The USA Celebrates Continuing Prosperity ... at Whose Expense?

Ron Swenson
1999 July 1

Ignoring the threat of the coming global oil crisis, today citizens of Santa Cruz demanded in a public hearing that tens or hundreds of millions of dollars be invested in expansion of local highways.

In the USA, we are celebrating remarkable prosperity:

What underpins this remarkable prosperity? Is it the brilliance of the capitalistic system? Is it the intrinsic strength of character of the American people? Is it the phenomenon of the internet? Is it the enlightened leadership of our President or the Congress?

These factors may help make living in America what it is today. But there is another factor to be considered -- the low price that Americans pay for oil. In light of the following evidence, it can be concluded that Americans are virtually stealing oil from third world countries. Others are tightening their belts on already "empty stomachs" while Americans burn up the world's endowment of oil -- 5% of the world population consuming 25% of the supply -- the equivalent of our body weight in oil every week.

As we live in the continuing luxury that the glut of cheap oil provides, by virtue of unsustainable economic perversions, we think we are exempt from the fate that others are suffering. Sadly, we are not. This time the wolf is coming (within ten years according to the experts). This could happen to you:

Chronology of the Indonesian Crisis

From the website of the US Embassy in Jakarta:

"In 1997, Indonesia was afflicted with a severe El Nino-induced drought, a plummeting exchange rate, and near paralysis of the banking sector. By early 1998, Indonesia was experiencing rising inflation, growing unemployment, revelations of foreign commercial indebtedness, and declining GDP growth. In March 1998, the People’s Consultative Assembly selected President Soeharto for a seventh five-year term with former Minister of Research and Technology B. J. Habibie as Vice President. In May 1998, after violence rocked the capital city, President Soeharto resigned and President Habibie was sworn in.

These facts are generally well known. What faded in the bright light of political changes was the fact that the rioting was precipitated by energy price increases, including public transportation fares, gasoline prices, and electricity rates. Again, from the website of the US Embassy in Jakarta:

Early January '98   Rising prices and fears of shortages led to panic buying of food.
May 4, 1998   The GOI announced fuel price hikes. Riots ensued, particularly in North Sumatra. The fuel price hikes were quickly rolled back.
May 12, 1998   Four students were killed at Trisakti University in Jakarta.
May 13-15, 1998   Rioting, arson, looting, and rape rocked Jakarta and other Indonesian cities. The U.S. State Department ordered the departure of all USG dependents and non-essential personnel and recommended that all U.S. citizens depart Indonesia either via commercial means or on USG-organized evacuation flights.
May 21, 1998   President Soeharto resigned and was succeeded by Vice President Habibie.

By then, the bankers had chartered a plane to "ensure the safety of their personnel" (and to catch up on some overdue vacation time, it would appear), but they insisted that it was appropriate for the Indonesians to continue their suffering -- "Indonesia cancels IMF austerity measures," South News, May 16:

Indonesia is struggling to cope with its worst economic and political crisis in decades, and sharp government-ordered increases in the prices of basic goods and services [notably energy -- see below] last week pushed the poor to their breaking point. Anger spilled over into the streets Tuesday after police shot and killed six anti-government protesters at a student rally.

The austerity measures were a condition of the International Monetary Fund's $43 billion aid package to bail out the southeast Asian nation. But the IMF continues to defend its rigorous package on Friday, as monetary sources said IMF staffers had already left the riot-torn country.

In Washington, World Bank spokesman Graham Barrett said the bank had chartered a plane to evacuate its international staff from Jakarta, although country director Dennis de Tray and a handful of senior managers would stay in the country according to a Reuters report.

"We want to ensure the safety of everyone who works there and their families. That is our top priority in the region right now," Barrett said. He said Indonesian staff were not being evacuated, but would be offered places to stay on the holiday island of Bali or provided with "safe havens" in local hotels in Jakarta.

The protesters, bitter at IMF-mandated price rises for fuel and transport [ranging from 40% to 70%], are also seeking political change and an end to the crony capitalism which has enriched the family of long-serving President Suharto."

From the United States Energy Information Administration, Indonesia (previously posted in January 1999):

"Indonesia currently holds proven oil reserves of 5 billion barrels. This represents a 14% decline in proven reserves since 1994....

"... Indonesia's recent oil production has remained relatively flat as introduction of crude streams from new, smaller fields has helped compensate for declines at many of the country's mature oil fields."

"... PLN could experience losses of as much as $1billion to $2 billion this year if it has to meet obligations to purchase electricity from independent power producers (IPPs)."

In other words, the rate of Indonesian oil extraction and the prosperity that was associated with its oil industry is in permanent decline -- a sign of the times.

Similar unrest can be expected in other World Oil "Potential Hot Spots": Algeria, Iran, Iraq, Libya, Nigeria, Indonesia, East Asia. These are countries where western oil interests are paying rock bottom prices and exacerbating the plunge of national economies into unrest and poverty.

Is this a time for our community to expand facilities for transportation that are dependent upon cheap oil from people suffering in third world countries like Indonesia? Carpooling might be a little inconvenient, but with one passenger in each car, the capacity of our highways would nearly double. Is this too much to ask, to eliminate traffic jams here with the fringe benefit of avoiding riots in countries where energy and transportation prices have doubled so that Americans can continue living in a fantasy world of hundred mile commutes and SUV's for a few more years?

Note: This document and cited references may be reviewed on the web at: