Tag Archives: prices

Privatized energy has failed us – so why is UK ‘aid’ exporting it? Updated for 2026

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This week’s revelation that the Big Six energy companies are overcharging their most loyal and vulnerable customers by up to £234 a year is just the latest evidence of the failure energy privatisation has been in the UK.

Since 2010, our fuel bills have risen a staggering eight times faster than wages. Combined with falling incomes, the result is that a staggering seven million people in the UK are living in fuel poverty, and each winter an older person dies needlessly of cold every seven minutes.

Until recently, the claim that the big energy companies were simply passing on higher prices that they themselves were paying seemed to wash. But the pathetic price reductions they have offered in response to significant falls in wholesale gas and electricity prices have stretched this argument rather thin.

Neither cheap nor green

Then there’s the notion that we can either have cheap energy or go green – but with a pitiful 16% of our electricity being generated from renewable sources and the government desperately having to dangle juicy (and expensive) carrots in front of the energy companies to retain the necessary capacity of any sort, it seems the current system can’t deliver either.

Since pioneering privatisation in sectors such as energy and water during the Thatcher era, the UK has stayed firmly wedded to this particular course, with mainstream politicians of all stripes flailing and failing to come up with any plausible policy responses to the current energy crisis.

Their most radical suggestions so far are

  • trying to create more competition – apparently we should be switching suppliers every couple of months, never mind the fact that the bureaucracy involved would actually increase costs; and
  • a short-lived freeze on prices – itself an admission that privatisation has failed to lower prices.

That this is the best our political class can come up with only demonstrates the narrowness of their understanding, and the poverty of their imagination.

UK aid exporting a failed model – to the countries that can least afford it!

Even more scandalously, the UK is actually supporting further energy privatisation overseas. One of the main ways it does so is via the aid budget, which is currently funding energy privatisation projects in places like India and Sierra Leone.

The most extreme example is Nigeria, where around £100m of UK aid is being used to support a privatisation process the Department for International Development (DfID) itself describes as “far more ambitious than anything ever attempted in Africa”, and “seen by many as being so ambitious as to be unrealistic“.

The controversial DFID-funded programme, the Nigerian Infrastructure Advisory Facility, is even being implemented by Adam Smith International – the consultancy arm of the neoliberal ‘free market’ think tank the Adam Smith Institute.

With half of Nigerians lacking access to electricity despite the country’s enormous fossil fuel wealth, it was clear that change was needed. But so far privatisation only seems to have made things worse. It has led to major price rises in order to attract outside investors – but by last year the central bank had had to step in and bail out the newly privatised companies after investment flows dried up.

Rather than increasing the amount of electricity available, there has actually been a reduction in power generation due to the failure of the companies to keep their power stations running.

This is perhaps unsurprising when thousands of energy sector employees have been made redundant since the privatisation process started. As a result, blackouts have increased, and the federal government is spending around £2.5m a year on its own generators to keep its offices running.

It doesn’t work! So why do we keep on doing it?

It’s incredible that this failed approach to privatisation is still being rolled out when evidence from around the world shows that time and again, it fails to improve people’s access to energy, and leads to governments taking the risks while the companies pocket the profits.

Nigeria itself has been stung by energy privatisation in the past: since the late 1990s it has allowed power plants to be owned and operated by private companies, causing big losses for the state power company, Power Holding Company of Nigeria (PHCN).

This is because PHCN had agreements to purchase the private power generators’ power, giving their electricity a higher priority than lower-cost state-owned power stations. Since then PHCN has been broken up into 17 successor companies and partially privatised.

On top of this, a deal between Enron and the Lagos government to set up a power plant and three diesel units on barges anchored off Lagos formed part of the fraud charges against Enron executives after they made a fake sale of their stake in the barges to Merrill Lynch, later making $12m from a side deal to repurchase them.

There is an alternative

The way in which the British government is wedded to this flawed privatisation model might make one think that there was no other way. But in fact this couldn’t be further from the truth.

Around the world, there’s an increasing number of examples of energy being managed democratically, and doing a far better job of meeting people’s energy needs without trashing the planet.

These include German citizens voting to buy back their energy grids in order to deliver the green transition where private companies have failed, and systems that integrate co-operatives and publicly-owned utilities in places like Costa Rica and Nebraska.

These examples demonstrate that there is no stark choice between centralized state-owned monopolies like Britain’s old Central Electricity Generating Board, and for-profit corporate oligopoly. The alternative is smaller, locally accountable energy providers that are cooperatively owned, or publicly owned through local government and municipalities.

In fact, we should be up in arms that this is not happening absolutely everywhere: with one in five people globally still lacking access to electricity and the climate crisis already claiming victims, we can’t afford not to ditch these corporate controlled energy systems – and put fairer, more sustainable and democratic alternatives in their place.

 

 

Join: Global Justice Now are holding an Energy Justice Assembly at their conference in London tomorrow – Saturday 21st February.

Find out more about the campaign for a democratic rather than corporate-controlled energy system.

Take action: Give corporate-controlled energy the boot!

Christine Haigh is an energy justice campaigner at Global Justice Now (formerly the World Development Movement). She has a degree in philosophy and physics, a master’s in food policy and has previously worked for Women’s Environmental Network and Sustain: the alliance for better food and farming. She is an activist who has worked on a range of economic justice issues, most recently housing in the UK.

 




390482

Privatized energy has failed us – so why is UK ‘aid’ exporting it? Updated for 2026

Leave a reply




This week’s revelation that the Big Six energy companies are overcharging their most loyal and vulnerable customers by up to £234 a year is just the latest evidence of the failure energy privatisation has been in the UK.

Since 2010, our fuel bills have risen a staggering eight times faster than wages. Combined with falling incomes, the result is that a staggering seven million people in the UK are living in fuel poverty, and each winter an older person dies needlessly of cold every seven minutes.

Until recently, the claim that the big energy companies were simply passing on higher prices that they themselves were paying seemed to wash. But the pathetic price reductions they have offered in response to significant falls in wholesale gas and electricity prices have stretched this argument rather thin.

Neither cheap nor green

Then there’s the notion that we can either have cheap energy or go green – but with a pitiful 16% of our electricity being generated from renewable sources and the government desperately having to dangle juicy (and expensive) carrots in front of the energy companies to retain the necessary capacity of any sort, it seems the current system can’t deliver either.

Since pioneering privatisation in sectors such as energy and water during the Thatcher era, the UK has stayed firmly wedded to this particular course, with mainstream politicians of all stripes flailing and failing to come up with any plausible policy responses to the current energy crisis.

Their most radical suggestions so far are

  • trying to create more competition – apparently we should be switching suppliers every couple of months, never mind the fact that the bureaucracy involved would actually increase costs; and
  • a short-lived freeze on prices – itself an admission that privatisation has failed to lower prices.

That this is the best our political class can come up with only demonstrates the narrowness of their understanding, and the poverty of their imagination.

UK aid exporting a failed model – to the countries that can least afford it!

Even more scandalously, the UK is actually supporting further energy privatisation overseas. One of the main ways it does so is via the aid budget, which is currently funding energy privatisation projects in places like India and Sierra Leone.

The most extreme example is Nigeria, where around £100m of UK aid is being used to support a privatisation process the Department for International Development (DfID) itself describes as “far more ambitious than anything ever attempted in Africa”, and “seen by many as being so ambitious as to be unrealistic“.

The controversial DFID-funded programme, the Nigerian Infrastructure Advisory Facility, is even being implemented by Adam Smith International – the consultancy arm of the neoliberal ‘free market’ think tank the Adam Smith Institute.

With half of Nigerians lacking access to electricity despite the country’s enormous fossil fuel wealth, it was clear that change was needed. But so far privatisation only seems to have made things worse. It has led to major price rises in order to attract outside investors – but by last year the central bank had had to step in and bail out the newly privatised companies after investment flows dried up.

Rather than increasing the amount of electricity available, there has actually been a reduction in power generation due to the failure of the companies to keep their power stations running.

This is perhaps unsurprising when thousands of energy sector employees have been made redundant since the privatisation process started. As a result, blackouts have increased, and the federal government is spending around £2.5m a year on its own generators to keep its offices running.

It doesn’t work! So why do we keep on doing it?

It’s incredible that this failed approach to privatisation is still being rolled out when evidence from around the world shows that time and again, it fails to improve people’s access to energy, and leads to governments taking the risks while the companies pocket the profits.

