Tuesday, 28 August 2007

Rising Gas Prices

Gas Prices & Islam

The corporations are making billions in profits through the sale of natural resources. As the price or production of gasoline increases, the Gross Domestic Product (GDP) also increases as a result. The additional revenue collected through gas taxes also contributes to a higher GDP by enabling the government to spend more. Higher GDP is a sign of a healthy economy according to the Capitalist way of thinking. Islam has a completely different view of measuring the health of the economy. In the view of the Capitalists, man has unlimited needs and therefore there is a scarcity of resources. In order to alleviate this scarcity, they define the key economic problem to be that of production. Islam on the other hand, correctly recognizes that each individual has limited needs which must be fulfilled for his survival and be satisfied. In line with this recognition, the Islamic economic system correctly identifies the fundamental problem as being one of distribution, not production.
Soaring gas prices have been felt by people around the world. In the US, individuals on fixed incomes (such as retirees) are forced to pawn their possessions in order to pay for the higher cost of gas. On CNN, one such individual was pawning his 100 year-old watch to generate the additional funds necessary. His situation is not an isolated one. Pawn shops are noticing a rise in business from people who need loans to pay for gas. In Canada, commuters are noticing the spike in price as well. During the past week prices have jumped an average of almost 4 cents per liter raising the price to over $1 per liter in many areas of the country.
An article in the Toronto Star authored by the former director of investor relations at Petro-Canada, attempted to deflect the blame of the rising gas prices away from “Big Oil” companies. Instead, he suggested that the real blame should be directed towards the government; 40% of the cost at the pump is associated with gas taxes. Although this is true, it is also true that “Big Oil” has posted record profits. According to USA Today, gas companies reported record profits during their 3rd quarter. Exxon reported net income to be up 75% to $9.92 billion, while Royal Dutch Shell reported net income to be up 68% to $9 billion. So who is really to blame?
To simply assign blame either to “Big Oil” or to the government would be a superficial approach at best. After all, it’s a well known and accepted fact that governments usually work on behalf of business’s interests. For example, former Prime Minister Jean Chr├ętien went to Turkmenistan on behalf of PetroKazakhstan. The Globe and Mail reported that “Bernard Isautier, chief executive of Calgary-based PetroKazakhstan Inc., has publicly credited Mr. Chr├ętien, "because of his name," for landing the company high-level meetings in China and Iran”.
Islamic Insight into the Oil Issue
When trying to identify the root cause of the sky-rocketing gas prices it is important to reflect deeply upon the ayah that Allah (swt) has revealed to understand the nature of society. Allah (swt) revealed:
“When it is said to them: "Follow what Allah has revealed:" They say: "No! We shall follow the ways of our fathers." What! Even though their fathers were void of wisdom and guidance?”
[ 2:170]
What we see from this ayah, is that people stuck to their “ways” – or “the man made system” – even when the Truth was revealed to them. Extending this thinking to the oil problem we see that by laying the blame on the symptoms of the problem we fall into the same trap. What we need to do is question the Capitalist system itself. The democratic/Capitalist ideology is based on the separation of religion (deen) from the running of man’s affairs. It is, therefore, void of wisdom and guidance. The oil companies and the politicians are players who benefit from the system (and therefore work to ensure its continuance), but it is the system itself that is to blame for the high oil prices. It is the system which gave the elite the power to legislate according to their benefit. Who gave the right to the corporate elite to extract and profit from the oil wealth?
The New York Times reported "the federal government collected little more money last year than it did five years ago from the companies that extracted more than $60 billion in oil and gas from publicly owned lands and coastal waters."
It also reported that "Companies that pump oil and gas on federal property are required to pay the government royalties, usually 12 percent to 16 percent of the value of what they sell."
So the public, the “owner” of the land and wealth, gets only 12-16%.
Islamic Economics: More than Honest Businessmen
Most Muslims are familiar with the idea that Islam is a complete way of life. The challenge lies in understanding how this idea translates into practice; how would an Islamic State manage the production and allocation of resources in accordance with the laws of Allah (swt).
Firstly, economy is based on the fact that the true owner of all wealth is Allah (swt). As Allah (swt) has revealed:
“It is He who created for you all that exists on earth.”
[2:29]
“He put at your disposal that which is in the heavens and that which is in the earth, all from Him.”
[ 45:12]
Therefore, Allah (swt) is in reality the true owner of wealth and it is He (swt) who has entrusted its use to human beings.
Taking the oil as an example; it would be illegal for the Islamic State to simply follow the western model of giving up oil exploitation rights to a handful few. Islam recognizes three categories of ownership; private ownership (which is the default), state ownership (e.g. government offices are actually owned by the state itself), and public ownership. Oil would be an example of a property that is held under public ownership. This is according to the Prophet’s (saw) saying:
“People share in three things: Water, Pasture lands, and Fire.”
[Abu Dawud]
