STRAIGHT TALK by Hafeez Khan
This is what happened on April 20th. The oil market witnessed a total collapse. The price dropped to minus $37. It meant suppliers would pay this amount to buyers per barrel purchased! The world has turned on its head. Economies are slipping out of control to levels not see in our lifetimes.
Oil is a multi trillion dollar industry. It is the fuel that powers the world economy. Till alternate energy is developed, it remains the single most important component. It received a double whammy. The demand dropped drastically with the onset of COVID-19. Estimates show a 30 to 50% reduction. Then there was a clash of probably the three largest egos in the world. It started between Crown Prince Mohammed of Saudi Arabia and President Putin of Russia over production levels of oil.
How could President Trump stay away from a good fight? With an increased production by Russians and Saudis, plus massive quantities of shale oil pumped in USA, through Trump’s encouragement, the market is totally flooded. There is a huge slump in demand due to global shutdowns. Combining these two factors, the global oil prices dropped like a rock. Apparently it is something to rejoice for consumers.
Not really. As a student of economics, I find similarities between economies and the eco-system. As an example, there is a recent upsurge in killing bats worldwide. Bats consume insects. Reduction in bats would lead to increased populations of insects. These insects will eat and damage crops and plants. Food production will be endangered. This will disturb the natural balance of the eco-system.
The same is true in an economy. Every sector that contributes to production cycle has a price attached to it. If the price of an input escalates or decreases outside acceptable band width, it destabilizes the entire economy. Millions of households, multiple corporations and many countries survive off oil revenues. Present prices of oil are disastrous for an economic equilibrium.
Take another sector. Loss of revenue by airlines due to onset of COVID-19 is estimated at $450 billion. That is four times the total accumulated debt of Pakistan! I can keep going, but I guess you get the picture. In short, the global economy has fallen off the cliff.
Some economies, businesses and corporations will survive this mishap and some may not. Even those who walk away will be scathed, needing time to recover. But this scenario will become relevant after the present pandemic of COVID-19 is blunted and the infection levels are on a downward trajectory.
Where do we stand today? COVID-19 has no cure yet. Over 90 vaccines are under trials around the globe. Approvals and actual production is 8 to 18 months away. Progress of patients injected with antibodies is being monitored. Availability of kits for massive testing is a work in progress as is antibody tests for recovered patients. The infections continue to rise. During last week alone global infections increased by over half a million. The death toll continues to mount. I believe the global fight back by scientists is also gathering momentum. I am convinced they will bear positive results, but it will take time.
Isolation is causing COVID-19 fatigue. I feel that way myself. People are experiencing “Cabin Fever” due to restrictions imposed. But we should not cocoon our selves. We cannot afford to let our guards down at this stage. Based on data available, Prevention is the best option for combating this virus.
The methods to prevent infection are widely propagated. You probably see them in your sleep! What needs to be promoted is the importance of the basic ingredient to achieve this success. It is discipline. The enemy is ignorance, stupidity and bravado.
A perfect example is the unfolding situation in Pakistan these days. COVID-19 spread thus far is much better contained than many countries. Rather than build on this blessing, it is being dismantled from within by our religious leaders. We all agree that “Traveeh” prayers are the best time to redeem one self. But realities of COVID-19 forbid close contact and large gatherings.
How difficult is it for our Ulema and Imams to understand this? What is their motivation? Our Holy Prophet, Peace be upon him, always preferred wisdom over ignorance. Who are they following? Their narrow minded territorial approach will spell disaster for the whole nation. Are they willing to take responsibility that their mindless pursuit to gather the believers will turn mosques into hotbeds of infections? Will it please God? If Khana Kaaba and Masjid-e-Nabvi can be empty what brand of Islam justifies “hara-kiri”?
I urge them to heed the medical community. Our doctors and healthcare workers are serving humanity over and beyond the call of duty. They are serving at a great risk to their wellbeing. They are offering sacrifices as true believers. Ignoring their call violates the basic principles of our belief.
We are being severely tested. The last epidemic of this proportion was the Spanish Flu in 1918. It devastated the world with 20 to 50 million deaths. They did not have the benefit of modern medicine. An economic disaster of this proportion was witnessed at the end of WW II in 1945. It led to the dismemberment of the British Empire. We must pray that we emerge from this tough challenge with scars that would heal over time with Providence’s blessings.