Nigeria itself has been stung by energy privatisation in the past: since the late 1990s it has allowed power plants to be owned and operated by private companies, causing big losses for the state power company, Power Holding Company of Nigeria (PHCN).

This is because PHCN had agreements to purchase the private power generators’ power, giving their electricity a higher priority than lower-cost state-owned power stations. Since then PHCN has been broken up into 17 successor companies and partially privatised.

On top of this, a deal between Enron and the Lagos government to set up a power plant and three diesel units on barges anchored off Lagos formed part of the fraud charges against Enron executives after they made a fake sale of their stake in the barges to Merrill Lynch, later making $12m from a side deal to repurchase them.

There is an alternative

The way in which the British government is wedded to this flawed privatisation model might make one think that there was no other way. But in fact this couldn’t be further from the truth.

Around the world, there’s an increasing number of examples of energy being managed democratically, and doing a far better job of meeting people’s energy needs without trashing the planet.

These include German citizens voting to buy back their energy grids in order to deliver the green transition where private companies have failed, and systems that integrate co-operatives and publicly-owned utilities in places like Costa Rica and Nebraska.

These examples demonstrate that there is no stark choice between centralized state-owned monopolies like Britain’s old Central Electricity Generating Board, and for-profit corporate oligopoly. The alternative is smaller, locally accountable energy providers that are cooperatively owned, or publicly owned through local government and municipalities.

In fact, we should be up in arms that this is not happening absolutely everywhere: with one in five people globally still lacking access to electricity and the climate crisis already claiming victims, we can’t afford not to ditch these corporate controlled energy systems – and put fairer, more sustainable and democratic alternatives in their place.

 

 

Join: Global Justice Now are holding an Energy Justice Assembly at their conference in London tomorrow – Saturday 21st February.

Find out more about the campaign for a democratic rather than corporate-controlled energy system.

Take action: Give corporate-controlled energy the boot!

Christine Haigh is an energy justice campaigner at Global Justice Now (formerly the World Development Movement). She has a degree in philosophy and physics, a master’s in food policy and has previously worked for Women’s Environmental Network and Sustain: the alliance for better food and farming. She is an activist who has worked on a range of economic justice issues, most recently housing in the UK.

 




390482

Privatized energy has failed us – so why is UK ‘aid’ exporting it? Updated for 2026

Leave a reply




This week’s revelation that the Big Six energy companies are overcharging their most loyal and vulnerable customers by up to £234 a year is just the latest evidence of the failure energy privatisation has been in the UK.

Since 2010, our fuel bills have risen a staggering eight times faster than wages. Combined with falling incomes, the result is that a staggering seven million people in the UK are living in fuel poverty, and each winter an older person dies needlessly of cold every seven minutes.

Until recently, the claim that the big energy companies were simply passing on higher prices that they themselves were paying seemed to wash. But the pathetic price reductions they have offered in response to significant falls in wholesale gas and electricity prices have stretched this argument rather thin.

Neither cheap nor green

Then there’s the notion that we can either have cheap energy or go green – but with a pitiful 16% of our electricity being generated from renewable sources and the government desperately having to dangle juicy (and expensive) carrots in front of the energy companies to retain the necessary capacity of any sort, it seems the current system can’t deliver either.

Since pioneering privatisation in sectors such as energy and water during the Thatcher era, the UK has stayed firmly wedded to this particular course, with mainstream politicians of all stripes flailing and failing to come up with any plausible policy responses to the current energy crisis.

Their most radical suggestions so far are

  • trying to create more competition – apparently we should be switching suppliers every couple of months, never mind the fact that the bureaucracy involved would actually increase costs; and
  • a short-lived freeze on prices – itself an admission that privatisation has failed to lower prices.

That this is the best our political class can come up with only demonstrates the narrowness of their understanding, and the poverty of their imagination.

UK aid exporting a failed model – to the countries that can least afford it!

Even more scandalously, the UK is actually supporting further energy privatisation overseas. One of the main ways it does so is via the aid budget, which is currently funding energy privatisation projects in places like India and Sierra Leone.

The most extreme example is Nigeria, where around £100m of UK aid is being used to support a privatisation process the Department for International Development (DfID) itself describes as “far more ambitious than anything ever attempted in Africa”, and “seen by many as being so ambitious as to be unrealistic“.

