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1. A HISTORICAL VIEW OF THE OIL PRICES
    Omar Bonilla: “Los precios del petróleo”
2. IRANIAN OIL BOURSE
    Alberto Cruz: “Irán: la crisis nuclear y la bolsa petrolera”
3. HUBBERT’S EQUATION
    Fernando López D'Alesandro: “EL final de la era del petróleo”
4. THE G8 AND THE OIL PRICES
    Graham Saul
5. LOTS OF OIL: GIGANTIC EARNINGS BUT WITH GIGANTIC PROBLEMS.
    Andy Rowell
6. THE PRICE OF DEMOCRACY
    Greg Muttitt
7. POEM
    Roque Dalton

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1. A HISTORICAL VIEW OF THE OIL PRICES

Omar Bonilla: “Los precios del petróleo”

Gráfico 1: Precios del Crudo desde 1861 (en $/barril)

 
Source: Andrés Barreda, El crudo, espejo del poder, Revista Rebeldía, No. 4.

The price of what Andrés Barreda called “the most important merchandise in the planet” has depended on the control of the reserves as well as on the oil business. Although, it was the United States –the new Europe- who first linked its development to the oil industry, Europe followed its steps. Not only in what has to do with the creation of the industry model, but also in its consumption, which since the petrochemical development has led to approximately 1500 intermediate and final products. Therefore, there is a talk about the increasing Americanization of Europe.

The control which multinational companies had during the thirties entailed a control over the price of oil. The price went down at the companies’ will, to achieve business growing. Multinational companies achieved that National States answered to their interests. However, the beginning of nationalizations meant that these companies were to loose control over dream prices. The third world dynamic of recovering oil resources was crystallized in a more evident way in the creation of OPEC.

For that reason, is very important to reflect on the oil nationalization processes, especially those in Mexico, Iran, and Venezuela because these were directly related to the control of the resource and with the profits it represents. OPEC’s pressures achieved the multiplication of low oil prices. This was a critical moment in what is related to oil prices and was a moment of profound transformations at the international level.

In 1970, crude oil was sold at an annual average price of 2.53 dollars per barrel, while at the end of the eighties it reached the 41-dollar mark. Oil prices caused profound changes in the world’s configuration, in fact, for the Soviet Union to have this resource meant to have profits and these led them more and more to enter a model based on importing and exporting goods. Additionally, there was a lot of money in the international system of credit, which caused the world indebtedness crisis, at the beginning of the eighties.

A CRISIS WHICH HAS WORSENED IN THE LAST FIVE YEARS

As in many other occasions, it is difficult to find a single cause for this increment, but without a doubt, many causes played a role. Among them the growth of the Chinese and Indian markets; OPEC policies, the cartel which Venezuela helped rebuild; the US war actions promoted by oil capitalists; natural disasters like Hurricane Katrina, and perhaps the most important cause is speculation due to a possible crude oil shortage…

Gráfico 2: Evolución del precio del Crudo Brent

 

In only two years, between May 2004 and April 2006, the price of a barrel of crude raised from 39 dollars to 73 dollars. One of the reasons was the threats to Iraq and its following invasion. The Iraq war meant that 300 million daily barrels stopped being sold on the international markets (See: Juan Carlos Sosa, La caridad no existe. El Universal, Venezuela, September 13). The strategy outlined at the White House was of “stimulation of the crude oil producing countries to increase their production capacity through the creation of favourable investment conditions, the development of regulatory frames that are structural and stable, and the increase of opportunities for foreign investments” (See: White House Newsletter, July, 8 2005).

The threats of a war in Iran, because of its nuclear program, but also with the control over oil in the back of their mind, and the future opening of a new oil stockexchange could be causing new price speculations. These tensions already created an instability, which caused an increase in oil prices, especially since September 2005 when this country had conflicts with the United Nations Atomic Energy Commission. The price, which up to that moment was estimated at around 51 dollars, increased to 67 dollars per barrel. This situation immediately produced tensions in other industries like the aviation industry, probably one of the most affected, since in Europe and Asia there were many bankruptcies registered for the same dates (see: same source).

