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Little Knowledge of Energy Transition

Little Knowledge of Energy Transition

Posted on  by elizabethperry493 is this essay on a Survey of oil and gas workers shows little knowledge of energy transition. Here it is.

The picture above that is for illustrative purpose is of The impact of the global energy transition on MENA oil and gas producers written by Jade on 08/09/2019.

A report commissioned by international union coalition Industrial examines the geopolitics of fossil fuel producing countries (mainly, the United States, China, Europe and Russia) and the investments and performance of the Oil Majors (Chevron, ExxonMobil, Shell, BP, Total, as well as nationally-owned PetroChina, Gazprom and Equinor).  Energy transition, national strategies, and oil companies: what are the impacts for workers? was published in November 2020, with the research updated to reflect the impacts of Covid-19. 

In addition to a thorough examination of state and corporate actions, the report asked union representatives from four oil companies about how workers understand the energy transformation and its impact on their own jobs, and whether the concept of Just Transition has become part of their union’s agenda.     

Some highlights of the responses:

  • “the union members interviewed showed little knowledge about either the risks that the current transition process can generate for the industrial employee, or about the union discussion that seeks to equate the concern with the decarbonisation of the economy with the notions of equity and social justice. In some cases, even the term “Just Transition” was not known to respondents.”
  • Their lack of knowledge regarding the Just Transition can be justified by the fact that they do not believe that there will be any significant change in the energy mix of these companies.
  • Regarding information about energy transitions within the companies, “Managers are included, but the bottom of the work chain is not”
  • Lacking corporate policies or support, some  employees feel compelled to take responsibility for their own re-training

Echoing results of a similar survey of North Sea oil workers in the summer of 2020, published in Offshore: Oil and gas workers’ views on industry conditions and the energy transition, one European respondent is quoted saying: “In the end, everyone is looking for job security, good wages and healthy conditions. It doesn’t matter so much if the job is in another area, as long as it is in good working conditions”.

The researchers conclude that: “Far from being just a statement of how disconnected workers are from environmental issues, these researches reveal a window of opportunity for union movements to act in a better communication strategy with their union members, drawing their attention to the climate issue and transforming their hopes for job stability and better working conditions into an ecologically sustainable political agenda.”

The report was commissioned by Industrial and conducted by the Institute of Strategic Studies of Petroleum, Natural Gas and Biofuels (Ineep), a research organization created by Brazil’s United Federation of Oil and Gas Workers (FUP). 

OPEC, Unconventional Oil and Climate Change

OPEC, Unconventional Oil and Climate Change

OPEC, Unconventional Oil and Climate Change – On the importance of the order of extraction by Benchekroun, Hassan, Gerard van der Meijden, and Cees Withagen. Published by the Journal of Environmental Economics and Management is a long-awaited reflection on what could be the most important topic of the century. The abstract and part of the introduction are republished below, and the whole text could be found in the original referred to document.

OPEC, Unconventional Oil and Climate Change-On the importance of the order of extraction

OPEC, Unconventional Oil and Climate Change

We show that OPEC’s market power contributes to climate change by enabling producers of relatively expensive and dirty oil to start producing before OPEC reserves are depleted. We examine the importance of this extraction sequence effect by calibrating and simulating a cartel-fringe model of the global oil market. While welfare net of climate damage under the cartel-fringe equilibrium can be significantly lower than under a first-best outcome, almost the entire welfare loss is due to the sequence effect of OPEC’s market power. In our benchmark calibration, the cost of the sequence effect amounts to 15 trillion US$, which corresponds to 97 percent of the welfare loss. Moreover, we find that an increase in non-OPEC oil reserves decreases global welfare. In a counterfactual world without non-OPEC oil, global welfare would be 13 trillion US$ higher, 10 trillion US$ of which is due to lower climate damages.

Introduction

What is the impact of imperfect competition in the oil market on climate change? This question is relevant given the sizable carbon footprint of oil and the prominent size of OPEC. Oil is responsible for close to a quarter of anthropogenic carbon emissions (IEA, 2016)1 and, with OPEC producing 40 percent of global oil supply and owning 70 percent of world oil reserves (EIA, 2019b), it is not realistic to assume that OPEC is a price taker in the market of oil.

