inflation.

I think if creating of reserv is one of the option, then let us do it. If government need to subsidize it, i support it 100%. American subsidize their farmers every year. Few month ago Nancy Pelosi was talking about opening reserv in the gulf of mexico, so they can lower gas price. So, don't tell us free market nonsense, while US government own Insuarance companies, auto companies and majority of the Bank in US.

What we need is a smart move approch on pricing this commodities. The government need a watchdog, we all like free market but we need common sense regulations when it come to pricing.

Mchangiaji said...

January,

I raised one question on this post on manipulation of oil prices, most of you seems to such for answers on seclusion.

But I think January and others, you seems to have a good grasp of the issue, as the discussion revolve around on this topic, in particular on subject of OIL price manipulation and other many issues, when you mentioned IMF on your latest post, but we also need to mention other BIG club corporate institute, which is World BANK.

Why IMF advising us not to have such strategic importance commodity such as OIL resoivoir while allowing others to have similar measure as matter of NATIONAL SECURITY, and thats a total SABOTAGE in my assessment.

World Bank is making loans to the poor countries, and once they struggle paying only INTEREST of their debt, they subotage them by forcing them to privatise their own resources to the elites(Dont get me wrong not any country but handful of richest people) without profit. IT IS VICIOUS CYLE, it becomes DEBT TRAP, and thats their main goal creating POVERTY. Making a cause for desperation in our COUNTRIES, that leads us to whole bunch of economic policy, with absolute ZERO return from our own resources.

The rulers of the world IMF and World Bank

REP Ron Paul on World Bank and Poverty Speech

A part from oil, I think Tanzania given their natural resources particularly on Gems, such as Gold, Tanzanite, and others, I honestly believe we should have vigorously pursuing a policy of reserving these commodities as well, and that on itself would allow us to have a stronger economy by trading these items on International market.

I reckon IMF and World Bank, should advice us that, and helping us in that process if they are really sincere about lifting us from POVERTY. But I reckon once we come to that sense, they will make a stop to it, and will give us a same reason not to take that approach. Yeah! and thats why we are getting $10M for the last 10yrs from it.

This is our requests to IMF and WORLD BANK!

1. Setting us higher institute of MINING, OIL exploration and research centre.

The reason we ask them for help, we need to make them involves, if we dont we will be called every names, and you know where is that gonna lead us, They are KIRANJAs of the world.

AND WE WILL PAY IT BACK WITH INTEREST, by leaving us alone by making our own investment firms on this. Can you do that ? and thats how you lift a poor from the poverty, if thats is their real agenda? and thats the policy they should pursue, but not SUFFOCATING US, by their hypocracy.

By Mchangiaji

Rash said...

Mchangiaji, i look this argument from different point of view.

We need a long term strategy which will give us a full control of our economy. We need a smart strategy in order to run away from world bank trap. World bank is a scum, we need look beyond our cites.

You think IMF cares about Tanzania? The don't give a flip. What we need is a long term projects which will impower our citizen, and take us to the next level.

Anonymous said...

World Bank creating poverty (BBC Newsnight)

Mchangiaji said...

Spot on Rash, I wish our leaders would have the same vision and understanding.

By Mchangiaji

misokasick said...
This comment has been removed by the author.
misokasick said...

Inno my old friend,
IMF is not to blame here. If third world countries wish to continue being manipulated by IMF dudes then so be it. But we cannot sit here and convince ourselves that our countries are at the state they are because of the bad policy influence of IMF. 10 years ago I would have no doubt IMF still had the ability and the balls to screw us up. After the failures and Manipulations of the Washington Consensus many countries took a bold stand and analyzed critically policies that were being suggested by the institution. I thought we also learned this lesson. Why countries such as Taiwan, South Korea have succeeded on their economic reforms without much IMF Policies? I guess since it was an institution formed by the mighty white man, we are caught in the mentality that nothing is better unless suggested by a guy called Johnson. Anything suggested by a guy called Ayitey is wrong, but if Johnson suggests we rush into starting millennium villages. What is the difference between these Millennium villages and the Ujamaa villages anyways? Let’s take a bold stand and denounce some policies thrown to us by these institutions. At the same token, don’t we have so called intellectuals from our countries working in developing these policies? Are they so oblivious of the situation at ground in their home countries?