Rigging the Market

[polly7]

By George Monbiot
Source: The Guardian
February 4, 2016

Instead of a collapse in the supply of oil, we confront the opposite crisis: we’re drowning in the stuff. The reasons for the price crash – an astonishing slide from $115 a barrel to $30 over the past 20 months – are complex: among them are weaker demand in China and a strong dollar. But an analysis by the World Bank finds that changes in supply have been a much greater factor than changes in demand. Oil production has almost doubled in Iraq, as well as in the US. Saudi Arabia has opened its taps, to try to destroy the competition and sustain its market share: a strategy that some peak oil advocates once argued was impossible.

The outcomes are mixed. Cheaper oil means that more will be burnt, accelerating climate breakdown. But it also means less investment in future production. Already, $380 billion that was to have been ploughed into oil and gas fields has been held back. The first places to be spared are those in which extraction is most difficult or hazardous. Fragile ecosystems in the Arctic, in rainforests, in remote and stormy seas, have been granted a stay of execution.

Already, according to the IMF, more money is spent, directly and indirectly, on subsidising fossil fuels than on funding health services. The G20 countries alone spend over three times as much public money on oil, gas and coal than the whole world does on renewable energy. In 2014, subsidies for fossil fuel production in the UK reached £5 billion. Enough? Oh no. While essential public services are being massacred through want of funds, last year the government announced a further £1.3 billion in tax breaks for oil companies in the North Sea. Much of this money went to companies based overseas. They must think we’re mad.

Compare all this to the government’s treatment of renewables. Local people have been given special new powers to stop onshore windfarms from being built. To the renewables companies Amber Rudd says this, “We need to work towards a market where success is driven by your ability to compete in a market, not by your ability to lobby government”. Strangely, the same rules do not apply to the oil companies. Your friends get protection. The free market is reserved for enemies.

Crises expose corruption: that is one of the basic lessons of politics. The oil price crisis finds politicians with their free-market trousers round their ankles. When your friends are in trouble, the rigours imposed religiously upon the poor and public services suddenly turn out to be negotiable. Throw money at them, trash their competitors, rig the outcome: those who deserve the least receive the most.

Full article: https://zcomm.org/znetarticle/rigging-the-market/