An old adage says that “the monopolist is the conservationist’s best friend” (e.g., Dasgupta and Heal, 1979, p. 329). Indeed, we know from non-renewable resource economics that market power typically leads to higher initial resource prices and slower resource depletion. However, in the case of oil, the consequences of imperfect competition for the Earth’s climate are more complex because different types of oil reserves with varying carbon contents are exploited. The reason is that imperfect competition does not only affect the speed, but also the order of extraction of different reserves of oil (cf. Benchekroun et al., 200920102019). Conventional OPEC oil is cheaper and its extraction is less carbon intensive than unconventional oil owned by relatively small oil producers (Malins et al., 2014Fischer and Salant, 2017OCI, 2019). Technically recoverable reserves and production of unconventional types of oil by non-OPEC countries have grown significantly over the last decade. The supply of oil sands from Canada has more than doubled, and shale oil production in the US has increased more than tenfold since 2007 (CAPP, 2017bEIA, 2019b). Current recoverable reserves of Canadian oil sands and of US shale oil amount to 165 and 78.2 billion barrels, respectively (CAPP, 2017aEIA, 2019c). In this paper, we take into account that when OPEC exercises market power it does not only slow down its rate of extraction—which tends to be good for the climate—but it also opens the door for earlier production by the fringe. As a result, OPEC’s relatively cheaper and cleaner oil is extracted later, while the fringe’s costlier and dirtier oil is extracted earlier. This ‘sequence effect’ leads to higher discounted extraction costs and climate damage.


This work is licensed under a Creative Commons Attribution 4.0 International License

After 60 years, what future for OPEC

After 60 years, what future for OPEC

In the face of new global energy changes, going through these traumatic times, and after 60 years, what future for OPEC, can we expect of this organisation.

OPEC was established on September 14, 1960 and celebrated its 60th anniversary with a declining share in both energy decision-making and global marketing. With the coronavirus outbreak despite a substantial drop in production, prices are struggling to recover to 2019 levels.  With a crisis like no other, since the 1928/1929 crisis, at a time when the interdependence of economies was low, no expert, able only to develop scenarios, can predict whether consumer and investment activities will be able to rebound, depending on the control of the epidemic. However, a high growth rate in 2021 compared to a negative growth rate in 2020 would mean it recovers, and in any case, the level of 2018/2019 will not be reached until 2022. However, the growth of the world economy and the future energy consumption model for 2020/2025/2030 are the fundamental determinants of the price of oil/gas, as the market has experienced ups and downs have not yet reacted favourably to the various OPEC decisions.

OPEC was created on September 14, 1960, at a Baghdad conference mainly on the initiative of the Shah of Iran, the Saudi Abdullah Tariki and the Venezuelan Juan Pablo Pérez, with initially only five member countries: Saudi Arabia, Iran, Iraq, Kuwait and Venezuela. Other producers joined such as in Africa, Algeria joining in 1969 was the first country to nationalise its hydrocarbon production;  Angola:  member since 2007. One of the largest areas of exploration, mainly conducted as production by the major oil companies of the OECD;  Congo:  the last member country to join the organisation (in the summer of 2018); Gabon:  a member who left the organisation in 1995 and rejoined it back in July 2016; Equatorial Guinea, a country that joined OPEC in May 2017; Libya:  member since 1962. Immense potential for untapped exploration due to the conflict in that country;  Nigeria: OPEC’s least nationalised oil industry. In South America:  Venezuela a country with the world’s largest oil reserves thanks to its oil sands resources but currently experiencing a severe political and economic crisis; Ecuador,  which was a member of OPEC between 1973 and 1992 and then again in 2007 In the Middle East:  Saudi Arabia as a founding member. The traditional leader of OPEC and the second-largest producer in the world with the largest conventional reserves; the United Arab Emirates, a member since 1967, a significant producer; Iran, founding member, OPEC’s second-largest producer and fourth-largest exporter of crude oil in the world before sanctions; Iraq: a founding member with the world’s largest open-air reserves; Kuwait: a founding member, a unique deposit whose peak production is declining. Qatar, a country that announced that it would leave the organisation in January 2019, officially to focus on its gas production. 

