Future Oil Price Spikes Could Derail Maldives Development 

  Spikes in the price of oil pose a greater short-term risk to the Maldives than climate change. This was the consensus among a group of energy experts, who gathered earlier this month at Soneva Fushi resort in Baa Atoll for a symposium on sustainable tourism.

"The future price of oil is likely to rise as the world economy moves out of recession and emerging markets such as China, India, Brazil and Indonesia take off," warned energy expert Mike Mason of the UK.

"There is a close link between global economic growth and the price of oil... we are likely to see price spikes similar to those of two years ago," Mason added.

In 2008, oil prices reached a peak of $145 per barrel, sending the price of diesel spiraling upwards, before the global recession caused oil to fall to today's price of around $80 per barrel. 

The Maldives is particularly vulnerable to the price of oil because the entire economy is, in some way, dependent on oil-based products.

The Maldives generates nearly all of its electricity from diesel-fired generators, all the motorbikes and cars run on petrol and all marine craft are fuelled by diesel.

According to a United Nations report in 2007, the Maldives is the most oil vulnerable country in Asia.

Energy experts warned that unless the country reduces its dependence on oil, expected future oil price rises could cripple economic development, as businesses and consumers grapple to meet ever rising electricity and fuel bills.

The price of electricity is already an issue of major concern to voters. Earlier this year, the opposition DRP conducted a large protest against hikes to the electricity tariff. Many families complain that one third of their income is spent paying the electricity bill.

Jeremey Leggett, director of British solar power company Solar Century, said it makes economic sense for the Maldives to switch to renewable forms of energy, such as solar power.

Renewable technologies such as wind turbines and solar panels do not require imported fuel and the Maldives has a plentiful supply of sunshine and significant wind resources. 

Morevoer, the high price of electricity in the Maldives means that renewable technologies such as wind, solar and biomass can produce electricity at cheaper rates than existing oil-fired generators.

Maldivian homes and offices are also often poorly insulated and use old electrical appliances, which waste tremendous amounts of energy.

Mason predicts that relatively cheap modifications to homes - such as insulating loft and floor space, mending cracks in window and door frames as well as replacing aging, inefficient fridges and air conditioners - could cut people's electricity bills by as much as 40%.

President Nasheed says he wants the Maldives to rapidly move from diesel to renewable energy, in order to avoid the risk to the economy of a catastrophic rise in the price of oil.

The President recently installed solar panels on his official residence, Muleeaage, to signal his support for new forms of power.

But until renewable energy becomes widely adopted across the economy, the Maldives will remain at the mercy of the global oil price; over which the country has no control.