POLITICS OF OIL PRICE



Careful reading of Ethiopian history shows a close relationship between commodity price and political stability. There is no more important commodity than oil in this nexus. History shows us that oil price has played a significant role in the whole play of the student movement of the 1960s. As the commodity's price gets into another low cycle, it is better if policymakers give due attention to the political implications of their decisions.


The price of oil globally has been dropping lower and lower, thus causing some chaotic ups and downs in the world of politics. Oil price has been used as a barometer to gauge relations between nations with varying political interests, depending on whether these nations are producers or consumers. This even goes to the extent of boycotting the import of oil from producing nations, as sanctioning measures by countries purchasing in large amounts or nations through which oil pipe lines traverse. The issue has been contentious for quite a long time, now with nothing to halt the falling price.

The same trend, however, has also become a God-sent windfall and blessing that has unexpectedly befallen on importing countries. Ethiopia happens to be among such nations where the black gold has strived. Nonetheless, the price fall being experienced over the last couple of months has not made

any significant dent in the local market.

Asked why the price of oil was not reduced except for a few cents here and there, Getachew Reda, head of the Government Communications Affairs Office, said that the present pumping prices will be maintained until the old prevailing stock is finished. At the outset, the pretext given by the communicator may sound appropriate and rational. But there are some sceptics who say that, although it may sound logical, it is not timely.

These skeptics contextualize that the timing of the decision to stick to the old prices does not read well to the political upheavals taking place sporadically in towns and neighbour hoods all over the country. The decision made could not only evoke further disobedience, but also could be perilously adding fuel to the already fragile political situation.

Getachew and his compatriots in power may not have lived long enough to recall what had happened in the streets of the capital some 42 years ago for the same issue of an increase in price of only 42 cents. Taxi drivers who happened to be falling prey to the hands of the police force, refrained from buying oil at the new price and serving the public. They joined students, whose activities had helped to trigger more and more chaos and took to the streets throwing rocks and smashing windows of Anbessa City Buses. They needed no slogans or banners to hold up.

The silent strike was very effective. We know too well what happened following the boycott. Addis Abebans are not very far away from what is taking place only a few kilometres outside the metropolis. They know what is going on all over the world, let alone in Oromia.

There is an old saying in Amharic – “Never lend an axe or a hatchet to the man who is feeling resentful inside”. At a time when the impacts of the drought have threatened the lives of over 10 million people and at a time when we hear about the brutal killings taking place in some parts of the country, not adjusting oil prices in the market, on the pretext that the reserve of oil is not yet drained, should be reviewed very carefully, before it is too late and things get out of hand.

The ruling party may be satisfied with the provisional calming down of riots in Oromia that come and go. But that is only illusionary. The party has the opportunity to pause and bring all opposition parties to the table. It may not be a simple offer. It could take quite a while before the divide could be broken. But it is worthwhile making the right effort at the right time.

If peaceful protest could lead to the negotiating table, there is no reason why more and more people are being killed. It seems we are being carried away along the disastrous road of volatility.

We should not lose sight of the precarious danger we are going to undergo before too long. Leaders of the opposition parties ought to be freed so that genuine peace talks could be made.

The oil market too is something not to be taken for granted. It could either go down the tube further or could climb up the ladder before long. The opportunities have to be gained from now.

Another important point to consider will be the multiplier effect the price adjustment could have on the socio-economic and political advantage of the whole country. Take the feeling of satisfaction all the taxi drivers and transportation operators will have in their day to day operations. The decision could also bring a change in the dynamics of development.

With reduction in price of the pump, the purchasing power of people will automatically increase, thus inducing people to buy more and spend more money on essentials. The price of food will decrease because of the decrease in transportation cost. Farmers who have been wishing to buy some inputs and could not do so due to scarcity of money can now do so.

Some can be encouraged to save a little more money derived from the reduction in transport cost. Unemployment will also be reduced significantly because of the improved purchasing power.

Hence, it is better if the decision not to decrease prices may be reviewed in good faith. The oil price issue has taught us quite enough lessons in the past. We do not have to go through it again. The sooner we do soul-searching, the better it will be for all.



Published on Feb 29,2016 [ Vol 16 ,No 826]


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