EDITORIAL | Wednesday, 09 January 2008

Challenges of a changing world

With the cost of oil reaching USD$100 a barrel, we are entering a new age of expensive energy with serious consequences for the way we live and on national economies.
Our standard of life has traditionally been based on a lifestyle where the oil commodity was affordable. The average lifestyle is based on taking the kids to school by car, driving to and from work, and an annual family holiday. These things, to date taken for granted, are now all being called into question because the average family is simply not going to be able to afford carry on living this lifestyle now that the price of oil has skyrocketed.
This has created a knock-on effect. Electricity, gas and petrol prices worldwide will all go up. The cost of food, already up as a result of the higher costs of cereals, will carry on increasing as energy prices will increase the costs of food production, distribution and importation.
Worse still, many economic pundits are forecasting that the price of oil will also carry on increasing.
As a result of this continuous increase a financial shift is bound to take place. In four years the price of oil has quadrupled. The days of cheap oil are over and since oil lubricates economies the higher cost is bound to have devastating consequences.
We are living in a world whereby supplies can be interrupted and prices increase as a result of tension and violence in certain areas and also because of the stronger run for growth on the world global market coming from emerging countries developing at an incredible rate. China and India are expanding in tandem with the diminishing accessibility of new sources of oil.
People are going to have to change their lifestyles. Choice of cars will move away from the trendy 4x4 and other gas-guzzlers; long haul travel will suffer, with airlines citing high fuel costs as the reason to increase fares. Inflationary forces as a result of the increase in the price of oil may prevent the world monetary institutions from decreasing interest rates with the consequential increased burden on people meeting their loan repayments.
This has not to date hit Malta, but worldwide the writing is on the wall. More and more people are going to find out that meeting their financial commitments could become a veritable chew. Rising energy prices and rising repayment loans could play havoc with many world economies.
The only way forward is for people to cut back on their consumption, with all the undesirable consequences to national economies.
The effect of the increase in oil prices will also have an effect on geo-political strategies. We will witness a shift of muscle in favour of individual states such as Russia and Venezuela which are riding on the crest of an oil wave while countries with no oil supplies are most likely to decline. As a result of increased revenues for the oil producing companies, much of these revenues are being shifted towards buying assets in Western countries, which is creating a powerful force of influence over the foreign policies of these countries.
The balance of power could well be different in a few years’ time as a result. There is an inevitable shift away from America and towards the Middle East power blocs. One rightly asks: where does Malta stand in all this? The answer is simply nowhere. We are living in a globalised world where our small size makes us susceptible to all world events and at the mercy of developments which we cannot control or influence in any way at all. We must all realise that the price of oil will not decline and if it does it will only be minimal. Consequently we have to understand that we all have to start living differently by spending less on consumables and being choosier in our diets. It’s a different world where we simply have to invest in new sources of energy and make our economy less dependant on imported oil.
This is easier said than done but a beginning must take place with government playing a leading role in making us all aware of the dire situation. Incentives must be put in place to pressure society into living green.
A radical change in public transport is urgently called for. We strongly urge all political parties to set their vision for public transport in their forthcoming electoral programmes. Equally important are the inclusion of concrete and specific incentives to drive people towards living greener lifestyles. Solar energy should become part and parcel of all dwellings over a period of time. Awareness campaigns on our carbon dioxide footpath should be inculcated on a daily basis.
The writing is on the wall. We either change our lifestyles, or a reduction in the quality of our lives will become inevitable.