To this situation, add Hurricane Katrina, which seriously affected US refineries, severely damaging forty-one pumping stations. After this disaster, the price of oil reached the 70-dollar mark. It is important to point out in which way this tragedy benefited oil companies: “That day, Exxon Mobil shares raised 3% to 61.68 dollars, while Chevron’s experienced a 2.2% increase, to 62.75 dollars. ( See: Luis Luque Alvarez, Para Algunos no es Tragedia (To some it is not a tragedy), Juventud Rebelde, September 4, 2005)

This year, between February and April 2006 the oil price rose again to 74 dollars. There are also other problems added to this situation, like the fact that Nigeria, which is the main oil exporter in Africa, it is currently going through a civil war. On the other hand, OPEC announced that they will not increase its production, on the grounds that, among other reasons, the United States has big oil reserves which should be commercialized.
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2. THE IRANIAN OIL BOURSE

Alberto Cruz: “Irán: la crisis nuclear y la bolsa petrolera”

Last June 5^th, Iran announced the opening of a free trade area at the Kish Island, a crucial step for its oil stock exchange to start being effective. The oil stock exchange worked in an experimental stage for a while and was officially announced on March 20, coinciding with the beginning of the Persian year. Two European companies, Total-Fina-Elf (France) and Agip (Italy) already have their regional offices there, because they believe that the Kish oil exchange will become the fifth largest oil market in the world after New York, London, Singapore, and Tokyo. This initiative happens in parallel with Norway’s announcement that they are studying the possibility of creating its own oil stock exchange in euros. If that were the case, it would steal market from London, whose importance is decreasing because the British oil production has been decreasing since 2005.

The Iranian Oil Bourse opens with an initial capital of 2 billion dollars – yes, dollars, although the Iranian intention is to star the stock exchange using the euro as the exchange currency, but not in a mid-term basis- and right now is in the client recruitment phase. Right now Iran is not going to change the oil reference standard to the euro, waiting to see how is resolved the (artificial) controversy about the nuclear issue. If they take this step in a moment where Russia has announced the conversion of their international trading currency to the ruble from July 1^st –especially in the gas and oil commerce-, the dollar stability as the currency of reference has its days counted in the world economy. Russia’s oil exports represent 15.2% of the world’s total, while Iran’s are in the order of 5.8%.

If Venezuela joins them (5.4%), which at the recent OPEC summit held in Caracas expressed its desire of substituting the dollar for the euro, a fourth of the world’s oil and gas market would be dealt in euros.

Currently the Iranian stock exchange is in the most advance stage, the Russian is ahead of its original date of 2007, and the Venezuelan is not more than a way of pressuring the United States as a response for the threats the Bush Administrations pours against the Hugo Chavez’ government. However, all of them are there as a possibility of an economic destabilization of the United States. Moreover, Iran plays that game, conscious that it is in a position of strength.

The oil ministry, Mohammad Javad Assemipour, had said that “for now”, the oil trade will be in dollars but Iran’s intentions, of trading with the countries in the region and Asia, is that the trade will be in euros. The mention of Asia is important because if China and India get in the Iranian Oil Burse –and this country has participated, as an observer at the Shangai Cooperation Organization-, this would be the deathblow for the dollar. Currently 68% of the oil international trade is in dollars, so if it would only be a drop of 10%, The United States would fall in a depression stage, similar or worse than the one at the beginning of the twentieth century.

Perhaps, that is the reason why the United Status and some of Europe put so much emphasis on the economic sanctions to Iran, if this country does not put a stop to its uranium enrichment program. For sure, in those sanctions, will be a prohibition for western banks to accept any kind of transactions from their Iranian counterparts, which would make it difficult for the Iranian Bourse to develop and succeed.