The controversial DFID-funded programme, the Nigerian Infrastructure Advisory Facility, is even being implemented by Adam Smith International – the consultancy arm of the neoliberal ‘free market’ think tank the Adam Smith Institute.

With half of Nigerians lacking access to electricity despite the country’s enormous fossil fuel wealth, it was clear that change was needed. But so far privatisation only seems to have made things worse. It has led to major price rises in order to attract outside investors – but by last year the central bank had had to step in and bail out the newly privatised companies after investment flows dried up.

Rather than increasing the amount of electricity available, there has actually been a reduction in power generation due to the failure of the companies to keep their power stations running.

This is perhaps unsurprising when thousands of energy sector employees have been made redundant since the privatisation process started. As a result, blackouts have increased, and the federal government is spending around £2.5m a year on its own generators to keep its offices running.

It doesn’t work! So why do we keep on doing it?

It’s incredible that this failed approach to privatisation is still being rolled out when evidence from around the world shows that time and again, it fails to improve people’s access to energy, and leads to governments taking the risks while the companies pocket the profits.

Nigeria itself has been stung by energy privatisation in the past: since the late 1990s it has allowed power plants to be owned and operated by private companies, causing big losses for the state power company, Power Holding Company of Nigeria (PHCN).

This is because PHCN had agreements to purchase the private power generators’ power, giving their electricity a higher priority than lower-cost state-owned power stations. Since then PHCN has been broken up into 17 successor companies and partially privatised.

On top of this, a deal between Enron and the Lagos government to set up a power plant and three diesel units on barges anchored off Lagos formed part of the fraud charges against Enron executives after they made a fake sale of their stake in the barges to Merrill Lynch, later making $12m from a side deal to repurchase them.

There is an alternative

The way in which the British government is wedded to this flawed privatisation model might make one think that there was no other way. But in fact this couldn’t be further from the truth.

Around the world, there’s an increasing number of examples of energy being managed democratically, and doing a far better job of meeting people’s energy needs without trashing the planet.

These include German citizens voting to buy back their energy grids in order to deliver the green transition where private companies have failed, and systems that integrate co-operatives and publicly-owned utilities in places like Costa Rica and Nebraska.

These examples demonstrate that there is no stark choice between centralized state-owned monopolies like Britain’s old Central Electricity Generating Board, and for-profit corporate oligopoly. The alternative is smaller, locally accountable energy providers that are cooperatively owned, or publicly owned through local government and municipalities.

In fact, we should be up in arms that this is not happening absolutely everywhere: with one in five people globally still lacking access to electricity and the climate crisis already claiming victims, we can’t afford not to ditch these corporate controlled energy systems – and put fairer, more sustainable and democratic alternatives in their place.

 

 

Join: Global Justice Now are holding an Energy Justice Assembly at their conference in London tomorrow – Saturday 21st February.

Find out more about the campaign for a democratic rather than corporate-controlled energy system.

Take action: Give corporate-controlled energy the boot!

Christine Haigh is an energy justice campaigner at Global Justice Now (formerly the World Development Movement). She has a degree in philosophy and physics, a master’s in food policy and has previously worked for Women’s Environmental Network and Sustain: the alliance for better food and farming. She is an activist who has worked on a range of economic justice issues, most recently housing in the UK.

 




390482

Oil prices and the devil’s ransom Updated for 2026

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There has been a fascinating debate developing in the environmental movement – particularly in The Ecologist – over the meaning and effect of the oil price collapse.

Most recently, environmental consultant Paul Mobbs declared that “environmentalists should be cheering on OPEC!” for increasing production and lowering prices, thereby driving the ‘unconventional’ production (like tar sands mining) out of the threshold of economic viability. Unfortunately, the debate seldom zooms out at some of the broader conditions that caused the collapse.

Mobbs’s enthusiastic support of oil production in Saudi Arabia manifests a powerful rebuttal to Steve Melia’s dispatch on the troubled thesis of peak oil.

Whereas Melia claims we must continue to resist fossil fuels for the sake of the environment through civil disobedience not unlike the vital anti-roads movement of the 1980s, Mobbs seems to believe that “keeping the oil in the ground” will be counterproductive to the short-term goals of environmentalists.

Symptoms of a wider economic malaise?

