Whenever energy prices go up, so does the cost of living, crushing the common man under its burden. Why have we not been able to handle our energy resources properly?
These days, much in life seems to depend on the cost of energy, which in turn is based on the prices of fuel. The prices of oil and gas have gone up once again, which has made electricity and transport more expensive. That came to bear on bread, which in turn made meat, vegetable, medicine and everything else dearer. Yet, sometime ago, our forefathers neither knew nor depended upon this material buried underground, but managed to live happily to build the civilization that we enjoy.
I am told that oil and gas were produced by the action of volcanic steam on marine fossils, and coal by the burnt down forests, millions of years ago. Mother Nature had wisely swept these noxious black remains of her own dead past under the carpet, as she continued to provide sustenance to all living beings from her own plentiful and evergreen bosom. She did not know that some day, a clever but unwise creature called man will discover these dead remains and go into an orgy of incineration. Although oil, gas and coal exist in limited quantities and are no more produced, man goes on bingeing on them as if they would last forever. In his exuberance, he may even cause irreversible damage to Nature by breaking her cycle of regeneration, thus making it difficult to fall back on her renewable resources when the time comes.
Whenever energy prices go up, the shopkeepers increase their margins to adjust for the higher cost of living, so do the doctors and the hairdressers. Even the beggars would not look at a 50 paisa coin any more; the government also stands to collect more taxes based on higher import prices. But, there is no compensation for the common man. All the concessions of the policy makers, such as low tariffs for small consumers of gas and electricity and smaller increase on the rates of kerosene, etc., are wiped off by the inflated prices of other things in the market.
As a common man, I feel crushed and cheated, seeing the rich man continuing to enjoy his luxuries unaffected, while millions like me find it increasingly difficult to make the two ends meet. My compatriot in the rice fields and cotton fields who contributes much of the foreign exchange making oil import possible, gets little benefit and much punishment from high cost of living. Ironically, he has to spend more on wood, kerosene or LPG than the rich does on cheaper natural gas piped into his kitchen. Is it not one of many examples showing how the poor man subsidizes the rich, making him richer while getting poorer in the process?
I am told that the government has to impose heavy taxes on oil and gas to collect a large part of its revenues, because few are willing to pay the income tax. Indirect taxation puts the major burden on the shoulders of the common man who is used as the captive tax-payer, while the relatively better off classes go scot-free by paying a little or nothing on their profits.
When I ask for relief, I am told that if taxes were reduced, no money will be left to spend on developmental work, which will mean more unemployment and greater poverty. Moreover, if taxes on oil are reduced, oil consumption and foreign exchange burden will shoot up; and if gas was made cheaper, the prospectors will not be attracted to extract more and the existing resources will run out sooner. All this seems to put any argument on oil on a very slippery ground.
But I am no oil expert, and only a common man endowed with the uncommon commodity — common sense. I feel that we should look back and look around, to learn where have we gone wrong, which of our policies have borne fruits and how do others handle the current and potential challenges of energy.
We often talk of cutting down imports of food and drinks, without realizing that what we spend on import of fuel, is 16 times more than tea and eight times more than edible oils. If anything is worth saving, it is the energy. It is wasted visibly and pervasively, starting from the kitchen flame which is left burning to save the trouble of re-lighting, to the badly tuned automobile and defective winding of electric motor, and unnecessary illumination. Even the architects have forgotten the traditional concepts of passive cooling and conserving heat, making it necessary to consume extra energy to cool and heat the homes. It is an established fact that one third of the energy (equivalent to a billion dollars) is wasted and can be saved by measures costing only a fraction of the waste.
The time when fossil fuel starts drying up, and solar and wind power becomes profitable may not have come, but why wait for the catastrophe and do nothing about it. In fact, we are already late in preparing for the day. It is the role of the Government to guide and cajole the indigenous enterprises, particularly the oil and gas companies, to invest in this field by offering incentives. The petroleum development levy should be converted into the energy development levy, and dedicated to the research and development of the new and alternate energy in a transparent manner. Waiting to buy the Western patented technology, which they are developing now, will amount to paying four to ten times more than what can be developed by our own engineers and scientists within our own resources. Failing that, we may sink deeper in the debt trap of the World Bank loans. Only by acting now we can exploit the abundant resources of solar and wind energy that the nature has bestowed upon us.