Rebelión/Igad
Author’s e-mail:

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3. HUBBERT’S EQUATION

Fernando López D'Alesandro: “EL final de la era del petróleo”

King Hubbert was the most prestigious geophysicist of the XX century. He worked for Shell, and was a professor at the Massachusetts Institute of Technology, Stanford and University of California, Berkeley. During the mid fifties, he came up with a model that predicted that when the production of an oil field reaches half of its reserves, it will start a terminal declining curve, making the extraction of crude oil more difficult and expensive. When applying his theory to the United States, he concluded that its decline in production would happen around the beginning of the 70’s. Few, believed him.

With exact accuracy, in 1970, the oil production of the United States started to fall very rapidly, confirming what Hubbert predicted fifteen years earlier . Since then, the United States became a big scale importer, reaching the critical point that is described in the Energy National Plan. Hubbert’s proposal validated by the facts was applied at worldwide level by experts in the subject. CJ. Campbell and J.H. Laherr, refined Hubert’s formula and sustained that the same scenario predicted thirty-four years ago for the United States would be repeated at a worldwide level between 2008 and 2012.

The Association for the Study of Peak Oil & Gas (ASPO) (www.peakoil.net) is a scientific network founded by Cambell that for many years has studied and validated this theory. The Spanish counterpart is “Crisis Energética” (www.crisisenergetica.org) where it is possible to find all the materials in Spanish.

In summary, without a doubt the oil price climbing responds to the war in Iraq and to the unstable situation in the Middle East, but these would only be current factors that hide the true reason: the peak of crude oil production and its imminent depletion.

CR. La Insignia

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4. THE G8 AND THE OIL PRICES

Graham Saul

EXPANDING ACCESS TO OIL AND GAS

The G8 draft Plan of Action argues that 17 trillion US dollars of investment will be needed over the next 25 years in order to create a “shock-proof system of global energy supply” and it outlines the G8's intention to work together to “create the environment for the effective mobilization of these huge sums.”

The G8 is calling for a global effort to reshape regulatory regimes and remove “unjustified administrative barriers”.

According to the draft Plan of Action, these legal and regulatory changes will help create the conditions for the private sector to:

• find new reserves of oil and gas at a faster rate than the existing reserves are depleted;
• increase oil and gas output by, among other things, more drilling on the continental shelf;
• expand production capacity in oil-refining, petrochemical and gas processing industries;
• develop new electric power facilities, with an emphasis on nuclear and hydro-power plants; and
• introduce “clean coal” technology.

Any intention of significantly reducing the world's use of fossil fuels seems to be swept aside. The draft Plan of Action states that: “The proven hydrocarbon reserves and the existing investment potential are sufficient to meet, for a foreseeable future, the growing world demand for energy. We need to create jointly the proper environment to realize this potential.”

Energy Efficiency and the Environment

The draft Plan of Action emphasizes the following priorities among a range of “measures to ensure a more efficient and ecologically responsible energy production and use”:
• increasing the output of hydrocarbon deposits;
• raising the level of processing of hydrocarbon resources;
• widespread introduction of carbon sequestration technologies in energy production;
• wider introduction of “clean coal” technologies;
• large-scale utilization of associated gas;
• use of coal-bed methane; and
• expanding the market for synthetic fuels, particularly those produced from coal and natural gas.

Expanding Nuclear Energy: The message on nuclear energy is clear: “We believe that the development of nuclear energy would promote the global energy security...” and “we intend to make additional joint efforts to ensure non-discriminatory access to this energy source.”

DEVELOPING AN INSTITUTIONAL FRAMEWORK FOR A NEW GLOBAL ENERGY ARCHITECTURE

The G8 wants to pursue the above-mentioned objectives by working “within the framework of existing relevant institutions and mechanisms.” According to the draft Plan of Action, they intend to call on the World Bank, export credit agencies and the regional development banks to “use more effectively their potential for financing energy projects, especially in developing countries”.

They want the international financial institutions (IFIs) to pay “special attention” to improving the “economic and financial viability of projects” by using “mechanisms and schemes of insurance and sharing of financial risk.” They will presumably also be expecting the IFIs to join them in working “actively with the developing countries with a view of improving conditions for private investment...”

