Power Politics

The last time Iraq was attacked, over ten years ago, oil prices reached record levels of over US$ 45 a barrel.
Analysts expect prices to go the same way if US and British threats actually lead to a war.

The hardest hit next to Iraq will be developing countries that depend on oil imports.rn

rnSri Lanka is no exception. In fact the local economy is likely to be hit harder than most. rn

rnAnalysts say oil shocks tend to have destabilizing effects on developing countries fueling inflation and lowering growth.rn

rnThe countrys electricity production prices are likely to shoot up due to the heavy reliance on oil based power generation.

The local grid is now supplied by two main sources.

Supplementing the hydro plants are the petroleum based thermal generation.rn

rnBeing limited to two main sources of fuel has proved problematic.rn

rnThe rain has been in short supply over the last few years while oil prices are showing every sign of going one way and that is up.

Bad news for a country almost