Sunday, 18 May 2008!
HandWritten on; 19:55
Economics Online Blogging Assignment
The above comic strips are uploaded with credits to solarcities.eu and bigpicture.typepad.com respectively.
Saudis: More Oil Production Unneeded
By AP/JENNIFER LOVEN
From: http://www.time.com/time/world/article/0,8599,1807320,00.html
(RIYADH, Saudi Arabia) — Saudi Arabia's leaders made clear Friday they see no reason to increase oil production until customers demand it, apparently rebuffing President Bush amid soaring U.S. gasoline prices.
It was Bush's second personal appeal this year to King Abdullah, head of the monarchy that rules this desert kingdom that is a longtime prime U.S. ally and home to the world's largest oil reserves. But Saudi officials stuck to their position that they will only pump more oil into the system when asked to by buyers, something they say is not happening now, the president's national security adviser told reporters. "Saudi Arabia does not have customers that are making requests for oil that they are not able to satisfy," Stephen Hadley said on a day when oil prices rose above $127 a barrel, a record high. "What the Saudis wanted to tell us was we're doing everything we can do ... to meet this problem, but it's a complicated problem."
The Saudi oil minister, Ali al-Naimi, announced that the kingdom decided on May 10 to raise production by 300,000 barrels at the request of customers, including the United States. He said that increase was sufficient. "Supply and demand are in balance today," he told a news conference. "How much does Saudi Arabia need to do to satisfy people who are questioning our oil practices and policies?"
Bernard Picchi, an energy analyst at Wall Street Access, an independent research firm, said the 300,000-barrel Saudi production increase was "a token amount" that is not expected to have much impact on prices.
It would be different, he said, if Saudi Arabia boosted production by 1 million or 1.5 million barrels a day. The announced increase will have Saudi Arabia pumping 9.45 million barrels a day by June, Saudi officials said. That's about 2 million barrels below its capacity.
Oil prices advanced Friday as traders, unimpressed by efforts to boost supply, kept buying on the expectation that prices would keep setting new records.
Saudi Arabia often adjusts its output to meet demand, and the increase coincides with the start of the peak driving season in the U.S. "It's a way to raise production without raising production," said Phil Flynn, analyst at Alaron Trading Corp. "I think it was a way to save face."
Hadley never mentioned the Saudi's new production in his recap with reporters. He said the Saudis briefed Bush again on their plan to increase their production capacity over time. They also argued that even an increase would be unlikely to bring down the soaring prices, driven more by uncertainty in the market, lack of refining capacity for the type of oil readily available and other complicated dynamics, he said.
Associated Press writers H. Josef Hebert in Washington and Adam Schreck in New York contributed to this report.
Review:
I agree with traders, in that, by keeping supply low, Saudi Arabia would then be able to increase its prices and thus reap greater profits. This is as oil is currently much of a necessity for commodities such as transport etc. ‘Raising production without raising production…’ Saudi is also able to sell less and earn more. Oil prices would then be able to keep setting new records. It is thus possible that the claim regarding the lack of demand could be a cover-up for the fact that they would like to raise prices.
Why Europe is coming to India
By MADHUR SINGH / NEW DELHI
From: http://www.time.com/time/world/article/0,8599,1688971,00.html?iid=sphere-inline-bottom
For a European Commission ambassador, introducing European businesspeople to your host country is a big part of the job description. Since E.C. ambassador Danièle Smadja arrived in Delhi two months ago, she has found herself shepherding a half-dozen delegations of eager European executives and politicians every week. "All my fellow ambassadors are always either receiving or sending off visitors," she says. "India is like a beautiful woman being wooed by many suitors at the same time."
Increasingly, those suitors are whispering sweet nothings in European accents. So far this year, European bigwigs including German Chancellor Angela Merkel and London Mayor Ken Livingstone have come calling, while French President Nicolas Sarkozy will be chief guest at India's Republic Day celebrations next January. On Nov. 30, E.C. President Jose Manuel Barroso and European Union President and Portuguese Prime Minister Jose Socrates will visit New Delhi for the annual E.U.-India summit, a bilateral confab to discuss investment, scientific cooperation and efforts to combat climate change. The participants are expected to announce a joint solar energy project and the formation of a European Business and Technology Centre in Delhi.
With annual bilateral trade estimated at $85 billion — nearly a fifth of India's total — the E.U. is India's largest investment partner, and its largest source of foreign investment. It's also the largest recipient of Indian investment, thanks largely to conglomerate Tata's $12 billion acquisition of Anglo-Dutch steelmaker Corus earlier this year. The E.U. and India are currently negotiating a free trade agreement as well as a comprehensive trade and investment agreement. These and other deals have European executives coming in droves, drawn by the country's 9% annual economic growth, along with its fast-growing middle class and booming trade, services and investment sectors.
But the E.U.'s growing interest in India, some analysts say, is also an attempt to avoid putting all their eggs in China's basket. "There is a degree of apprehension over the fact that European [multinationals] are too deeply entrenched in China," says Rajendra K. Jain, professor of European Studies at Delhi's Jawaharlal Nehru University. "There is also concern in Europe over issues such as intellectual property rights violation in China; some 70% of European fakes come from China." Jain says India, whose growth, unlike China's, has been primarily domestically driven, is beginning to look more promising. "The E.U.'s calculation is that getting a firmer hold and greater market access in India will be more fruitful in the longer run," he says, "providing the enabling environment improves."
The last part is crucial. If India wants to keep the suitors coming, it will have to do more to reform its business climate and address foreign companies' concerns on everything from corruption to its tangled bureaucracy to widespread environmental, child labor and health issues. Earlier this month, a Norwegian sovereign fund withdrew investments from Indian-owned mining firm Vedanta Resources over its environmental practices in India. And big-box European chains like Carrefour are frustrated over the slow pace of reform in India's retail sector, where complete foreign ownership of multi-brand retail outlets is still not allowed. Partly to tackle such issues, Europe is helping to fund bilateral projects aimed at helping India develop much-needed infrastructure and improve its social indicators in an eco-friendly way.
But not all of India's visitors are European. The country has also hosted high-profile visitors like Russian President Vladimir Putin, Chinese President Hu Jintao and Brazilian President Luiz Inacio Lula da Silva this year. And among its "strategic partners" — a term India accords to countries whose long-term interests dovetail with India's — are not only the E.U., but the U.S., Japan, Russia, China, Israel and Iran. New Delhi, it seems, is flirting with all and promising marriage to none.
Review:By stepping into developing countries like India, European countries are able to tap on several of its resources, e.g. cheap labor, cheaper rentals etc, or in the case of software industries, it’s pool of skilled labor. They can easily outsource certain vocations to India and achieve Economies of scale and other added advantages. Naturally, India ought to do all it can to sustain such attractions, and to achieve sustained boosts in its economy. China on the other hand, as according to the above article, ought to go all out to (maintain their current) and attract more investors.
-Nicole Lim
08S75
18 May 2008
The above comic strips are uploaded with credits to solarcities.eu and bigpicture.typepad.com respectively.