Day 44 of UK lock down: No such thing as a free trade lunch

In 1776 Adam Smith wrote, in the Wealth of Nations: “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage”.

By ignoring the whole-life cost, which takes into account the social and environmental price of manufacture, use & disposal of goods, Smith’s legacy has been one of gross inequality, back-door imperialism, sweatshops, wage slavery, and minimal to non-existent protection of workers and environment. Oh, and, in the case of smiley International Trade Secretary Liz Truss, the “inadvertent” and illegal shipping of military supplies to Saudi Arabia, twice.

That’s the same Liz Truss who was promoted as a reward for supporting Johnson in his leadership campaign and for being the architect for plans to cut taxes for people earning over £50,000. And who is now embarking on free trade negotiations with the US to “help the economy bounce back” from the Covid-19 crisis. True, this may adversely effect the much-clapped NHS, but things are definitely looking up for UK exports of pork pies and shower trays.

Day 40 of UK lock down: The writing is on the wall for fossil fuels

The oil industry is foundering, and even traders in futures markets are beginning to seek more buoyant ships.

Meanwhile, forward looking companies that read the writing on the wall some time ago, such as Danish state-owned oil & gas company (Dong) morphed into a renewable energy company (Ørsted), are now thriving despite the pandemic. See report here.

In a recent article in the influential Science Magazine, Daniel Rosenbloom & Jochen Markard summarise very lucidly the global opportunity created by the current circumstances for a rapid move to a cleaner future.

At the same time, they highlight the need not only to avoid bailing out fossil fuel companies and industries, but also to support affected workers and communities in the form of temporary relief, retraining, and retirement benefits. The choice of a cleaner and more sustainable future involves a fair and regenerative approach to human resources too.

And opinion from within the oil industry is beginning to shift in the same direction !

Day 38 of UK lock down: The End is Nigh

BP has gone from a $2bn profit this time last year to a $500m loss, but is still issuing a dividend to their investors, which looks like delivering a 7% yield , albeit by drawing on their capital & depleting their resources. This is clearly is not a sustainable long term strategy, but then neither was what the fossil fuel industry has been doing to the planet for the last 300 years.

Oil prices are currently at the lowest point for 160 years, although that’s not quite as dramatic as it sounds, since prices were almost as low in the 1970s and late 1990s. Nevertheless, Jeremy Cliffe, writing in the New Statesman, makes the point that, regarding the end of the Age of Oil, it’s now a matter of not if but when.

And the answer to that rather depends who prevails – short sighted investors and their populist politician puppets, or people prepared to seize the moment and change to a regenerative & circular economy.

Read analysis of oil price here

Read depressingly upbeat oil industry forecast here

Day 35 of UK lock down: Too much oil

Over the last months demand for oil has collapsed, sending the price through the floor, but oil producers have continued production regardless, because closing a well is an expensive procedure which could also lead to reduced production after re-opening. As a result, global storage is nearly at full capacity and already oil tankers, and probably bathtubs and saucepans, are being called into use to hold the unwanted oil.

If demand doesn’t recover in the next few weeks many oil wells will have to close, which may also mean closing many oil-based businesses. Those governments showing signs of managing the pandemic in a rational and effective way seem very unlikely to return to “normal” any time soon, so mass oil well closure is looking increasingly probable.

Predictably, this is being characterised from within the fossil fuel industry as a looming energy crisis on an unprecedented scale. So, we are being asked to save the status quo of trashing the global ecosystem to produce polluting and climate-wrecking hydrocarbons, which also have, by the way, been the cause of many of the armed conflicts of the last 100 years, with casualty figures way beyond those of Covid-19.

As an opportunity to reboot and move rapidly to sustainable, renewable, more localised energy production this is equally unprecedented and equally massive. And we already have the technologies. If we don’t seize the day, future generations will never forgive us.

See Guardian report here

See analysis of US oil here

See analysis of disastrous oil wars here (surprisingly Conservative source alert)