To shore up his hypothesis, Mobbs argues against Melia’s claim that low prices are a challenge to the peak oil hypothesis of gradually increasing prices. The ecological metabolism of peak oil is responsible for the oil price crash, since the increased production of oil stems from high-cost and low-yield production, such as tar sands, which is being undercut by Saudi oil, causing oil prices to decline.

But, Mobbs ventures, this is not a sign of the supply and demand of oil. Instead, it is a complex phenomenon that involves the stagnation of the whole economy. Mobbs cites the declining prices of other commodities as evidence.

Mobbs does not provide a clarification by referencing recent economic events, which hinders his argument. After the housing market crash of 2007, investors from more prosperous financial centers of the world shifted capital to land speculation and resource extraction in the Global South.

This ‘spacial fix‘, to use geographer David Harvey’s term, remains part of an economic program called ‘credit easing’, through which junk loans are backed by land grabs. The so-called ‘fracking revolution’ in the Bakken Shale plays an important role in the US’s own attempts to emerge from the recession.

Busting the global resource grab

According to the US Energy Information Administration’s (EIA) Adam Sieminsky, “just six tight gas plays taken together account for nearly 90 percent of domestic oil production growth and virtually all domestic natural gas production growth in the last 2 years.”

Bakken is 67% of oil growth, and Marcellus is 75% of gas growth. Bakken is relatively low-cost, high yield, while Marcellus has proven far more problematic for investors in the area (due in large part to the sheer amount of speculation happening).

But therein lies the rub: a financialization bubble bursts, leaving resource extraction to mop up the mess, but the glut of oil production is facing diminishing markets abroad. Between 2008-2015, production will have expanded by 3 million b/d, while US demand will have fallen by 1.5 million b/d.

With Saudi Arabia refusing to maintain the high prices by decreasing its own production, choosing instead to “ride out the oil price slump” as the NY Times put it, the relative growth of production against demand has caused low prices.

As oil prices decline, the prices of other commodities decline, because oil factors into every level of the supply chain, from the manufacture of the machines to work a mine or a tractor to the running of the machines themselves to the manufacture of the commodity to the transport of the commodity to market, and virtually all transports in between.

Due to the oil prices, food prices, for instance, are predicted to drop 10-15%, according to Arab News. Furthermore, along with the sharp rise of oil production since 2008, the extraction of tin, copper, and virtually any other commodity has risen as well.

Gluts have appeared across the board, while demand has declined-a phenomenon that has caused tremendous problems in supply chains for countries like China and Brazil.

In the North Atlantic, on the one hand, the banks have refused to invest in small businesses and homeowners, and on the other hand, working people have less confidence in the economy and their political representatives. Hence the Fed and the ECB have been unable to switch back from extractionist positions of ‘credit easement’ to their earlier financial policies.

Geopolitical games – or coincidence?

There are at least three spins that one could put on the oil price collapse and its implications. The one preferred by industrial actors around the world expounds the low price as a natural fix, which will decrease production, increase consumption, and eventually drive the price back to a higher equilibrium.

The challenge here would be, as Mobbs indicates, maintaining high-cost, unconventional projects at a price equilibrium, but that is a matter of eventuality, since the conventional crude is running out.

The second spin is that collapse of oil prices marks a natural boom-bust cycle of extractivist oligarchs who push supply beyond demand, only to have markets contract into a perfect situation for further speculation.

The final spin, of course, is more closely related to the attempts made by the BRICS countries to shift away from petrodollars and dollar hegemony while cutting oil and gas networks throughout Asia without regard for the interests of NATO.

This final proposal marks a gap in Mobbs’s thesis: namely that it is OPEC that is responsible for the price decline. Instead, it is largely Saudi Arabia, with Venezuela taking a brutal hit to the balance books, and scrambling to prop up prices.

As The Telegraph noted, lower prices is bringing about a possible new era, which is ushered in not by OPEC, itself, but by an inter-OPEC crisis marking the crucial geopolitical rift that the oil price collapse plays into.

For its part, The Economist‘s blog, Buttonwood’s notebook, has put up a cheeky graph identifying the “Red Army signal“ showing how every price collapse in oil has come directly after a Russian foreign intervention: most recently, the intervention in Crimea, the 2008 invasion of Georgia, and the 1979 invasion of Afghanistan before it, which prompted Saudi Arabia to increase oil production and saturate the market.