The draft Plan of Action also focuses on the need for more dialogs between energy producers and consumers in order to ensure a secure and uninterrupted supply of oil and gas. This includes working “in closer contact with OPEC” and other international bodies such as the Saudi-inspired International Energy Forum (IEF). Looking ahead to 2007, the draft Plan of Action states: “We have instructed our experts to examine the feasibility of and formulate recommendations for the next G8 Summit in Germany with regards to establishing the practice of holding regular annual meetings of G8 energy ministers along with senior officials of the IEA, IEF and OPEC...” Is There Any Good News?

The G8 reaffirms its commitment to the Gleneagles Plan of Action on renewable energy and makes a range of references to the importance of energy efficiency and “eradicating energy poverty”. Unfortunately, these laudable goals are couched within an unmistakable focus on expanding fossil fuel and nuclear energy production and using public institutions to support the work of international oil companies who are currently reporting record profits.

DEBT AND OIL

By emphasizing the need to increase oil production rather than helping countries diversify away from their dependence on oil, the G8 is contradicting both its rhetoric on climate change and debt cancellation. At the G8 in 2005, Oil Change International, and the Jubilee USA Network, co-published Drilling into Debt - the first study to rigorously examine the relationship in between oil and debt.

The report confirmed the direct impact, that rising oil prices have had and continue to have on oil importers globally, while also for the first time reveals that countries that produce oil also have unusually high debt burdens.

CONCLUSION

The world's leading industrialized countries don't seem to be able to decide whether or not to use the G8 as a vehicle for overcoming their addiction to oil or as a means of feeding that addiction. They acknowledge the potential for “devastating conflicts driven by eventually disruptive competition for energy sources”, but their draft Plan of Action seems to suggest that the answer to the world's dangerous dependence on fossil fuels is more fossil fuels. Rather than charting a bold vision for a clean energy future, G8 governments are debating a “global energy architecture” that would drive us further down the destructive road that we find ourselves on today. Hopefully, there is still time to turn the Summit around.

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More info: www.priceofoil.org

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Más información: www.priceofoil.org

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5. LOTS OF OIL:
GIGANTIC EARNINGS BUT WITH GIGANTIC PROBLEMS.

Andy Rowell

Hot on the heels of Business Week laying into the oil majors, now the Financial Times is doing it too. Although they are making “unprecedented profits” and have returned well over $120bn to shareholders, the FT says these are “uncertain times for the international oil companies”.

Once again, the issue of gaining access to reserves is explored. “The first, and perhaps largest, problem they face is getting access to new resources. About three-quarters of the world’s oil and gas reserves are off limits to them because governments such as Saudi Arabia do not allow them to participate”.

Coupled with declining mature fields, hostile governments increasing their tax burden, and a host of countries renationalizing or tightening their grip on their oil assets, all is not rosy with Big Oil.

Unwanted by countries such as Saudi Arabia, the majors are being forced into frontier areas of the world – such as ecologically sensitive Sakhalin or into “unconventional” technology, such as the equally damaging tar sands in Canada. What this means that every barrel of oil carries a higher ecological price than the one before.

Instead of destroying these fragile ecosystems, the majors could be spending their vast stockpiles of cash on kick-starting the renewable revolution. So what’s stopping them?

Full version of this document @:
http://priceofoil.org/category/big-oil-profits/

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6. THE PRICE OF DEMOCRACY

Greg Muttitt

Multinational oil companies have reaped record profits the last two years due to the high oil price. But behind the scenes, they are playing a longer game. Civil society should learn from their approach.

Hovering around $70 per barrel – the highest level since the late 1970s (in the 1970s, the nominal price was lower than now, but adjusted for inflation it was higher) – the oil price has sparked focus on the theme of “energy security”, notably at this July’s G8 meeting. But this term is a misleading one, a cover for companies to take long-term control over oil and gas resources, at the expense of genuine security.

What is needed is to replace it with a genuine concept of energy democracy.

AN OIL PRICE PREDICTION

In October 2004, the International Energy Agency, which is seen as the world authority on oil prices, predicted that the oil price would fall to $22 in 2006. They missed by a factor of three.

