Control & Zenith of Capitalism: Energy Politics and Economic Impact

By Ghalib Ata

Instructor of Development Management, IAS, PU, Convener Think Tanks - PEF

Ex-Director R&D, LCCI, University of the Punjab

January 5, 2012

Capitalism: Background

16th to 17th Century People Vs State-Church Policy of Taxation Renunciation of Religion Compromise

Don’t leave Religion Separation of Religion from State

Higher ideals will come from “People’s Consensus” Difficult to ask from everyone ask from

“Representative” – Beginning of Modern Democracy

Capitalism: Four Basic Freedoms (Cont …) Higher Ideals

Freedom of Faith Freedom of Expression Personal Freedom Freedom of Ownership

The greatest Problem: Scarce resources to meet unlimited desires of people

Real problem is creation of wealth to remove scarcity of resources

Tools of Creation of Wealth Banks Leasing Companies Stock Exchange

Capitalism: Four Basic Freedoms (Cont …) Tools of Creation of Wealth

Banks Leasing Companies Stock Exchange

Develop Multi-national Companies Every Large Company to have unabated

supply of resources Biggest Resource of Every Company is:

ENERGY

Proved reserves

at end 2009Thousand

million barrels

Share of total

R/Pratio

Total Middle East 742.7 61.5% 79.5

Total Europe & Eurasia 144.4 12.0% 22.5

Total Africa 117.2 9.7% 32.1

Total S. & Cent. America 103.5 8.6% 41.2

Total North America

59.9 5.0% 12.0

Distribution of Energy Sources

•US R/P Ratio is 12 years

•Iran 11.4%, Kazakhstan 3.3%, Russian Federation 6.6%

Oil

Source: BP Statistical Review of World Energy for UN

Population Vs Consumption Pattern of Oil

% of World Population Ranking

Country Name

Million tonnes oil equivalent

2009

2009World Share

Total

19.79% China 349.8 9%

17.52% India 120.3 3.1%

4.54% USA 842.9 21.7%

2.41% Pakistan 18.4 0.5%

2.14% Russian Federation 128.5 3.3%

1.91% Japan 235 6%

1. Oil Consumption Volume

•US consumes 21.7% of world’s oil consumption

•China is 5 times bigger than US consumes only 9% of world’s oil consumption

•Japan is less than 2% of world population consumes 6% of world’s consumption

Source: BP Statistical Review of World Energy for UN

Proved reserves

at end 2009

Trillioncubicmetres

Shareof total

R/PRatio

Total Middle East 73.47 40.5% > 100 Yrs

Total Europe & Eurasia 64.13 35.3% 59.8

Total Asia Pacific 14.82 8.2% 39.3

Total Africa 14.18 7.8% 78.6

Total North America 7.98 4.4% 10.6

Distribution of Energy Sources

•Iran 16%,

•Russian Federation 26%

•US R/P Ratio 11 Years

Natural GasNatural Gas

Source: BP Statistical Review of World Energy for UN

Population Vs Consumption Pattern of Natural Gas

% of World Population Ranking

Country NameMillion tonnes

oil equivalent

2009

2009share of

total

19.79% China 50 1.9%

17.52% India 35.8 1.4%

4.54% USA 588.7 22.2%

2.41% Pakistan 27.6 1.1%

2.14% Russian Federation 388.9 15.1%

1.91% Japan 76.1 3%

2. Natural Gas Consumption Volume

•US is responsible 22% of world’s gas consumption

•China is 5 times bigger than US & consumes only 2% of world’s gas consumption

•Japan is less than 2% of world population consumes 6% of world’s consumption

Seven Sisters

Rockefellers Huge Oil Monopoly: Standard Oil

Governments Toppled 1911 Regulatory Action

Broken into Smaller companies Maintained shares of all

1945 Enrico Mattei: Italian Minster for Petroleum Seven Dogs – Italian Cat – Iranian Oil First time 70% of oil produce to natives Murdered in Plane Crash

