Privatising profit and socialising risk

This is essentially the modus operandi of the modern western government; to promote the interests of corporate gloabalisation and to offload the risks onto the people. This has manifested itself in many ways over the last few decades, but interestingly many have been demonstrated in only the last few years and even days.

As the Libyan uprising continues the news has come through that BP oil workers operating in the Libyan desert have been repatriated, by the SAS no less. This is a complex problem, as British citizens they have a right to be defended by their government though this is not really the question. The question is should BP expect national governments to repatriate their workers at tax-payers’ expense? Oil and conflict go hand-in-hand, there are very few oil-rich areas that are not conflict zones in one way or another. It is, therefore, reasonable to expect that companies operating in these areas have carried out assessments of the risk to their workers and created contingency and evacuation plans should the situation get dangerous for those workers to remain. That it has taken so long to get the workers out and that the operation was conducted by the SAS and Royal Navy suggests that BP had no such plans in place, or that if they did their plan was to let national governments deal with it and let the citizens pay for it.

A similar situation happened in the Gulf of Mexico last year with the Deepwater Horizon disaster. BP’s disaster response plan was not sufficient to cope with the scale of the disaster and therefore the burden of responsibility was shifted onto the American tax payers. Now BP did have to cough up a significant chunk of money to deal with the mess, and the eventual legal fees and result of the estimated 20 year litigation process to determine culpability will cost them greatly. Though it should be noted that rarely, if ever, are oil companies fined an amount that represents anything near the cost of the damage done. However there has been, and will still be, a significant burden on the tax payer to deal with the ongoing repercussions of the disaster.

The financial crisis in the minority world is the epitome of the privatisation of profit and socialisation of risk. National governments across the rich minority world bailed out their failing banks to the tune of trillions of pounds. This was done, ostensibly because not doing it would have had more significant and disastrous repercussions for the citizens of those nations, the concept of “Too Big To Fail”. What happened in the UK was that HM Treasury set up a company, limited by shares, called UK Financial Investments that then bought up the now public stakes in banks such as RBS and Lloyds. This has allowed the banks to continue operating business-as-usual and turning over huge profits at little risk to their own livelihoods. The unemployed, lowest paid and most vulnerable in the UK are facing cuts to their public services whilst bankers are reaping the rewards of their risky investments is a case-in-point.

David Cameron has been in the Middle East as a trade envoy for the British arms industry. The crassitude and insensitivity this shows when tyrannical dictators are crushing democracy with British arms is incredible but this is not the key point. Is it the responsibility of the Prime Minister to be touring the Middle East trying to sell things? Is there nothing more important for the person responsible for governing the UK to be doing than being a traveling salesman? Corporate globalisation has engulfed national government and offloaded the risk so that the government has seemingly no alternative but to act like an advertisement for big business. Government has been reduced to the middle man, linking seller with buyer, desperately kowtowing to the megarich and the despotic (funny how often those go together) in the interests of the economy. The economy is a means to an end, not an end itself.

The role of a national government is to serve the people of the nation, not the interests of corporate globalisation. After all, as David Ransom points out, the only time corporate globalisation is interested in nations is when they need their money.


Are we heading for an Oil-Crunch?

worldofoilbybarbaradodukLeading environmentalists, major national companies and industry experts have increased calls for more action on what has been called the “oil crunch”. Environmental entrepreneur Jeremy Leggett wrote in The Guardian recently about how we are heading for an oil crunch within the next decade. Leggett heads up the UK Industry Task Force on Peak Oil and Energy Security and has warned how we could see the same crash that happened to the banks happening with global oil reserves. The task force has claimed that oil production will hit its peak in 2015 after which we will see a rapid decline in production whilst demand continues to increase, a claim supported by major UK companies such as Virgin and Stagecoach. The report by the task force highlights concerns that draw parallels with the causes of the credit crunch. They are concerned that there may be significant flaws in the oil reserve estimates by OPEC countries, similar to the flaws in the value placed on “toxic loans”. This would mean that demand would be even higher than estimated and could cause oil production to peak even earlier. The UK Government’s line on this has remained the same; that there is enough oil for the next 40 years and there is no crisis on the way, though I’m sure that’s what the Treasury and Bank of England were saying to the few economists that predicted the crash.

So what would an “oil crunch” mean? Well, as supply plummets and demand continues to increase, countries dependent on importing oil, such as the UK, would initially see increasingly large price rises, particularly for energy and fuel. On a global scale, countries that produce a lot of oil would become increasingly protectionist, particularly countries with histories of isolationist foreign policy such as the USA, China and Russia. This combined with neo-liberal (read ‘corporate influenced’) government and free-market economics pushes larger countries into conflict with oil-rich countries such as those in the Middle East.

A pretty dire future I think you’ll agree.

So, if we are plummeting towards this inevitable distopian future, is there any point in doing anything? Well, yes, or at least if we don’t do anything and we do continue to burn oil for the next 40 years, it won’t be the lack thereof that is a our biggest problem, we can kiss goodbye to staying below a 2oC rise in global temperatures. Far from being inevitable this is, in fact, evitable, very evitable. The answer is simple but, like cleaning up any mess, implementing the solution will require a huge effort and a lifestyle switch. What is the answer? Simple, we stop using oil, and there are a great many ways in which we can do this. In the UK, for example, the report from the task force suggests ending the, quite frankly absurd, £9billion tax break on fuel for domestic flights (which in a country the size of the UK are ludicrous anyway) and instead pumping it into public transport and boosting the renewable energy sector. If the subsidies that go into fossil fuel energy were put into developing sustainable, decentralised renewable energy, peak oil wouldn’t be anywhere near the problem that it is likely to be. If ever there was a good reason to look into fitting solar panels onto your roof, this is it.

And yes, I have noticed the obvious self-interest of SolarCentury owner Jeremy Leggett warning us of the perils of relying too much on oil, doesn’t make him any less right though.