The overall reserves‐to‐production ratio ‐ an
indicator of how long proven reserves would last at current production rates –
outside of the Middle East is about 15 years comparing to roughly 80 years in
the Middle East. It is for this reason that George Bush said in April 2007, US
dependence on overseas oil is a "foreign tax on the American people
." This is one of the most volatile regions in the world; and its
importance will only grow stronger. The US is currently very worried about
political developments in this region. A return of the Khilafah as predicted by
several think tanks can potentially cripple America’s economy, at a time where
its political leverage is at its weakest since the end of the cold war. The Oil
price crisis once again highlights that the greed of speculators knows no
bounds. It was greed that drove many banks to lend sub prime loans to
individuals with no ability to repay the loans. It is again greed that is
driving speculators to bet on Oil prices with no intention of actually
purchasing the oil in order to make profits on the price differences – whatever
the affect on the world. Such speculators drove the dot.com bubble, and then
moved to the sub prime bubble once it burst and now they are pouring into the
last remaining sector commodities – it is for this reason oil prices have
reached astronomical levels, well beyond the reach of those who need it most.
The Western world consumes 50% of the 21st century’s most important
resource, it produced less then a quarter of it. It is over consumption rather
then China and India that are causing the crisis. The US specifically produced
only 8% of the world’s oil but consumes 25% of it. Global Food Crisis As the
Credit crunch crisis matured another crisis hit the headlines. The soaring cost
of food on the international markets raised the spectre of global inflation.
The price of wheat alone has increased an astonishing 120% since August 2007,
with the price of rice increasing by 75% since February 2008. With the Western
world reeling from the collapse of the housing bubble crisis, the global food
crisis would spell disaster due to food being essential for life.
Western policy makers have refused to link the credit crunch with
the food crisis as many investment banks and speculators moved out of the sub‐prime
sector and into commodities to shore up their losses and inflate another bubble
to replace the housing bubble. To deflect attention several reasons were put
forward by Western politicians’ and the mainstream Western media to explain the
sudden price surge. The most commonly offered explanation was that food demand
has increased globally over the last few years. In particular they cite the
growing economies of China and India as having tightened global supplies of
wheat, rice and corn; as they grow more affluent they are increasing their
demand for meat based products for which these food stuffs are essential. They
also cited poor harvests recently, particularly in Australia the worlds number
two wheat producer, due to the ongoing drought the country is experiencing.
Another reason put forward is that the wheat fungus striking parts
of Eastern Africa, Yemen, Iran and Pakistan. These increases together with the
increase in Corn price have been blamed on the growth in countries such as
Brazil and America using land to grow Corn for bio‐fuel derived Ethanol
as a substitute for petrol. Thus, according to their argument, the land that
could be used to grow wheat and rice is being lost. Although food prices have
been rising these reasons in no way explain the sudden surge in prices globally
in such a short space of time. Despite all the claims about corn being used for
bio‐fuel, corn prices have only increased by a relative modest 31% as
compared to the triple digit increases in wheat and rice prices in 2008. The
populations of India and China have not increased to their present size in the
space of a year. Neither have they grown proportionately affluent in the same
space of time. China's economic growth has been underway for the last 30 years
since it first started to reform its centrally controlled economy. India has
also only introduced free market reforms since the early 1990s. Moreover global
food production has increased twice as fast as the increase in the world
population in the last 25 years.
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