This is the “cunning of history”, and the US’s connections to the House of Saud stands as reason enough for The Economist‘s bloggers to gloat. What is left between the lines is what Vijay Prashad calls “dispossession by manipulation.”

Opposing interests clash on Middle East battlefields

All the above proposals may, in fact, have some degree of truth, but the crucial focus should not necessarily be Russia or Venezuela or even Iran, but the battlefields on which their interests collide.

The oil price collapse is hindering Iraq’s ability to fight the menace of IS that remains ensconced in its third largest city, Mosul, while retaining the social services necessary to maintain a tenuous order.

Supporting the Kurds seems to have been the US’s most successful attempt thus far in confronting IS in Northern Syria and Iraq, but the presence of Kurdish HPG guerillas in Iraqi Kurdistan, who are also connected to the Kurdish YPG/YPJ self-defense forces fighting IS in Northern Syria, rankles the Turkish government to no end.

Turkey does not want to see its southern territories turned into an autonomous Kurdistan tied to the Kurdish Regional Government in Iraq. In fact, the Turkish state seems more willing to help IS than the Kurds. If the Kurds are unable to fight down IS, oil prices will rise once again, which seems to be in the interests of oil producers.

An old Kurdish proverb states, “A head that is to be cut off cannot be ransomed” – and it applies here: IS serves a purpose, if not a devious one. Although the EIA posits that oil spot prices will continue to decline until 2018, prices may settle to a bottom later this year, only to increase once again because of regional discord.

And having sent Russia, Iran, and Venezuela a cruel message, along with Iraq and the Kurds, the North Atlantic oil companies may return to their traditional profits and risky, unconventional projects against the will of environmentalists like Mobbs who see the current price collapse as a prospect for greener pastures.

 

 

Alexander Reid Ross is a contributing moderator of the Earth First! Newswire and works for Bark. He is the editor of ‘Grabbing Back: Essays Against the Global Land Grab’ (AK Press 2014) and a contributor to Life During Wartime (AK Press 2013).

 




389095

Oil prices and the devil’s ransom Updated for 2026

Leave a reply




There has been a fascinating debate developing in the environmental movement – particularly in The Ecologist – over the meaning and effect of the oil price collapse.

Most recently, environmental consultant Paul Mobbs declared that “environmentalists should be cheering on OPEC!” for increasing production and lowering prices, thereby driving the ‘unconventional’ production (like tar sands mining) out of the threshold of economic viability. Unfortunately, the debate seldom zooms out at some of the broader conditions that caused the collapse.

Mobbs’s enthusiastic support of oil production in Saudi Arabia manifests a powerful rebuttal to Steve Melia’s dispatch on the troubled thesis of peak oil.

Whereas Melia claims we must continue to resist fossil fuels for the sake of the environment through civil disobedience not unlike the vital anti-roads movement of the 1980s, Mobbs seems to believe that “keeping the oil in the ground” will be counterproductive to the short-term goals of environmentalists.

Symptoms of a wider economic malaise?

To shore up his hypothesis, Mobbs argues against Melia’s claim that low prices are a challenge to the peak oil hypothesis of gradually increasing prices. The ecological metabolism of peak oil is responsible for the oil price crash, since the increased production of oil stems from high-cost and low-yield production, such as tar sands, which is being undercut by Saudi oil, causing oil prices to decline.

But, Mobbs ventures, this is not a sign of the supply and demand of oil. Instead, it is a complex phenomenon that involves the stagnation of the whole economy. Mobbs cites the declining prices of other commodities as evidence.

Mobbs does not provide a clarification by referencing recent economic events, which hinders his argument. After the housing market crash of 2007, investors from more prosperous financial centers of the world shifted capital to land speculation and resource extraction in the Global South.

This ‘spacial fix‘, to use geographer David Harvey’s term, remains part of an economic program called ‘credit easing’, through which junk loans are backed by land grabs. The so-called ‘fracking revolution’ in the Bakken Shale plays an important role in the US’s own attempts to emerge from the recession.

Busting the global resource grab

According to the US Energy Information Administration’s (EIA) Adam Sieminsky, “just six tight gas plays taken together account for nearly 90 percent of domestic oil production growth and virtually all domestic natural gas production growth in the last 2 years.”

