It took seven-tenths of a bushel of wheat to buy one barrel of oil in 1973. In 1980 it takes more than seven bushels. The same kind of things has happened to other agricultural commodities and raw materials. For countries that depend on exports of this type, and this includes most of the developing nations, the result is a devastating drain on national wealth or, more accurately for the developing countries, a devasting explosion of national debt.
For most of the less developed countries, the rising price of oil has been even more damaging than it has been for the industrialized nations because their economies, and consequently their energy requirements, have been growing faster. A recent report from the World Bank documents the awesome dimensions of the challenge for the LDCs in the coming decade if energy costs are not to cripple economies that must grow rapidly to break the cycle of poverty.
The cost of net oil imports to the bank's developing member nations rose tenfold in real terms in the past decade. The bank predicts that without a major effort to initiate conservation programs, the cost of oil imports will more than double again by 1990.
The bank has already begun a program to aid LDCs' domestic energy production -- especially to finance and provide technical help for oil exploration. But the report documents how inadequate its present resources are to the need. In the past two years, the bank has committed $4.5 billion for energy projects, and it plans to lend $13 billion more over the next five years. Yet its estimates are that the total energy investment needed during this decade in the oil-importing developing nations is $450 billion to $500 billion.
The energy prognosis for the industrialized countries is not so rosy either, and there is an understandable tendency to see the LDCs' problem as, well, their problem. But of course it isn't. Though the non-OPEC LDCs consume only a small share of the world's oil -- about 15 percent -- their import needs are more than enough to mean the difference between enough oil on the world market and a recession-inducing shortage.
The fact that their needs are relatively small is the one bright light in this otherwise gloomy picture. Small oil fields, not large enough to make much of a difference to the big consumers, can make an enormous difference to a developing nation, freeing up foreign exchange for badly needed investments. But because such fields have not been very attractive to the major oil companies, very little oil exploration in the non-OPEC LDCs has been done, and the potential exists for many small to medium-sized finds. Cumulatively, if enough of these fields can be found and developed, it could mean not only economic salvation for the LDCs, but a substantial loosening of the oil market for the developed nations as well.