Since 1982, OPEC has had a system for regulating production and selling prices using a total amount of production (slightly more than 30 million barrels of crude per day). This volume of production, defined according to member countries’ reserves, is adjusted according to the needs of the consumer countries. The system of production quotas by member country was agreed in 2011 and negotiations have been expanded since the end of 2016 with other non-OPEC producers, Russia, produces as much as Iran, Nigeria, Venezuela, Algeria and Ecuador combined. However, the functioning of this regulatory system is affected by fluctuations in the price of the dollar, the transaction currency of oil: the purchasing power of producing countries decreases when the dollar falls and vice versa. 

OPEC manages a quantification instrument: the OPEC basket (ORB) which sets a benchmark price based on the costs of fifteen crude oils type (one per member country). The different qualities type reflect the major crude exports of member countries (e.g., the “Arab Light of Saudi Arabia). This basket is competing with the WIT and the Brent, whose prices are usually only a few cents different. Production and price management is extended by periodic assessment of available reserves. For all these countries, oil and gas revenues contribute significantly to their development through taxation. Still, these being very fluctuating over time and depending on the number of inhabitants of a country. For example, according to the EIA (2019), oil revenues in 2018 amounted to $14,683 per capita in Kuwait (nearly 4.2 million inhabitants), compared to only $212/hab for Nigeria (-200 million inhabitants). When the dollar falls against other currencies, OPEC states see their revenues decline for purchases in different currencies, which reduces their purchasing power as they continue to sell their oil in dollars. Local constraints (political instability, wars) or international crisis (embargo, sanctions) also affect the availability of the oil resource and thus its price. Always according to the IEA, in 2018, OPEC states as a whole benefited from a total of about $711 billion in oil revenues compared to $538 billion in 2017, due to higher average crude oil prices and higher exports, where Saudi Arabia benefited of $237 billion in 2018, ahead of Iraq with $91 billion.

OPEC decisions have, for some time, had some influence on the world’s oil price. Beyond the economic context, OPEC’s action on oil price developments is closely linked to the geopolitical environment. The organisation’s influence, however, has diminished since the 1990s, as has its share in world oil production. 55% in 1970, 42.6% in 2017 and about 38/40% in 2019 and indeed an even lesser rate is expected in 2020. One example is the oil crisis of 1973 during the Yom Kippur War: OPEC’s embargo on Western countries that support Israel caused a fourfold increase in the price in five months from October 17, 1973, to March 18, 1974. However, this historical version of the first oil shock is highly questionable.

On the other hand, from 1983, the price of a barrel collapsed, and from then on, would no longer be controlled by OPEC for several years. The London futures markets (ICE) and New York (NYMEX) playing an increasing role in determining prices, took over the pricing process away from OPEC. Recall that on September 28, 2016, OPEC met in Algiers with a historic decision to limit crude oil production to a level of 32.5 to 33 million barrels per day. On November 30, 2016, in Vienna, its output from 1.2 million barrels per day to 32.5 million with an effective agreement as of January 01, 2017, and Russia’s commitment to reduce its production by 300,000 barrels per day. In May 2018, the Vienna meeting, the members signed the integration of another country: Equatorial Guinea, which then officially became the 14the member of OPEC (the sixth African country). It was in a particular context that on April 09 2020, the group of oil-exporting countries, comprised of the 13 of the OPEC and ten-member partner countries, negotiated a new agreement on a joint reduction in production: a 22% reduction in output from the ten non-quota-exempt OPEC countries (i.e. OPEP without Iran, Venezuela and Libya) and their 10 OPEC partners, the final agreement covered 10 million barrels per day less on the market during May and June, with reductions up to 8 Million Barrel per Day (MBD) between July and December 2020, and then to 6 MBD up to January 2021. The effort will be supported mainly by Saudi Arabia and Russia, the second and third largest producers in the world behind the U.S., which would each cut nearly 2.5 Mbj from a reference production smoothed to 11 MBD. The remaining 5 million barrels to be cut would be distributed among the other 18 countries in the agreement, depending on their production level over a typical reference month, which is October 2018. According to experts, discussions focused on this reference period, with each measuring its actual production capacity, having to decide whether or not to take into account condensates (hydrocarbons associated with natural gas deposits) in the reference period can also play on final quotas. The organisation hopes that the United States, the world’s largest producer, and other countries such as Canada, Norway and Brazil, will reduce their production to a total of 5 MBD. This is only a wish since the United States has indicated that it will not participate in this reduction,(the majority being private companies, U.S. laws prohibiting executive directives in the management of the private sphere) as the U.S. Department of Energy has declared that the country’s production is already declining, because the majority of marginal deposits, which are the most numerous, although costs have fallen by more than 50% in recent years, shale oil is no longer profitable below $40 per barrel