Seven Sisters

Cheveron ExxonMobil Shell British Pet Standard Oil Unocal

Dick Cheney, Condelisa Rice, Bush, Hamid Karzai

Theory of Counter Insurgency

Joint vs. an Ant Create Deception

Iraq WMDs 9/11 Falsehood Talks Broke down between US Energy

Companies

First Century Routes

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Roman Trade with India

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Gawadar: Chinese Pearl in Indian Ocean

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Location of Minerals in Pakistan

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Minerals Location of Deposits

Ruby Hunza, Neelam,& Upper Hunza

Emeralds Swat, Gilgit, Mehmund, & BajourPink Topaz MardanAquamarine Eastern Gilgit & ChitralPeridot KohistanKashmir Ruby Neelam ValleyGold Saindak & Reko Diq

Aluminium Muzaffarabad, Ziarat, Kalat, & Khushabad

Iron ore Kalabagh, Nakkundi, & DilbandCopper Saindak & Reko DiqZinc Lasbela, Khuzdar

Coal Thar, Lakhra, Ziarat, Salt Range, Thatta, & Orakzai, etc.

Precious Stones

Value of Finished Goods in

Proven Reserves

Price / Carat

Reserves inMillion Carats

Value in Million $

International MarketMillion $

Ruby 500 1.5 750

Emeralds 75 70 5250

Pink Topaz 45 9 405

Aquamarine 45 0.2 9

Peridot 39 10 390

Kashmir Ruby 500 125 62500

Total 69,304 693,04019

Metals & Coal Reserves

Proven Reserves Price/Ounce million ounce Value Million $

Gold 1100 9 9,900

Per Ton Million Tons

Aluminum 2243 74 165,982

Iron ore 76 903.4 68,658.4

Copper 680 1882.5 1,280,100

Zinc 130 23.72 3,083.6

Coal 65 185000 12,025,000

Total 13,552,724

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Coal in Electricity Generation

South Africa 94% India 68%

Poland 93% Czech Rep 62%

PR China 81% Morocco 57%

Australia 76% Greece 55%

Israel 71% USA 49%

Kazakhstan 70% Germany 49%

Source: IEA 2009

Coal in Electricity Generation

Current Issues Energy Related Issues

Power Shortfall ( 2000 MW to 5000 MW) Gas reserves to last 2025 (Govt Official Stance)

Gas available to Industry only 3 days/week CNG Stations Shutdown for 3 days/week

Electricity load shedding in summers Cities: 8 to 12 hours Villages: 12 to 18 hours

Water shortage 1700 (1990) today 1000 cubic meter/capita

Results High Energy Prices High cost of Input Global Competitiveness (Pakistan Ranked 101)

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InputsEquipmentRaw MtUtilitiesHRLand

OrganizationProcess

OutputsGoods/ Services

TaxAnnual on surplus income

Business Process

InputsEquipment $ ERaw Mt $ RMUtilities $ UHR $ HRLand $ LSub-total $ IP

OrganizationProcess $ PInput $ IPSub-Total $ P+IP

OutputsGoods/ $ P+IPServicesProfit $ Pr S-Total $ P+IP+PrTax $ TTotal = $ P+IP+Pr+T

Before 1990

InputsEquipment $ E+15% STRaw Mt $ RM+15% STUtilities $ U+15% STHR $ HR+15% STLand $ L > ExpensiveSub-total $ EIP

OrganizationProcess $ PInput $ IPSub-Total $ P+EIP

OutputsGoods/ $ P+EIPServicesProfit $ Pr S-Total $ P+EIP+PrTax $ TTotal = $ P+EIP+Pr+T

After 1990

Imports $ Income Tax

InputsEquipment $ E+15% STRaw Mt $ RM+15% STUtilities $ U+15% STHR $ HR+15% STLand $ L > ExpensiveSub-total $ EIP

