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The Developing World's Oil Problem

The rise in the price of oil has taken a heavy toll from the industrialized countries both through their business and ordinary usage of fuel.  The rate of inflation in the U.S. is now heading towards 4.5%, a figure that except for two momentary spikes it has not reached in 16 years.  But, as usual, the poor countries are suffering the most.  In fact, as Saturday's FT pointed out in a story from London by Ed Crooks and William Wallis, "Africa aid (has been) wiped out by rising cost of oil." The International Energy Agency has shown that "the rising cost of oil has wiped out the benefits many African countries were expecting from western aid and debt relief..."  There are dreadful corollaries to the rising fuel prices, including higher food prices, decline in the use of diesel-powered generation and just plain domestic violence.

A second article in the Saturday edition of the FT by Ed Crooks and Matthew Green specify some more of the numbers: "When prices rise, it is the poor who suffer most.  This year's surge in the oil price towards $100 a barrel is no exception: it is a concern for rich countries but the greatest threat is to the poorest."  These were the roots of the developing-country debt in the eighties.  So it will be again.