Shortage amid plenty
Why is it that oil producing countries have such huge political problems with domestic consumption of petroleum products? How would your students analyze the problems in Iran and Nigeria based on the following articles?Romance versus reality: Iran's populist president is finding it hard to stay popular
"MAHMOUD AHMADINEJAD won presidential office promising to give Iran's oil money back to the people. But he is finding the demands of populism hard to reconcile with economic reality. His government has recently been wobbling over implementing two of its biggest economic decisions: to bring in petrol rationing and to cut interest rates...
"Last year Iran spent $13 billion-plus on subsidising petrol. Though it has the world's second-largest oil reserves, the country is so short of refining capacity that it spends a lot of cash on importing fuel. Local economists complain that the subsidy tips the trade balance the wrong way, wantonly increases state spending, encourages people to waste fuel or smuggle it abroad and is regressive because the poor do not own cars...
"[N]either Mr Ahmadinejad nor his parliament wants to take responsibility for unpopular decisions, and has not yet decided how much fuel to let people have or what rates higher consumption should incur...
"Mr Ahmadinejad has called for a cut in interest rates to 12%. Lending rates are capped at 14% for state banks and 17% for private banks...
"Long-term cuts are meant to help create jobs by encouraging investment in business. But with high inflation and the threat of more UN sanctions hanging over Iran's economy, most borrowers are likely to pump cash into the booming property market instead..."
Nigeria unions join fuel strike
"Nigeria's trade union federation is to join a strike over recent rises in petrol prices and value-added tax.
"We have decided to go on an indefinite strike beginning on Wednesday," trade union leader Nuhu Toro told the BBC.
"The trade unions had warned the new government of President Umaru Yar'Adua to reverse the increases two weeks ago or face a national strike...
"Talks between the Nigeria Labour Congress and the new government broke down over the 15% rise in fuel prices and a VAT increase from 5% to 10%.
"The union also wants Nigeria's new President, Umaru Musa Yar'Adua, to reverse Mr Obasanjo's sale of two of the country's refineries..."
Labels: Iran, Nigeria, policy, politics
posted by Ken Wedding @ 7:13 AM
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Nigeria U-turn over strike threat
"Nigeria's government has made a series of last-minute concessions to trade unions, aimed at averting a general strike due to start on Wednesday.
"Sources say the government has offered to reduce a fuel price rise, suspend a value-added tax hike and raise civil service salaries by 15%...
"Our reporter says the strike threat provides the first major test for new President Umaru Yar'Adua...
"Dino Mahthani, West Africa correspondent of the UK's Financial Times, told the BBC that the government was stuck between a rock and a hard place on the refineries.
"He says that despite being a major oil producer, it has hardly any refining capacity because the equipment is in such a poor state.
"To give the owners an incentive to put money into the refineries, the government should stop subsidising the price of fuel, he says.
"But this would lead to a lot of angry people in the cities, who would accuse the government of making their lives harder, he says.
"A further complication is that the new owners are among the richest people in the country, with strong links to the ruling party..."
The strike goes on. There are signs of life in Nigeria's civil society.
Strike bites in Nigerian cities
"Nigeria's main cities are reported to be very quiet on the first day of a general strike called by trade unions.
"Office blocks are empty in central Lagos, with long queues at petrol stations. Schools and offices are shut in the northern city of Kano...
"The government offered concessions on fuel and value-added tax rises on Tuesday, but the trade union federation said it was 'too little, too late'..."
General Strike Over Rising Fuel Price Takes Hold in Nigerian Cities
"LAGOS, Nigeria, June 20 — Shop shutters stayed bolted and young men played soccer on roads that were usually choked with traffic as the first day of an indefinite general strike and fuel shortages brought cities across Nigeria to a hush on Wednesday.
"The strike by powerful labor unions is President Umaru Yar’Adua’s first major challenge since taking office three weeks ago...
"The government has agreed to withdraw a five-point increase in the value-added-tax rate, to halve the rise in fuel prices and to review privatization policies, but those moves failed to avert the strike...
"'Government wishes to warn, however, that while it respects the right of any worker to embark on a strike action, that right should not be used as an excuse to instigate a breakdown of law and order,' said the statement, signed by Babagana Kingibe, secretary of the government..."
24 June 2007
Nigeria's unions end fuel strike
"Nigeria's trade unions have called off their general strike over a recent rise in petrol prices, after talks with government officials.
"Union leaders said they had accepted the government's proposal to freeze petrol prices for at least a year...
"In the end, the unions accepted a series of government compromises offered before the strike started and ditched their initial demand for a complete reversal of the recent hike in the price of subsidised fuel, our correspondent says.
"He says the price of fuel is a sensitive issue in the country because it is one of the few benefits Nigerians get from the government, which receives billions of dollars in oil revenues but fails to provide even basic amenities.
"New President Umaru Yar'Adua has emerged from this first major test just about intact, our correspondent says..."
"Solving" Iran's gasoline shortage (6 July 2007)
Iran ends petrol-only car making
"Iran has announced that it will stop producing purely petrol-driven cars and produce more dual-fuel vehicles, which also run on gas...
"The move was an attempt to reduce the large subsidies the government spends on petrol and to limit the country's rising petrol consumption...
"Dual-fuel cars can run on Liquefied Petroleum Gas (LPG) or petrol...
"Last year, some 1,150,000 vehicles were manufactured in Iran...
"The government also hopes the switch to dual-fuel will provide relief for motorists affected by petrol rationing, as there are no limits on the supply of LPG.
"Iran is one of the world's biggest oil producers, but has to import about 40% of its petrol because of low refining capacity..."
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