Similarly way-out predictions are repeatedly made by financial analysts, by the US government and by OPEC, the Organisation of Petroleum Exporting Countries.

So, asked to write about the high oil price, we decided to limit our predictions to the following: that those who spend their time predicting the price will, before too long, end up with egg on their face.

Whenever the oil price is extremely high or extremely low, it seems to attract talk of a “new era” – in the current case, of permanently high prices. While some have associated the high price with depletion of the planet’s reserves, in fact rates of production depend as much on politics, economics and technology as they do on geology. These other factors – determining what proportion of the world’s oil is extracted and by whom – are more difficult to predict.

Major oil and gas companies do not expend a huge amount of effort on predicting the price. Like predicting the weather, their game is more to consider what might happen, to be prepared for it, and to calculate how to use it to their long-term strategic advantage.

MEGA-PROFITS

One obvious consequence of the high price is higher profits for oil and gas companies. At the end of July, ExxonMobil announced profits amounting to $4.7 million per hour – the second highest in corporate history (The highest was ExxonMobil six months earlier!).

Such profits raise the question in oil- and gas-producing countries of whether the state is getting a fair share. Meanwhile, the high price shifts the balance of market power from company to state: with limited other available supplies, they have little choice but to accept the terms offered by producing governments.

The oil price is one of the most important factors behind the change of contract terms in Venezuela last year (and more recently in Algeria and Indonesia), the nationalisation in Bolivia this year, and continued pressure on private companies in Russia and Kazakhstan.

Conversely, during the low price of the late 1990s, the companies took advantage of the weakness of Asian nations following their financial crisis, to sign contracts which gave the companies very favourable terms, but outlasted the crisis and the low oil price.

Thus despite the immediate boon of record profits, the high oil price creates a long-term challenge to multinational companies’ power over the energy market.

PUSHING THE FRONTIER

Far from sitting back on their current windfall, oil companies are working to turn this dynamic to their longer-term advantage, taking on oil-producing governments both in their own countries and abroad.

In the 1970s, the oil majors, nationalised out of the world’s largest oil provinces, moved into the more expensive the North Sea and Alaska, a move enabled by the high oil price. Subsequent increased production in these areas built up extra capacity, which along with reduction in demand led to the drop in oil price of the late 1980s – and the containing of OPEC’s power.

This approach was continued into the 1990s and the start of this century, with a rash of new oil and gas developments around the globe, especially offshore and in remote and pristine onshore areas.

However, these projects have mostly been small compared to the giant provinces of the Middle East, Venezuela and Russia – which between them contain more than three quarters of the world’s known oil reserves. Oil production in the rest of the world has flatlined since the mid-1990s – while global demand has accelerated upward.

The only real potential for significant increases outside OPEC and Russia now lies in “unconventional” fossil fuels – such as oil sands, oil shales, methane hydrates and gasified or liquefied coal. The Alberta Energy Board estimates that Canada contains 170 billion barrels of oil, locked in bituminous sands. If this could be extracted, it would give Canada about 15% of the world’s oil reserves, the second largest behind Saudi Arabia.

The oil-soaked sands (usually extracted by strip mining) must be heated to high temperatures to release the oil. This is highly energy-intensive, expensive and environmentally damaging.

Now, some oil companies are using the high oil price to develop these resources.
Shell is one of the frontrunners. Already the operator of Canada’s $10 billion Athabasca Oil Sands project, this year the company bought a small Canadian oil sands company for $2.2 billion, and spent a further $400 million just on a set of speculative land leases. It is also pursuing oil shales in the USA and China.

But while investing in this new frontier, the ultimate prize for oil and gas companies is to break back into the countries with giant reserves. The supermajors gained significant positions in Russia in the 1990s. Now attention is turning to the Middle East.

SPREADING “DEMOCRACY”

US Vice President Dick Cheney famously reflected on the distribution of oil wealth in 1996, when he was CEO of Halliburton, that “The problem is that the good Lord didn’t see fit to put oil and gas reserves where there are democratic governments.”