Bakken is 67% of oil growth, and Marcellus is 75% of gas growth. Bakken is relatively low-cost, high yield, while Marcellus has proven far more problematic for investors in the area (due in large part to the sheer amount of speculation happening).

But therein lies the rub: a financialization bubble bursts, leaving resource extraction to mop up the mess, but the glut of oil production is facing diminishing markets abroad. Between 2008-2015, production will have expanded by 3 million b/d, while US demand will have fallen by 1.5 million b/d.

With Saudi Arabia refusing to maintain the high prices by decreasing its own production, choosing instead to “ride out the oil price slump” as the NY Times put it, the relative growth of production against demand has caused low prices.

As oil prices decline, the prices of other commodities decline, because oil factors into every level of the supply chain, from the manufacture of the machines to work a mine or a tractor to the running of the machines themselves to the manufacture of the commodity to the transport of the commodity to market, and virtually all transports in between.

Due to the oil prices, food prices, for instance, are predicted to drop 10-15%, according to Arab News. Furthermore, along with the sharp rise of oil production since 2008, the extraction of tin, copper, and virtually any other commodity has risen as well.

Gluts have appeared across the board, while demand has declined-a phenomenon that has caused tremendous problems in supply chains for countries like China and Brazil.

In the North Atlantic, on the one hand, the banks have refused to invest in small businesses and homeowners, and on the other hand, working people have less confidence in the economy and their political representatives. Hence the Fed and the ECB have been unable to switch back from extractionist positions of ‘credit easement’ to their earlier financial policies.

Geopolitical games – or coincidence?

There are at least three spins that one could put on the oil price collapse and its implications. The one preferred by industrial actors around the world expounds the low price as a natural fix, which will decrease production, increase consumption, and eventually drive the price back to a higher equilibrium.

The challenge here would be, as Mobbs indicates, maintaining high-cost, unconventional projects at a price equilibrium, but that is a matter of eventuality, since the conventional crude is running out.

The second spin is that collapse of oil prices marks a natural boom-bust cycle of extractivist oligarchs who push supply beyond demand, only to have markets contract into a perfect situation for further speculation.

The final spin, of course, is more closely related to the attempts made by the BRICS countries to shift away from petrodollars and dollar hegemony while cutting oil and gas networks throughout Asia without regard for the interests of NATO.

This final proposal marks a gap in Mobbs’s thesis: namely that it is OPEC that is responsible for the price decline. Instead, it is largely Saudi Arabia, with Venezuela taking a brutal hit to the balance books, and scrambling to prop up prices.

As The Telegraph noted, lower prices is bringing about a possible new era, which is ushered in not by OPEC, itself, but by an inter-OPEC crisis marking the crucial geopolitical rift that the oil price collapse plays into.

For its part, The Economist‘s blog, Buttonwood’s notebook, has put up a cheeky graph identifying the “Red Army signal“ showing how every price collapse in oil has come directly after a Russian foreign intervention: most recently, the intervention in Crimea, the 2008 invasion of Georgia, and the 1979 invasion of Afghanistan before it, which prompted Saudi Arabia to increase oil production and saturate the market.

This is the “cunning of history”, and the US’s connections to the House of Saud stands as reason enough for The Economist‘s bloggers to gloat. What is left between the lines is what Vijay Prashad calls “dispossession by manipulation.”

Opposing interests clash on Middle East battlefields

All the above proposals may, in fact, have some degree of truth, but the crucial focus should not necessarily be Russia or Venezuela or even Iran, but the battlefields on which their interests collide.

The oil price collapse is hindering Iraq’s ability to fight the menace of IS that remains ensconced in its third largest city, Mosul, while retaining the social services necessary to maintain a tenuous order.

Supporting the Kurds seems to have been the US’s most successful attempt thus far in confronting IS in Northern Syria and Iraq, but the presence of Kurdish HPG guerillas in Iraqi Kurdistan, who are also connected to the Kurdish YPG/YPJ self-defense forces fighting IS in Northern Syria, rankles the Turkish government to no end.

Turkey does not want to see its southern territories turned into an autonomous Kurdistan tied to the Kurdish Regional Government in Iraq. In fact, the Turkish state seems more willing to help IS than the Kurds. If the Kurds are unable to fight down IS, oil prices will rise once again, which seems to be in the interests of oil producers.