During the 1990s, OPEC’s influence with the importance of Saudi Arabia on oil price resulted in prices declining for three reasons: a) internal divergences and the violation of production quotas by some of its members, b) the failure to extend its zone of influence to new producers (Russia, Mexico, Norway, United Kingdom, Colombia) and c) the impact of the London and New York markets that significantly drive prices

After 60 years, what future for OPEC
So sixty years after its founding, OPEC faces also three significant challenges that have persisted since the 1990s.  
  • First,  the resolution of new internal conflicts: the rift between pro and anti-American members exacerbates these conflicts. Saudi Arabia, a traditional U.S. ally, is facing Iran and Venezuela, two of the most overtly anti-American countries in the world, challenging its influence on the organisation. Beyond ideological differences, there are therefore two trends between countries for which OPEC must above all be the facilitator of a commodity market and those wishing to make it a more political weapon.  
  • Secondly,  the rise of Russia, wherewith more than 11.3 million barrels per day, produces as much as Iran, Nigeria, Venezuela, Algeria and Ecuador combined, having pledged since late 2016, alongside OPEC to cap its production to raise oil prices. 
  • Third,  the growing production of unconventional hydrocarbons in the United States, which makes it the world’s largest producer in 2019 with more than 12 million barrels per day, has reduced OPEC’s influence. However, its hydrocarbon reserves are announced as the world’s first. Still, it will all depend on the price vector and costs that may have large reserves but are not economically profitable. New deposits discovered, particularly in Canada or off the coast of Brazil, could disrupt the global distribution of these reserves and thus significantly reduce OPEC’s share. But the critical medium and long-term decline in its influence is the new model of global energy consumption that is emerging.  

Years 2020 through 2040 could be impacted by the Coronavirus, as already shown by the reorientation of public investment in Europe. As per B.P.’s recent statement of September 11, 2020, companies should redirect their investments towards other alternative energies with the combination between 2025/2035 of renewable energy and hydrogen, the cost of which will be widely competitive compared to conventional fossils. 

By 2030, lower dependence on oil is expected by industrialised countries. In contrast, conversely, OPEC countries remain highly dependent on oil, mainly due to the absence of a sustainable economic model that can replace the oil industry. Oil revenues account on average more than half of their Pia developed a “Vison 2030” to diversify its economy. The combination of these factors weakens the geopolitical influence of the OPEC institution and acts on the price level.

The price of oil in 2020/2021 is as always fundamentally dependent on the growth of the world economy. 