In fact, the correlation is not the product of God’s mysterious will. Owing their political success to outside support, many governments – from Saudi Arabia to Azerbaijan to Colombia – have favoured the interests of the USA and foreign companies over those of their own populations.

Equally in countries with a high degree of nationalism, oil has been associated with undemocratic governments, which have used oil income to fund high social spending with low taxation, dampening pressure for representation and democracy, and to build up their internal security forces to ward off protest.

But what Cheney really meant by “democratic governments” was “governments supporting US interests” – a point echoed in May this year, when President Bush said he was concerned about “erosion of democracy” in Bolivia and Venezuela, referring to lack of “respect for property rights”.

Although oil companies have mostly been cautious of being seen as too close to politics, one exception keen to show its allegiance to Uncle Sam is the British company BP. American companies’ compliance with US sanctions has passed without comment, but BP made a point of not dealing with Iran, unlike other European companies.

BP has also tried to link “democracy” with investor rights. At a conference in Dubai in March, the company’s head of policy Nick Butler commented: “By 2015 up to 80 per cent of supply will come from just three areas of the world. West Africa, Russia and overwhelmingly the Middle East ... Few of those countries are democracies and few are open to international investment.”

But the oil majors have all echoed the call for opening reserves to foreign investment – often arguing that it is the only way to reduce the oil price.

ChevronTexaco’s vice chairman Peter Robertson, for example, argued in March that “We should promote transparency and the free flow of energy trade and investment on a level playing field. By removing market barriers, we could increase production significantly and moderate the price volatility we face today.”

ENERGY SECURITY – FOR WHOM?

Companies have also tied access to reserves to “energy security”, the current buzzword on which this year’s G8 meeting focussed.

Although “security” is a comforting word, and is dressed up in concern over energy poverty, the G8’s emphasis is on free market structures of energy provision – which will naturally favour those with most power in the market, the largest consumers of energy.

Indeed, it is a sad irony that often people in major oil-producing countries suffer severe energy poverty, and the countries are forced to import expensive refined products, increasing the risk of smuggling and corruption. For example, Nigeria, the world’s eighth largest oil exporter, imports 76% of its gasoline, and 34% of its kerosene, at a cost of $3.6 billion. In the Niger Delta, the oil-producing region, firewood is the primary energy source for 73% of people, according to the UNDP’s Human Development Report.

The G8 insists that the majority of investment must come from the private sector – in part by breaking open public sector oil and gas industries. The G8’s official declaration on energy security promised that “We will work to reduce barriers to energy investment and trade. It is especially important that companies from energy producing and consuming countries can invest in and acquire upstream and downstream assets internationally”.

This model – giving multinational companies control – can worsen local access to energy in the producing country, as the companies prioritise exporting the oil to international markets.

Nor does “energy security” lead to physical security. For Russia, “energy security” was a major reason for its two brutal wars with Chechnya, an important pipeline corridor.

US policy towards the Middle East has also clearly had a destabilising effect. While this has pushed up the oil price, it has been to the USA’s longer-term advantage, with instability leading to governments offering oil and gas companies investment opportunities in order to help secure their position. Even Iran is now offering new production contracts, in an effort to win allies against potential US military action.

Iraq, with 10% of the world’s oil reserves, is seen as the lynchpin. Since the start of the occupation, oil companies and the US and UK governments have worked hard to reshape the country’s oil sector. Now, following the formation of a permanent government, an oil law has been drafted to allow long-term production contracts to be signed with multinational companies. The draft law has been reviewed by the US Energy Secretary and by nine major oil companies – before even being seen by the Iraqi parliament.

The combination of military force, and legal mechanisms for ensuring resources are taken to the wealthy consuming countries of the world, at the expense of local people’s needs, suggests a more accurate phrase might be not energy security but “energy imperialism”.

CLIMATE CHANGE

At first glance, a high oil price ought to increase the viability of alternative, renewable fuels, and of decentralised energy networks, and to encourage conservation. But this time such reaction has been limited – in part because rich country economies are less dependent on oil than 30 years ago, and so less responsive to the oil price. What response there has been has focused on securing greater oil and gas supplies, with nuclear the favoured alternative.