Oil, natural gas, nuclear energy, coal, and hydroelectricity, are all examples of energy sources that would facilitate “fire”. These natural resources are therefore administered by the Khaleefah on behalf of the Ummah and the profit has to be distributed to all people living within the Islamic State’s boundaries. These types of property are distinct from state owned property, in that public property can only be disposed of in a way that benefits all. In contrast, state property is disposed at the discretion of the Khaleefah. Under such regulation, the Ummah would be protected from fluctuations in oil prices since it owns it.
Based on the above, it should be clear that Islam has the ability to solve all of man’s problems without the need for other systems. To be clear, as Muslims we must take our solutions – be it practices of worship, politics, economy or otherwise – from Islam, and not from any other system. This idea is based on the following hadith where the Prophet (saw) condemned the taking of ideas from outside of Islam:
“He who introduces in our order something that is alien to it, must be rejected.”
[Muslim]
Key Problem: GDP or Distribution of Wealth?
As discussed at the beginning, the corporations are making billions in profits through the sale of natural resources. As the price or production of gasoline increases, the Gross Domestic Product (GDP) also increases as a result. The additional revenue collected through gas taxes also contributes to a higher GDP by enabling the government to spend more. Higher GDP is a sign of a healthy economy according to the Capitalist way of thinking.
Islam has a completely different view of measuring the health of the economy. In the view of the Capitalists, man has unlimited needs and therefore there is a scarcity of resources. In order to alleviate this scarcity, they define the key economic problem to be that of production. Islam on the other hand, correctly recognizes that each individual has limited needs which must be fulfilled for his survival and be satisfied. In line with this recognition, the Islamic economic system correctly identifies the fundamental problem as being one of distribution, not production.
Using reason, we can understand that good production is associated with good science. For example, the amount of oil that can be extracted out of the ground would be based on understanding the physics of extracting a thick liquid out of the ground. The one that understands the reality the best will have the highest rate of extraction. Therefore, the issue of production is not something that should be the focus of an economic system, as it is ultimately taken care of by good science. An economic system should instead focus on what type of society should be built. That is, it should examine the problem based on examining the reality of the human being. Allah (swt) knows what is best for the human being and therefore we turn to Him (swt) for guidance in any issue, including economics. According to the Shariah, Allah (swt) has guided us to understand that the focus of economy should be distribution and not production. Allah (swt) has revealed:
“Lest it circulates solely among the wealthy from amongst you.”
[ 59:7]
This ayah gives the illah (reason) as to why Allah (swt) ordered the distribution of wealth acquired from the Bani Nadeer expedition. The money was exclusively shared among the poor while the rich were excluded, in order to strike a balance in the provision of the basic needs within the society.
When analyzing the problem of high oil prices we see that the problem is made worse by the fact that the corporations and the government work to increase production, instead of alleviating the impoverishment of their citizens. For example, the society is not acting upon news that people are turning to pawn shops to secure additional funds to pay for the higher price of gas. Also, neither the government nor the “corporate citizens” are trying to regulate the price of gas to ensure a fair and equitable distribution of wealth in society. It is important to recognize that this problem is not attributable to the greed of certain individuals, although it may be manifested in them. Instead it is a problem associated with the entire Capitalist system; the system works to maximize production to fulfill the (according to it) unlimited desires of man, which is how the economist defines the key economic problem. Such individuals do not care about the impact of the policies of the system on the society; they do not see this as the key problem therefore they do not implement solutions to solve it. They do not care how poor the masses will become. What matters is that the elites are able to make profits and pursue their desires. Although the entire problem does not exist in the Islamic State since oil is a public property, Islam approaches the problem of economy from the correct perspective ensuring that the basic needs of citizenry are attended to and cared for – regardless of the situation.
Islam: The Solution for Humanity’s Problems
Based on the preceding discussion, it is clear that Islam has solutions that are unique and address the human being in a comprehensive manner. Understanding the correct solution enables us to understand how Islam is a way of life in a concrete manner. Such an understanding help us to train our aqliyyah (intellect) to think according to what Allah (swt) has revealed to us. Furthermore, knowing how Islam solves our problems strengthens our confidence in Islam as a way of life and strengthens our connection with Allah (swt). With such a mindset we can work with the people around us, Muslims and non-Muslims, to demonstrate how Islam organizes society in a unique way that strikes a balance in an amazing manner guaranteeing happiness and tranquility. Gas prices are something that are on people’s minds. This article gives us some ideas on how the issue can be discussed in a way that invites people to Islam.
May Allah (swt) help us to convey Islam in the appropriate manner and in a manner that pleases Him and Him alone.
“Verily, Allah will help those who help His (Cause). Truly, Allah is All-Strong, All-Mighty.”
[22:40]

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