For China, which is heavily demanding hydrocarbons and dependent on external markets at half-mast, industrial production is recovering very modestly. Such a decline is unprecedented in China since the country turned to the market economy in the late 1970s. According to the Asia-Pacific report released on April 8, 2020, the world’s second-largest economy could see its GDP growth limited to 2.3% over the whole of 2020, or, as per a darker scenario, be almost nil, at 0.1%. It is not to be compared to its 2019 estimated 6.1% for a population exceeding 1.3 billion requiring a minimum growth rate of 7 to 8%. As far as India is concerned, the demand for hydrocarbons will also be low because its economy is geared towards globalisation. The impact on its growth rate is evident and is still in a declining trend in 2019. After falling to 4.5% from 7.5% in 2018, it is accompanied by an increasing rate in unemployment. In addition to all potential health and social crises, its economy paralysis could lead to the breakdown of the supply chain of many global companies. India, with more than 4 million low-cost employees (Indian I.T. engineers are paid up to 5 times less than their Western counterparts) is the leading player in ICT outsourcing. Almost all of the major international groups delegate part of the management and maintenance of their digital tools to Indian companies.  For the Euro area, dependent on more than 70% on hydrocarbons, the PMI (survey of business purchasing managers) saw the most significant drop on record, after reaching 51.6 in February 2020. This index is a figure that if it is below 50, it indicates a contraction, but if above, represents an expansion of activity. For instance, the President of the European Central Bank stated “In the economies of the Euro area, for each week of Lockdown, GDPs are shrinking by 2 to 3%. The longer it goes on, the bigger the shrinking of the economy.” Growth in the euro area and the E.U. generally will fall below zero by 2020. This necessitated a $1 trillion bailout from the ECB, plus $500 billion for all ancillary institutions. For the two leading European economies, according to officials, in France, the notices give less 9%. In Germany, the leading economic institutes have forecast that Germany, which plunged by 9.8% in the second quarter of 2020, double the co. Recorded in the first quarter of 2009 following the financial crisis. For the United States of America, the job market is deteriorating at an unprecedented rate, despite the government’s injection of more than $2 trillion. With data contradictions showing the extent of uncertainty, Morgan Stanley sees GDP fall by 30%, Goldman Sachs by 24% and JP Morgan Chase by 12%. The bailout package, which is more than 9% of U.S. GDP, is a mix of non-refundable aid and hospital loans, a massive increase in unemployment insurance for individuals. But this raises the whole problem of the health care system in the United States. According to the Kaiser Family Foundation, which specialises in health issues, the average cost of family insurance in 2018 was $19,600 (about 18,000 euros), 71% funded by the employer. To keep it, a sacked employee will have to support it in full. To avoid a significant increase in the number of uninsured (about 28 million in the United States), a dozen states, mostly Democrats, have relaxed the rules for subsidised insurance underwriting.  For the global economy as a whole, and according to several international institutes, including the Institute of International Finance (IIF), Global Financial Sector Association, a note dated April 7, 2020, highlights the global economy is expected to contract by 1.5% in 2020 in the context of the COVID-19 pandemic, lowering its forecast from 2.6% to 0.4%. According to the report, I quote “our global growth forecast is now -1.5%, with a contraction of 3.3% in mature markets and growth of just 1.1%” in emerging markets, adding that there would be “enormous uncertainty” about the economic impact of COVID-19.” Over the full year, the IIF expects growth rates in the United States and the euro area to contract by 2.8% and 4.7% respectively. For its part, the IMF anticipates a “partial recovery” in 2021 provided the pandemic subsides in the second half of this year. That containment measures can be lifted to allow for the reopening of shops, restaurants, a resumption of tourism and consumption. According to the IMF, low-income or emerging countries in Africa, Latin America and Asia “are at high risk” where we have seen capital outflows from emerging economies more than triple that for the equivalent period of the 2008 financial crisis.

What are the prospects for the price of oil? 

Global oil consumption in 2019 was around 99.7 million BDD globally, according to IEA data, and OPEC countries accounted for only 40 per cent of global crude oil production.   China on a global consumption for the same period imported 11 million barrels or about 11/12% of world consumption. According to energy experts, a drop or rise of a dollar in the price of oil would mean an impact between 500 and 600 million dollars. If you take a median average of 550, the shortfall from this decision is $5.5 billion per day per year. It will therefore be a matter of establishing a currency balance of the net gain of this decision, assuming that, if the price falls to $30 or less, before this reduction, allowing the market price to be between $40/45 per barrel. If the barrel were less than $30/35, this decision would have had a very mixed impact. In September 2020, it seems that the market is reacting timidly after this reduction, knowing that the price increase will depend mainly on the return or not to ‘growth’ in the world economy. The primary determinant of demand, because the reduction of 10 million barrels per day is based on the assumption that global demand market declines by only 10/11% while the coronavirus epidemic has caused a drastic fall in global demand, up to 33% or about 30 million BPDs.  

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Fossil fuel demand to take a historic knock

Fossil fuel demand to take a historic knock

Fossil fuel demand to take historic knock amid COVID-19 scars per British Petroleum (BP) by Reuters is yet another confirmation of the on-goig energy world trends.