British Prime Minister Tony Blair’s feeble attempt to raise climate change in last year’s G8 meeting has been subsumed into the energy security agenda. Now, UK policy, like this year’s G8 declaration, talks simultaneously about expanding the supply base of fossil fuels while urgently addressing climate change, apparently seeing no contradiction.

Another reason for the lack of action to move to sustainable power generation is that energy infrastructure is geared towards centralised coal, gas and nuclear generation. And in transport, there is no significant replacement for oil (to produce a comparable amount of biofuels would require more land than is available); while ownership of cars, and use of road and air transport, have continued to rise: a trend no politician has dared to challenge.

This inertia is as much psychological as it is physical – the leap to new energies is difficult to imagine, especially for policymakers. And oil companies still carry a disproportionate sway over policy.

One impact of the high oil price is that it increases public interest in scrutinising oil companies’ behaviour. Faced with this reputation risk, the companies have all dramatically scaled up the visibility of their advertising, not so much to sell products but more to ‘sell’ the corporations themselves as responsible organisations – including for some highlighting their role in renewable energy.

BP and Shell are still among the world’s largest renewable energy companies – which gives them significant influence over the rate of change of any energy transition. Both companies insist that renewals will not provide a significant proportion of the energy mix for several decades. BP invests just 2.7% of its capital - $450 million per year (BP’s much-publicised announcement of $8 billion investment over 10 years was an aspirational goal. The concrete plan is for $1.8 billion over the next 3 years. But a quarter of this will go into gas power generation, so is not counted here) - in renewables, and Shell even less.

ENERGY DEMOCRACY

We have noted that oil and gas companies are not just sitting back on their record profits. Likewise, civil society gains tactical advantages from the high price, but should use them within the longer-term context.

For example, it would be tempting to surf the wave of resource nationalism, as a route to restricting the role of multinational companies. But the longer-term impact may be less democratic, more repressive governments.

On the other hand, there is an opportunity to steer the rejection of foreign company control towards a lasting greater democratisation of decisions on oil policy – in which communities affected by the developments have a genuine say in how, and whether, they take place.

It would be equally tempting to use the high price to call for an end to the oil age, hoping that potential supply constraints would get attention where environmental and social issues have failed. But we have seen that the policy response will favour not renewables but nuclear power, and greater interference in other countries’ energy policies.

Conversely, climate change is no longer in any serious doubt – and presents the most compelling arguments for a transition in energy sources, and in rich countries a reduction in total use of energy.

To borrow from David Korten, we should worry less about the ‘crisis of sources’ of fuels – whether the oil is going to run out – and more about the ‘crisis of sinks’ for their waste products – how much capacity the atmosphere has to carry greenhouse gases. Making climate change arguments now, to push for switching of energy use, can be effective, as environmental advocates within organisations will experience less resistance from finance managers.

In this too, civil society should be guided by core principles of democracy and justice. While energy resources under the ground belong to the citizens who live there, the atmosphere is a global resource owned by all of the world’s people.

There must be a strong concept of equity in how rights to atmosphere are divided in future climate regimes, taking into account who bears the responsibility for, and has benefited from, emissions to date. There should also be a concept of just transition, in which those most affected by an energy transition (such as oilworkers or oil-dependent countries) have a strong say in how that change takes place, and are supported by those who have gained from the fossil fuel economy. Meanwhile, the concept of decentralised energy, in which local, small-scale provision meets people’s needs sustainably, has gained welcome momentum recently.

The high oil price has renewed talk of “energy security”, calling for increased supply of energy to wealthy countries and expansion of their corporations – at the expense of poorer countries that need energy for development, at the expense of oil-producing countries who deserve a fair deal for their natural resources, and at the expense of the world’s whole population which urgently needs serious action to cut greenhouse gas emissions.

More info:
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http://www.platformlondon.org/carbonweb/


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7. POEM