If doubters need proof that globalisation is more than a bit of awkward jargon, they need look no further than the closing stock price yesterday for Cathay Pacific. Not long after Saudi Arabia, thousands of kilometres away, announced that it would increase oil exports, the airline's shares soared to a record high.
The reasoning was simple: higher petroleum exports should bring lower prices, hence reduced operating costs and increased profits for Cathay, and for other airlines.
What is really at stake, however, is much more crucial than the shares of airlines. The Saudis studied the global economic impact of oil prices, which have tripled over the past year, listened to pleas from Washington and decided to act. They said they would pump an extra 500,000 barrels per day, increasing the total output of Opec, the main producers' association, by two per cent. The stated goal is to bring prices down to US$25 per barrel from the more than US$30 level of recent times.
This will please more than Cathay shareholders. Petroleum-importing nations and private consumers worldwide should soon experience both cheaper fuel and reduced anxiety about their economic future. Prices have already dropped sharply in advance of the extra shipments.
While consumers have reason for gratitude, the Saudi decision was no simple act of charity. Saudi Arabia relies almost entirely on petroleum earnings for its own well-being, and abrupt price changes in recent times have caused it grave domestic problems. Its leaders feared current price levels might bring global recession, thereby reducing the kingdom's earnings and causing social unrest. It also heeded appeals for relief from the US, its main security guarantor. So the decision to pump more oil was mainly one of enlightened self-interest.
The benefits will be felt across Asia, which relies heavily on Middle East oil. This should help keep alive the region's economic recovery, with Hong Kong one of the main beneficiaries. Likewise the mainland, a leading importer of costly fuel; it now buys about one million barrels daily and this may rise to six or seven million barrels in a decade or so.