One lesson we should have learnt by now is that no foreign experts could really get into our shoes and decide what is best for us, even if they were sincere about it. Take the example of the well-known Harvard Group who made our earlier five-year plans. Using their own experience, they put the entire emphasis on oil guzzling road transport, leaving the energy efficient and cheaper railways to deteriorate as victim of neglect. Thus, with the apparent promise of quick results, they left behind the legacy of an avoidable and recurring import bill of millions of dollars that we pay for the purchase of extra trucks and diesel. These could have been minimized by improving and expanding the railways and by taking an early start on a cross-country network of fuel pipeline, thus making the money available for more productive uses. The same applies to closure of inexpensive tram service and disappearance of decent public transport in the cities, which compelled people to acquire personal transport and to burn mores fuel, even though some could hardly afford the expense.
In the government-sponsored private segment, however, there is a contrary and successful example of achievement, to take consolation from. It is about a company, established in participation of some Arab investor in the seventies, which started with laying pipelines for transporting oil products from Karachi to upcountry. Not only did it carry the commodity cheaper and faster but also reduced the air pollution and crowding on the roads to a large extent. They did not need foreign aid or World Bank loans and paid rich dividends to the investors, making good their investment and much more. In addition, they were able to expand further the pipeline network and later to establish the largest oil refinery in Pakistan.
The refinery has made the country totally self-sufficient in oil products and for the first time introduced lead-free petrol, to the benefit of the health of the entire nation. Not only did their operations do away with the heavy burden of regular replacement of oil tankers, the auto parts and the required fuel, but saved substantial foreign exchange through their refining operations and import substitution. The environment-friendly pipeline system also stands to earn a windfall profit through a new concept of invisible trade — selling ‘environmental credits’ — which the polluting countries must buy to meet the Kyoto standards.
It is worth noticing that the first example that was foreign prescribed, resulted in continued dependence on imported vehicles, consumables and foreign loans with the visible disastrous effects. The second one, on the other hand, which was homegrown, offered the synergy of commercial interest working in unison with the national interest. It demonstrated a building process, which systematically put back in the enterprise more than what it took out, thus making continuous growth possible. As it continues to diversify its activities, not only does it strengthen the underpinning of nation’s sovereignty and logistics of defence requirements, it lightens the burden of foreign exchange, without leaving behind a trail of foreign debts or environmental liabilities.
Energy is not a mere portfolio but an entire domain that impinges on all aspects of the well-being of the society and its future. Accordingly, it should be dealt with in a concerted manner, giving consideration to all the social, economic and environmental issues, in their present and long-term context. Sadly, we tend to grapple with energy-related problems, peace meal and in isolation of different compartments, often working at cross-purposes against each other. Example: Inviting foreign investment is the goal pursued by one arm of the government, which encouraged establishment of numerous car assembly plants, and a large refinery in the middle of the country to make the country self-sufficient in its demands of petroleum products. Saving foreign exchange, on the other hand, is the job of another wing, which finds the import bill on petrol and diesel going up due to more vehicles on the streets. It decides to promote the use of home-produced Compressed Natural Gas to replace gasoline.
Ironically, the latter decision undercuts the former by reducing gasoline consumption, forcing the refinery either to partially close down or to back-freight part of its gasoline production to the seaport and exporting it, possibly at a loss. Either way, the government and the people end up in a lose-lose situation, deprived of revenues on unsold gasoline as well as profits on the refining operation.
Yet, creative solutions can be worked out if attention is focussed on finding a win-win answer to the larger problems faced by the common man and the government. The common man will be better served if public transport system is improved and expanded, and CNG is promoted more for the buses and less for saloon cars. It may even relieve the middle income group from the necessity of maintaining cars which they can ill afford. Foreign exchange savings can be effected more rationally if diesel used by heavy vehicles is substituted with CNG, even at the cost of small subsidies or suitable incentives. It is diesel that is imported, not the gasoline, which is refined in the country.
Incentive for conversion of cars to CNG should not be too generous to offer an added privilege to those who are already privileged, and to transfer another deficit of revenue in the account of the deprived of the society. The available gas will be utilized more fruitfully if made available to the people living in and around forest areas, thus protecting the much-needed forests as well as helping the people involved to look after them. Admittedly, it is easier said than done and calls for a fine-tuning of prices and readjustment of incentives, but it is something that must be done..
Energy should not be used merely as a source of revenue but made available to the people at rates feasible for producing economic surpluses and improving quality of life. Generation of cheaper and cleaner energy in abundance, and its equitable distribution should be the foremost goal of the state for now and the future, when the real crunch comes.
Whenever energy prices go up, so does the cost of living, crushing the common man under its burden. Why have we not been able to handle our energy resources properly? 