By Ron Bousso

LONDON, Sept 14 (Reuters) – Fossil fuel consumption is set to shrink for the first time in modern history as climate policies boost renewable energy while the coronavirus epidemic leaves a lasting effect on global energy demand, BP said in a forecast.

BP’s 2020 benchmark Energy Outlook underpins Chief Executive Bernard Looney’s new strategy to “reinvent” the 111-year old oil and gas company by shifting renewables and power.

London-based BP expects global economic activity to only partially recover from the epidemic over the next few years as travel restrictions ease. But some “scarring effects” such as work from home will lead to slower growth in energy consumption.

Fossil fuel demand to take historic knock

BP this year extended its outlook into 2050 to align it with the company’s strategy to slash the carbon emissions from its operations to net zero by the middle of the century.

It includes three scenarios that assume different levels of government policies aimed at meeting the 2015 Paris climate agreement to limit global warming to “well below” 2 degrees Celsius from pre-industrial levels.

Under its central scenario, BP forecasts COVID-19 will knock around 3 million barrels per day (bpd) off by 2025 and 2 million bpd by 2050.

In its two aggressive scenarios, COVID-19 accelerates the slow down in oil consumption, leading to it peaking last year. In the third scenario, oil demand peaks at around 2030.

Fossil fuel demand to take historic knock

In the longer term, demand for coal, oil and natural gas is set to slow dramatically.

While the share of fuels has shrunk in the past as a percentage of the total energy pie, their consumption has never contracted in absolute terms, BP chief economist Spencer Dale told reporters.

“(The energy transition) would be an unprecedented event,” Dale said. “Never in modern history has the demand for any traded fuel declined in absolute terms.”

At the same time, “the share of renewable energy grows more quickly than any fuel ever seen in history.”

Under BP’s central Rapid scenario, non-fossil fuels account for the majority of global energy sources from the early 2040s onward, with the share of hydrocarbons falling by more than half over the next 30 years.

Even with energy demand set to expand on the back of growing population and emerging economies, the sources of energy will shift dramatically to renewable sources such as wind and solar, Dale said.

The share of fossil fuels is set to decline from 85% of total primary energy demand in 2018 to between 20% and 65% by 2050 in the three scenarios.

At the same time, the share of renewables is set to grow from 5% in 2018 to up to 60% by 2050.

In its forecast, BP said the growth in global economic activity slows “considerably” over the next 30 years from its past 20-year average, due in part to lasting effects of the epidemic as well as the worsening impact of climate change on economic activity, particularly in Africa and Latin America.

BP starts on Monday a three-day investor event where it will detail its energy transition strategy.

(Reporting by Ron Bousso; editing by David Evans and Jason Neely)

  • Oil demand may have peaked last year – BP
  • Renewable energy set to soar to up to 60% of primary energy
  • BP’s 2020 Energy Outlook underpins CEO transition strategy
  • GRAPHIC: Share of energy sources: https://tmsnrt.rs/3bVZ0aC (Adds graphic, detail)

The Thomson Reuters Trust Principles.

MENA’s oil boom is a perfect illustration of . . . .

MENA’s oil boom is a perfect illustration of . . . .

With oil, money comes to you in your sleep; with debt, money comes to you by crawling. With work, money comes to you by sweating.
MENA’s oil boom is a perfect illustration of the cohabitation between the permanence of endemic moral misery and the existence of abundant financial resources.

