Oil leaps to $130 a barrel

OIL prices in the international market continue to move upward and they are close to $130 a barrel. There are indications that the surge would continue for an indefinite period and the prices might settle at a level where most of the economies of the world would find themselves in deep trouble.

The industrialized and other countries with huge surpluses in the balance of payments have the capacity to absorb the shock but countries like Pakistan have already started feeling the heat. Our trade deficit has reached $17 billion mainly because of oil imports and the situation would become more precarious if prices go further up. Pakistan has limited financial resources and negligible export potential to cope with the dangerous scenario and the budget-makers are in a quandary about what to do to minimize the adverse impact. According to reports, the Government will have to make additional allocations worth billions of rupees for the next year to meet the fuel requirements of the armed forces and civilian departments. As a short-term measure the development budget appears to be the casualty of the new phenomenon but the policy-makers will have to gear up for medium and long-term measures to brace the challenge ahead. New policies should be devised in a way that minimizes dependence on oil while efforts should be accelerated to make use of Thar coal and exploit immense potential of alternative energy resources. This, in turn, requires investment on manpower and research with a view to developing local capability to meet the challenges.