Weekly Independent

Are We Addicted to Oil To Our Detriment?

Ever since George W. Bush used the phrase “addicted to oil”, the world has woken up to the fact that it might be suffering from an unhealthy compulsion to consume oil and oil based products. Oil is an integral part of every aspect of human life- whether the basic necessities of food, clothing and shelter or other utilities and luxuries. It is powerful, labor saving, cheap and incredibly practical for those with access to it. Yet, apart from these widely perceived benefits, there are numerous disadvantages as well. Environmental degradation, pollution of air, water, soil and constant reinforcing of global inequalities are some of the distinct drawbacks of a life governed by an obsessive use of oil.

Yet, despite these huge negatives, the reality of it stands at this- it would not be possible to sustain human life at this juncture without strong dependence on oil. It guarantees prosperity. The cheapest and most convenient option yet for electricity, heating, transportation, cosmetics and so much more, oil is the only alternative to ensuring a smooth and functional life.

It has been argued that people from all over the globe have together created an industrial empire which can sustain itself only by consuming huge amounts of energy. While this might be held to be true, the fact remains that oil consumption has recently been decreasing. Demand for heating oil, primarily in the developed world has started coming down as newer and more advanced technologies come to the fore. There is still a long way to go to get rid of the addiction to oil but the ground work has been done. Hopefully in the near future, there will be a range of alternatives which are as effective and cheap as oil while at the same time, not as scarce or as polluting. But until then, oil is the best and most effective way to ensure a good life for all concerned.

Why UK interest rates are likely to stay low for the time being

June’s Conservative-Lib Dem budget was a radical shift towards hefty public spending cuts in an effort to reduce Britain’s budget deficit.

There are a number of reasons why interest rates in Britain are likely to stay low for a while. The unique combination of tax increases and spending cuts will lead to a halt in interest rates until the financial situation has changed. It is of course inevitable that everyone in this country is going to be paying for the government’s debts in one way or another.

The Bank of England, which controls the UK’s interest rates, is currently regulating the base rate at just 0.5 percent, which means the banks are offering little or no interest for savers. However, the biggest problem at the moment is the fact that borrowers are still charged high rates. The banks can continue to do this so long as the government still owes them enormous amounts of money, which it will do for considerable time yet.

Meanwhile, the MPC (Monetary Policy Committee) has announced that the prospect for Britain’s GDP growth to recover to pre-recession levels in the medium-term is becoming less likely. Chief economist at the IHS Global Insight organisation Howard Archer expects interest rates to start increasing by the second quarter of 2011, with a 1.75% by the end of next year. Other analysts suggest that the interest rate forecast could be good for the strength of the pound, which may benefit from an increase in inflation and unhindered growth against other currencies. Currency analyst and independent financial advicer Tom Hampton said that sterling could reach EUR1.22 by the middle of August and EUR1.27 at the end of this year.