What is it with the price of gas these days? We are seeing record prices at gasoline pumps across the country, which are hitting our wallets hard. 

But what about the price of oil? High oil prices hit more than just the wallet of the average American consumer:

• High oil prices hit poor countries hard as they must pay more to meet their energy needs.
• An oil-fueled economy hits the environment hard, with oil spills and local damage, as well as emissions which fuel global warming. Global warming hits the poorest nations the hardest and threatens to erode the gains from debt cancellation and promises of increased aid.
• Dependence on oil also aggravates the global debt crisis. The oil shocks of the 1970s were one of the main causes of the debt crisis. Last year, a new study "Drilling into Debt" for the first time found that the more dependent on oil a country, the more heavily indebted it is. Today, with oil shocks again occurring, the implications are clear: A possible new debt crisis is in the making.

To avoid that new crisis, it's time for debt campaigners to think more about the links between oil, debt, and global warming.

Jubilee USA Network has embarked upon a project with Jubilee USA members Oil Change International and Rainforest Action Network, along with partner Bank Information Center to examine the links and develop more coordinated campaigns going forward.

The World Bank and International Monetary Fund, two of the largest creditors of impoverished country debt, have come under criticism for many years for the impacts of their policies on the environment.

Critics argue that World Bank projects and IMF/World Bank structural adjustment programs force indebted countries to weaken environmental safeguards and promote export industries, such as extraction of oil, metals and minerals.

EXPLOITING NATURAL RESOURCES?
While the World Bank and IMF talk of sustainable development, their policies and loans have encouraged countries to weaken or eliminate environmental protections to make their economies more attractive to foreign investment.

The results are deforestation, soil erosion, pollution and dislocation of millions of people. In Indonesia, 3.6 million people were forced from their homes by a $500 million World Bank-financed logging project.

The World Bank and IMF have also supported toxic mining projects in indebted countries with lax safety regulations. The World Bank has set no limits for harmful chemicals released by mining such as arsenic, dissolved ammonia, or sulfates.

The Bank has helped finance some of the worldís most environmentally damaging projects ó such as the Chad-Cameroon oil pipeline. During their lifetime operation, World Bank-financed fossil fuel projects will release 46.7 billion tons of carbon dioxide, a greenhouse gas, into the atmosphere.

By comparison, total worldwide carbon dioxide emissions in 2000 were 23.6 billion tons. The IMF pushes countries to increase oil exports to generate revenue to repay debts while lowering environmental and labor standards.

Renewable and clean energy alternatives such as wind and solar power are proving a better way to bring electricity to rural communities in impoverished nations. In rural areas of the Philippines and Bengal, small hydropower and photovoltaic plants are providing power to thousands of households and public buildings.

While the World Bank has lent $25 billion for fossil fuel projects since 1992, it has provided $1.35 billion in financing for renewable energy and energy efficiency projects in the same period.

In response to widespread criticism for its lending for extractive industries, the World Bank initiated the Extractive Industries Review in 2000 to evaluate whether support for oil, mining and gas projects reduces poverty.

Released in January 2004, the final draft called for the World Bank to end support for coal mining and require companies seeking World Bank support to follow human rights standards.

The review also recommended the World Bank to phase out lending for oil production by 2008 and instead devote its resources to alternative energy sources.

Most importantly, the review found funding oil, mining and gas projects does not achieve the primary goal of the World Bankís mandate: alleviating poverty.

In July 2004, the World Bankís executive board considered the review, but refused to implement its recommendations and failed to make concrete commitments to do so in the future.

PRIORITIZING SUSTAINABILITY
Through debt cancellation, an end to structural adjustment and increased environmental regulation, impoverished nations could promote the health of environments and people in them. 

As we work for freedom from debt, it is clear that we must also work towards freedom from oil and a clean energy future. A place to begin is by challenging the role that international financial institutions like the World Bank and private banks play in financing oil and extractive industries, together with our partners in the environmental movement.

We encourage you to get educated on these issues and the connections. Weíve pulled together a few short articles and reports to whet your appetite. 

RESOURCES ON DEBT & OIL
Our Addiction to Oil is Fueling World Poverty
Center for American Progress, April 6, 2006

Drilling Into Debt: An Investigation into the Relationship between Debt and Oil
Oil Change International, June 30, 2005

Secret Document: G-8 Plan to Invest ìTrillionsî More in Fossil Fuels & Nukes
Oil Change International and Jubilee USA Network, March 14 2006

State of the Union: Addicted and Still in Denial
Oil Change International, February 1, 2006

The Debt Boomerang: How Americans Would Benefit from Cancellation of Impoverished Country Debts (see Boomerang 3: Global Warming)
Institute for Policy Studies, March 2006
 

Sources: Vinod Raina, "Debt, Development, and the Environment"; Jubilee Research, "Deforestation"; Friends of the Earth International, "The Citizensí Guide to Trade, Environment and Sustainability"; Sustainable Energy and Economy Network, Jim Vallette and Steve Kretzmann, "The Energy Tug of War: The Winners and Losers of World Bank Fossil Fuel Finance".