An old Kurdish proverb states, “A head that is to be cut off cannot be ransomed” – and it applies here: IS serves a purpose, if not a devious one. Although the EIA posits that oil spot prices will continue to decline until 2018, prices may settle to a bottom later this year, only to increase once again because of regional discord.

And having sent Russia, Iran, and Venezuela a cruel message, along with Iraq and the Kurds, the North Atlantic oil companies may return to their traditional profits and risky, unconventional projects against the will of environmentalists like Mobbs who see the current price collapse as a prospect for greener pastures.

 

 

Alexander Reid Ross is a contributing moderator of the Earth First! Newswire and works for Bark. He is the editor of ‘Grabbing Back: Essays Against the Global Land Grab’ (AK Press 2014) and a contributor to Life During Wartime (AK Press 2013).

 




389095

Tide turning against global coal industry Updated for 2026

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There are increasing signs of the demise of the world’s dirtiest fossil fuel, from a global oversupply to plummeting prices to China starting to clean up its polluted air.

Last week, the Carbon Tracker Initiative published an analysis – Carbon Supply Cost Curves: Evaluating Financial Risk to Coal Capital Expenditures – identifying major financial risks for investors in coal producers around the world.

The demand for thermal coal in China, the world’s largest emitter of toxic greenhouse gases, could peak as early as 2016, says the report.

The analysis also highlights $112 billion of future coal mine expansion and development that is excess to requirements under lower demand forecasts.

“In particular it shows that high cost new mines are not economic at today’s prices and are unlikely to generate returns for investors in the future”, said an accompanying media release.

“Companies most exposed to low coal demand are those developing new projects, focused on the export market … With new measures to cap coal use and restrict imports of low quality coal in China, it appears the tide is turning against the coal exporters.”

A gloomy outlook for prices, asset values

The analysis added that China’s desire to reduce imports will impact prices and asset values for export mines in the US, Australia, Indonesia and South Africa.

“King Coal is becoming King Canute, as the industry struggles to turn back the tide of reducing demand, falling prices and lower earnings”, said Anthony Hobley, CEO of Carbon Tracker Initiative.

A recent article in Mining Weekly also says the coal industry is indeed facing tough times.

The article noted Coal Association of Canada president Ann Marie Hann agreed that about half of the global coal output at current pricing was being produced at a loss.

“Until a global rebalance between demand and supply takes place and the global economy rebounds, the coal industry will unfortunately probably see some more bad news over the coming months”, Hann said.

The story added that the prices for thermal coal, which is used to generate electricity, had fallen in recent years from about $190 per tonne in mid-2008 to $75 per tonne this year.

Metallurgical coal (used to make steel) had dropped from a high of more than $300 per tonne in late 2011 to less than $120 per tonne.

Under attack from all sides

To perhaps make matters worse for the coal industry, it is being publicly attacked by the oil and gas sectors, which are trying to position themselves as cleaner fossil fuels.

According to the Responding to Climate Change website, a number of the world’s leading oil and gas companies voiced their concerns about climate change at last week’s UN Climate Summit, arguing they can offer a future coal cannot.

“One of our most important contributions is producing natural gas and replacing coal in electricity production”, Helge Lund, Statoil’s chief executive, was quoted as saying.

Kevin Washbrook, a director for Voters Taking Action on Climate Change, a Vancouver organization that has fought against a proposed new coal export facility at Fraser Surrey Docks, agrees the thermal coal sector is in decline.

“I think coal is in everyone’s sights these days because coal is climate change”, Washbrook told DeSmogBlog. “Coal has to be on the chopping block for sure.”

Washbrook added that the UN, the International Energy Agency, big banks and insurance companies are acknowledging that the vast majority of coal must stay in the ground if humankind is to avoid catastrophic, runaway climate change.

“We need to see this current downturn [in the thermal coal sector] for what it really is – our last good opportunity to leave coal behind and start the transition to emission-free energy sources.”

 

 

 

Chris Rose is a journalist for DeSmogBlog and other news outlets, and a communications consultant. Born in Vancouver, his interests include politics, history, demographics, the economy, the environment and energy-related issues.

This article was originally published on DeSmogBlog.

 

 




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