The high price of oil has structurally the perverse effect of perpetuating the systems put in place to infinity. Because of oil and gas, America has lost all moral sense. Through the grace of oil and gas, a typical MENA’s oil exporter no longer thinks, it spends. And it pays without counting. It does not need economists; those are holiday troublers; it prefers to deal with merry lurons.
It has a visceral desire to entertain the gallery. The public does not ask for so much. Money is flowing. And let the rentier industry live! An industry that does not need a strategy, seminars, speeches, no supply problems, no market problems. It runs at full capacity, and it can do without any government and parliament. It works on its own and is not accountable to anyone, not even to itself. It is royally free from the productive work and creative intelligence of Algerians, Libyans and GCC inhabitants. An industry that cradles illusions, those from the top and feeds the despair of others, those at the bottom.
Finally, an industry that works from, by and for abroad. An annuity that oil-consuming states compete for or share tax to finance their mesmerising democracy and producing countries cheaply to perpetuate the obsolete political regimes in place with high costs. The largest share goes to influential locals or foreigners.
Some were supporting each other, and vice versa. A society that does not think of itself is a society that is slowly but surely dying. The life of a nation ceases, it is said, when dreams turn into regrets. Oil has made institutions, pale copies of those of our illustrious Western thinkers, empty shells bloated and budgetivorous, without impact on society, intended to camouflage reality to view of the foreigner, but no one is fooled. The world today no longer believes in Santa Claus.
At the slightest drop in the price of a barrel of oil, they collapse like a house of cards. They serve only as a storefront in the eyes of international opinion. Non-hydrocarbon exports are insignificant. Yet only labor can oppose oil. But it is marginal. It has accounted for less than 2% of exports over the past several decades. Is this not the apparent sign of the failure of so-called public economic policies that have only the funds, carried out by successive elites and who today have converted into opposition or Islamism.
Democracy is a view of the mind in a rent economy dominated by politics. Any political opposition that relies on hard-working forces is doomed to failure. The weight of inertia is predominant; the living muscles are weak. Work has lost its credentials; it bows to the diktat of oil. It is access to petrodollars that guarantees wealth. Easy money fascinates.
On another register, who better do without the hen with the golden eggs? Of course not anyone. Would a prolonged and increasing decline in the price of hydrocarbons, reserves or markets be life-saving or lethal for the country? What did the natives live on before the discovery of oil in 1956 by the French?
The nation-state is a dupe market between a power and a nation, namely bread against freedom, security against obedience, order against anarchy, external recognition against internal legitimacy. The concept of the welfare state is a convenient fraud that the population believes that providence is at the top of the State and not in the Sahara desert subsoil. One of the criteria for immediately determining whether a nation belongs to the third world is corruption.
Wherever the representatives of the State, civil servants, or politicians, from the top to the bottom of the hierarchy are corrupt and where this practice is almost official, we are in a third world country. The membership of people in the third world is above all its political system. The Arab world is dominated by authoritarian or totalitarian powers, by political castes that manipulate words and institutions. This is why no one now believes in development; everyone sees the corruption of political power daily.
Governments have deliberately chosen economic growth from the accumulation of oil and gas revenues or to the absence of debt pledged on hypothetical reserves rather than on development and internal mobilisation based on training and employment of men. The States have carried out a vast salary generalisation whose overall social effect is the dependence in which a significant proportion of the working population is located about the income distributed by the State from the revenues export of hydrocarbons to retain an increasingly large and demanding customer base.
The essence of the economic and socio-political game is, therefore, to capture an ever-increasing share of this pension and to determine which groups will benefit from it. It gives the State the means to redistribute clientelist. It frees the State from any fiscal dependence on the population and allows the ruling elite to dispense with any need for popular legitimisation. It has the extraordinary turnaround capabilities stifling any attempt to challenge society.
The oil will be the engine of corruption in business and the fuel of social violence. It has the art of war and initiating peace. It is both fire and water. He sometimes acts as an arsonist, sometimes as a fireman. It is one thing, and its opposite; wealth and poverty, both are illusions.
And as with any illusion, there is a manipulator. We are our gravediggers. To get out of the hole we are sinking into, every day more, we have to stop digging because the solution is on dry land and not at the bottom of a hole. To do this, you have to raise your head, stand up straight, and look yourself in the eye, in all humility, without fear and reproach. You have to arm yourself with science and have faith in God. Science is the key to our problems, religion the ultimate goal of our brief existence.
Oil intoxicates us; gas pollutes us, easy money blinds us. It’s dirty money. Money that kills, corrupts, rots, destroys consciences. It is the petrodollars that run the country and give it its substance and stability. The institutions, empty shells, are only there as a garnish to make the “cake” appetising. “Oil is the devil’s excrement; it corrupts countries and perverts’ economic decisions” Juan Pablo Perez Alfonzo, the founding father of OPEC Venezuela 1970.

Author:  Dr. A. Boumezrag