Of Oil and Hamburgers
by Fereydoun Hoveyda
Was he an OPEC Maximalist?
The New York Times, Wednesday, November 26 1975
The other day while I was leaving the United Nations, a radio reporter brandishing his microphone asked me:
"Following the recent increase of 10 percent in the price of a barrel of oil by OPEC, each American must now pay one to two cents more for a gallon of gasoline". What do you think of this state of affairs, you "who come from an oil-producing country?"
"What I think of it is very simple." I replied. "You are paying one or two cents more per gallon, but we, since last year, are spending an average of 35 percent more on products we buy from "you" industrialized nations. It is my turn now to ask you what you think of this situation."
The reporter
looked unbelievingly at me and started to recite arguments that were already
threadbare: Unjustified increase of oil prices in 1974, unilateral decision
of a cartel to raise prices, noxious consequences on the poorest countries,
cause of the recession and the galloping inflation in the industrial
countries.
Being a bit astounded by his dogged rehearsal of faulty views, I strove to set certain points straight: An unjustified increase? Was not the readjustment in prices an answer to the relentless inflation that has accompanied the extraordinary economic expansion ot the West since the war (due precisely, to the artificially rigged and ridiculously low price of Oil) and an attempt to put the price of oil on a par with the alternate sources of energy? 'The nations of third world that, as usual, did not
participate in the benefits of progress of the industrialized nations saw their meager purchasing power diminish regularly.
The unilateral decision of a cartel? But does anyone seek our advice when the steel industries or the cement industries suddenly hike their prices? have not the industrial countries in the past always tried to justify the oligopolistic price-fixing by their gigantic oil companies, without libeling these as cartel action?
Noxious consequences for the poorest countries? The industrial countries are suddenly crying, over the fate of the poor, while at the height of their own prosperity they failed to reach any approximation of the aid target they themselves had helped to set.
In contrast, in 1974, the members of Organization of Petroleum Exporting Countries alone gave the equivalent of more than 2 percent of their gross national products -- twice, the amount of the United Nations aid target--to the non-oil-producing countries, and they envisioned, following a proposal by Iran, creation of a special fund -- it has since been approved -- to provide aid to the poorest nations
Cause of recession and inflattion? But the oil-price increase in 1974 was responsible for no more than 2 percent of the over-all price rise, while in just a year the cost of the products we have had to purchase soared by an average of 35 percent.
As for recession just as in the case of inflation, it was already there, well before the decision of OPEC to increase oil prices. The the truth of the matter is that those responsible in the industrial nations found in the action by the oil producers a convenient scapegoat in the nick of time. If this holds, they might as well retroactively credit OPEC with the 1929 crisis, their economists were then attributing to numerous causes, all of which proved to be related to the industrialized world's economic system.
As the reporter, dumbfounded in his beliefs, hesitated to follow me completely, I asked him if he knew the price of oil in the Persian Gulf in 1969. "No," he answered. "Well, it was a $1.67 per barrel. And in December of that year, I paid here about $2 - tip included - for a -hamburger, an orange juice and a coffee!"
A barrel of oil for a hamburger! Was that normal, when we learn that "protein-wise" we can extract the equivalent of many hundreds- of hamburgers, as is said to be the case, from a barrel of oil! Is it an "extortion" that we should be able to purchase now four or five hamburgers from a barrel of our diminishing resources? My reporter shrugged his shoulders. "Your explanation made me hungry! I am going to eat a hamburger.
Fereydoun Hoveyda is Iran's representative at the United Nations and a novelist (That was in 1975 -- Now in 1997, Hoveyda who has become a prolific member of the "NATIONAL COMMITTEE ON AMERICAN FOREIGN POLICY" holds somehow different views. Having trouble guessing why? Well, look no further, its all part of that darn exile dilemna)