In My View

‘India needs energy’

That was the refrain one heard every so often in the speeches made in Indian Parliament in the past week. Manmohan Singh made that statement, in his inimitably furtive way - if only to obfuscate the real reasons for his deal with the USA. Rahul Gandhi made it too, even though he made it sound like an advertisement for an energy potion, meant for the youth of India.

Having said that, it has to be argued that growing India has developed an enormous appetite for energy. Let us leave that tiny three per cent or futuristic eight per cent that Manmohan Singh is so bent on ensuring, for now. Let us talk about something that is virtually fifty per cent of the country’s total energy consumption – petroleum, oil and lubricants. Between April and November, 2007-08, India consumed 131.01 million metric tonnes of oil, which was almost close to the total consumption of the previous year.

Indian Oil’s website says that the Indian basket of crude oil is priced at close to 130 dollars a barrel, which is less than the price of Brent crude but close to the price of WTI (West Texas Intermediate) – the American benchmark crude.

That price could climb down substantially were India to decide to source its crude from Iran – well, not just Iranian crude, but crude that could be transacted at the newest oil exchange of the world, Iranian Oil Bourse. Situated on an island off the coast of Iran, called Kish, it is in an Iranian free trade zone.

One such action could stop the tyranny of the New York Mercantile Exchange (NYMEX), futures trade in which has contributed to 60 per cent of the total price rise of crude oil in the past two years.

Iran Oil Bourse had been in the making since 2004. It finally opened on 17 February this year. And it trades in petroleum products on Euro, Iranian Riyal and a basket of major currencies including Yen. Also, because it trades in Euro, it can sell crude at a price lower than when paid in dollars. For the sky-high dollar price of crude is not just a function of the predatory speculators of the USA, who have the president of the country in debt, but the dollar price of crude is also a victim of the eroding value of the currency.

That value would drop more when the cost of saving the US economy from the ravages of the failure of two housing mortgage companies - with $ 5 trillion in credit; yes, trillion – Freddie Mac and Fannie May gets accounted. And this also the time when the people of India should ask its political-bureaucratic class why Indians, seventy per cent of whom live on less than $ 1 a day should pay for a tanking US economy.

Meanwhile, the American establishment continues to fight a low intensity war within Iran. If Seyomour Hersh, the American journalist is to be believed, American Special Forces and CIA Covert War specialists are inside Iran right now blazing a trail of death and destruction. He wrote an expose on this a few weeks ago in the New Yorker magazine.

If anyone believes this war would stop soon as Bush is on his way out, you should take heart at the statement of a recently defeated Hillary Clinton, who threatened to bomb Iran to smithereens. She is now being touted as the vice presidential running mate of Barack Obama, a poll ticket that is being described by salivating Democratic Party faithfuls as a ‘dream ticket.’

Leaving that aside for the time being, one should acknowledge that Iran’s newest venture promise deliverance for a vast section of the world that do not have a particular love for the dollar as the currency of preference.

Iranian Oil Bourse could see curious conjunction of self-interests soon. Europe, which buys 70 per cent of Iranian crude could start frequenting the Bourse. Russia, which sells 66 per cent of its crude to Europe could sell at the new exchange in Kish Island. In April, 2002, the Organisation of Petroleum Exporting Countries (OPEC) had begun discussions on switching to Euros for their oil transactions. But that idea eventually got shelved after Bush visited the region. It is believed that US did some serious arm twisting of the Saudi princelings to help them make up their mind about maintaining the status quo.

But other countries like Venezuela are keen to trade in the bourse. So is Nigeria. The bourse would really take off if China and India are to decide that they would source their burgeoning demand from it. China, of course, has a lot of equity oil – oil from fields in which it has a equity stake. India’s Oil and Natural Gas Commission (ONGC) had been taking that route till Mani Shankar Aiyar was the minister in-charge. It stopped when Murli Deora, a friend of many American leaders replaced him. Good economics dictates that we buy from the Iran bourse.

But is it good politics? We have a civilian nuclear deal to preserve and pay obeisance to.

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in