OrganizationProcess $ PInput $ IPSub-Total $ P+EIP

OutputsGoods/ $ P+EIPServicesProfit $ Pr S-Total $ P+IP+PrTax $ TTotal = $ P+EIP+Pr+T

After 1990

Imports $ 2.5 Income Tax

Operating Capital Required

Bank + Financial Institutions

Organization

$ + (Riba) Cost of Loan

InputsEquipment $ E+ 15% STRaw Mt $ RM+ 15% STUtilities $ U+ 15% STHR $ HR+ 15% STLand $ L > ExpensiveSub-total $ EIP

OrganizationProcess $ PInput $ IPSub-Total $ P+EIP

OutputsGoods/ $ P+EIPServicesProfit $ Pr S-Total $ P+IP+PrTax $ TTotal = $ P+EIP+Pr+T

After 1990

Imports $ 2.5 Income Tax

Operating Capital Required

Bank + Financial Institutions

Organization

$ + (Riba) Cost of LoanCustomer

Startling Facts

Petrol Price in 1990 was Rs. 7.00/liter Today?

Wheat Flour Price Rs 3.25/kilo in 1990 Today ?

Trade Deficit 1990 $ 1.48 Billion Today ?

Suicides in 1990 less than 100 recorded Today ?

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Question

What changed

in last 20 Years?

Govt. Revenues and Subsidies Since 1980 in Electricity and Gas

A Comparison of Subsidies, Electricity and Gas Distribution

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Years

Mill

ions

of R

s.

Subsidies Rs in Millions

Electricity and Gas Rs in Millions

Problem of Ownership – Wrath of Capitalism

Answer from Communism State-Ownership

Answer from Capitalism Private-Ownership

Answer from Islam Three types of Ownerships

Collective State Private

Turkman-China Pipeline 20 Billion CM DoneAnother 20 Billion CM Pipeline till end 2010

32Pakistan

China – Russia New Entries to Capitalism Purchase of US Federal Bonds

China $ 1.4 trillion Russia $ 700 billion

China and Russia have stakes in US Economy

Last year fear of meltdown in US Economy forced following changes: Alternate currency Breaking hegemony on energy fields and

trade routes

Nord Stream

South Stream

Issues and Solutions

Energy – Collective ownership no profiteering Mineral resources - Collective ownership no

profiteering Primary industry – Collective ownership Concentration of wealth in few hands –

Prohibited Currency – Gold/Silver or Gold/Silver Based Taxation – based on Islamic – From Rich to

Poor Housing State Responsibility

Accept the Fact that Human Beings Cannot

Make Law

Divine Law is the Solution

Thank You

New Water Major Reservoirs

Water Storage Bhasha Dam Kalabagh DamProposed Pakistan Dam

Total Increase in Capacity

Live Storage 6.4 MAF 6.1 MAF 12.5 MAF

Gross Storage 8.1 MAF 7.9 MAF 16 MAF

WAPDA Documents 2010

-Bhasha Dam is Recover of 5 MAF of lost Storage Capacity

-Only 1 MAF will be add

- Kalabagh Dam to add 6 MAF of storage capacity

Impact of Disintegration of Soviet Union

Kissinger and Brizinski Stop the Reemergence of Soviet Union

By entering Central Asian States Reduce dependence of Central Asian States on

Moscow Create alternate Energy Market for Caspian Sea fossil

fuel Stop the Reemergence of Political Islam

Denuclearize Pakistan By entering Afghanistan Deception – Constructive Chaos – Counter Insurgency

Potential

Hydro Power Potential 46000-50000 MW Exploited power potential 6474 MW

Coal Power Potential Enough for 500 Years 1,85,000 Million Tons Worth $ 9 Trillion Coal Imports are higher than local extraction

Gold/Copper Reserves More than $ 500 Billions Total External Debt $ 51.5 Billion

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