Africa: Soaring Oil Prices Threaten to Undermine Gains from Debt Cancellation

Record high oil prices – fueled by the world’s oil dependence – are undermining some of the benefits of last year’s G-8 achievements on debt cancellation and putting serious stress on many of the world’s most impoverished countries, a policy brief published today revealed. High Oil Prices: Undermining Debt Cancellation and Fueling A New Crisis?, co-published by Jubilee USA Network and Oil Change International, shows that developing countries continue to pay more for oil imports than they receive in debt relief.

“We are concerned that the rising cost of oil imports is draining far more money out of impoverished countries than debt cancellation is contributing each year,” said Neil Watkins, the National Coordinator of Jubilee USA Network. “This money was supposed to be used for healthcare and clean water, not oil.”
“Like the addicts in denial that they are, G8 leaders are ignoring the central role that oil plays in driving a new debt crisis and causing climate change,” said Graham Saul, International Programs Director of Oil Change International. “The G8 cannot overcome energy poverty or achieve lasting energy security if they continue to believe that more oil is the answer,” he continued.

Adjusting for inflation, oil – which is hovering around $75 a barrel – is now more expensive than at any time since 1980. International Energy Agency officials estimate that the cost of oil for all of sub-Saharan Africa will rise by $10.5 billion in 2005. This is more than ten times the annual debt relief received by all 14 African countries included in the 2005 G-8 debt deal.

Developing countries are also hit hardest by the growing catastrophe of climate change, driven by our addiction to oil and other fossil fuels. Global warming will have a major impact throughout the Global South, claiming hundreds of millions of lives and reversing poverty alleviation gains in many impoverished countries.

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