Low Oil Prices – End of Beyond Oil Investment?

By: Meir Javedanfar

18/12/2008

In mid July 2008, oil prices were $147 per barrel. Today, they stand at $40. That’s a fall of almost two thirds. History has taught us that the lower the price of oil, the less money governments have at their disposal to invest in Beyond Oil future industries.

However, the world of 2008 may be different. This time, due to restructuring in major industries, such as the automotive sector in the US, green industries are likely to make a come back, despite the low oil prices.

It is understood that even if the auto sector bailout is approved later on, it will be a temporary lifeline to allow these companies to go bankrupt slowly and in a more orderly manner, instead of a spectacular crash.

These events are going to encourage investors to look for new industries in the stock exchange, which have potential for growth. It's likely that biotech, agriculture technology, and green technology, especially those specializing in low emission transportation technology are going to benefit. This adjustment is likely to compensate part of the expected loss from low oil prices.

What is important to note is that although not all loses will be recovered, the recent developments are going to encourage a larger involvement of the private sector in the Beyond Oil industries, and this is likely to set a trend for the future. As the saying goes "give a man a fish, you feed him for a day. Teach him how to fish, and you feed him for the rest of his life".

Ghanaian Gold

By: Meir Javedanfar

10/12/2008

On 18^th of June 2007, the Ghanaian government received important economic news.

According to a recent find, 600m barrels of light offshore oil had been discovered.

The news was understandably greeted with joy and promises.

Ghana's president, John Kufuor, whose party recently stood for reelection said in an interview with BBC's Focus on Africa:

"Oil is money, and we need money to do the schools, the roads, the hospitals. If you find oil, you manage it well, can you complain about that?"

President Kufuor is right. You can't complain about such an important find. Some countries dream of finding such an important source of wealth and energy in their back yard.

But there are other countries, who have found oil to be a curse, rather than a blessing. So the question to ask is: How can the Ghanaian population be sure that oil does not lead to unrest, corruption, and neglect of other sectors?

Ghanaians point to democracy in their country as one reason why they are likely to be more successful. Accra is home to one of the most democratic governments over the last 20 years.

According to George Owusu, country manager for Kosmos Ghana (the company who discovered the oil:

"Ghana is different from other African countries. The public is wide-awake. There are 30 dailies, 160 radio stations. The people are well educated - more so than in many other African countries - and there's freedom and some level of transparency".

There are a number of important factors, which need to be in place to ensure that a new entrant into the oil producing league starts on the right path. One of the most critical is level of corruption, as its instrumental in ensuring that oil money is spent in areas recommended by experts and elected bodies. According to Transparency International's 2008 league table, with a total of 180 countries surveyed, Ghana is mid way up the table at 69^th .

This places Ghana near other oil producing countries such as Kuwait and Saudi Arabia, but far behind others such as Qatar and United Arab Emirates.

All eyes should be placed on the results of the current elections. The new Ghanaian administration has a golden opportunity to learn from other country's experience, and to use the new wealth to propel Ghana's position.

Failure to manage the newly found wealth could not only bring stagnation, it could pull the country backwards, both economically and politically.

One suggestion to the new Ghanaian government: as well as health and education invest the new wealth in non oil sectors, as it could produce inheritance long after the current blessing has departed. Africa is looking for a new Information Technology giant, to join Nigeria and South Africa.

Alternative Energy Code: Open or Closed Source?

By: Meir Javedanfar

05/12/2008

Bangladesh is not an oil producing country. It is an oil consumer. However due to its shrinking economy, its government is finding it economically difficult to continue importing oil for its economy.

At a recent round table titled "Future Directions of Bangladesh Foreign Policy", former senior Bangladeshi politicians called for the government to develop the country's alternative energy infrastructure, in order to reduce dependency on oil. This is a sound recommendation. However, Bangladesh and other developing countries are concerned about the cost of alternative energy infrastructure and technology,

The important question to ask is: now that the US is going to invest more money in its alternative energy infrastructure, will new developed technologies be shared with other counties? Or will they be protected like the Microsoft Windows operating code?

This question is important to ask, because if alternative energy technology is unfordable in many countries, in the absence of oil, the lights will go out in factories, schools and hospitals. This could cause internal and possibly external instability. In a globalized world, as viewed recently in the case of Somalia, instability in one area could impact the developing world.

No one is expecting private companies to give away their newly developed alternative energy products and technology for free. On the other hand, if made unfordable, as in the case of AIDS drugs, it could lead to wider gaps between rich and poor, as well as plagiarizing of technology. A balance needs to be found and this is where governments, especially that of the US and EU countries could play a part.

Meir Javedanfar, alongside Gordon Wollgam, is Project Manager and founder of the Beyond Oil project (http://beyondoil.net)