Friday, 22 April 2011

‘Black Gold’ to ‘Dirty Oil’

Whilst the world economy is critically dependent on oil, the sticky black liquid is referred to as ‘Black Gold’ and a passport to wealth and security for any country fortunate enough to be blessed with large easy-to-extract reserves. For Norway this has certainly been the case; the country has been prudent with its oil revenue and built up huge reserves which should underpin the country’s finances well beyond the end of oil. For the Middle East, oil is beginning to look like a curse, allowing autocratic (and sometimes despotic) rulers to remain in control. Oil revenue allows them to buy off opposition and purchase weapons to enforce their rule. In addition, the economic imbalances of oil leave many exporting countries ill-prepared to pay their way in the world beyond the era of oil.

When the world makes the transition away from oil (inevitable, only the timing is uncertain) the image of oil will shift from ‘Black Gold’ to ‘Dirty Oil’ – the term already in use by environmentalists for the oil extracted from the tar sands of Canada. This image makeover is small but important, as it will signal real commitment to reducing oil dependency. Instead of countries outbidding each other to purchase black gold they will compete to lead in the technologies that make dirty oil unnecessary.

It is unlikely that the world will learn quickly to live without conventional oil whilst there are supplies that are easy to extract. As the oil price rises, making unconventional oil commercially viable, the energy intensive extraction techniques and environmental damage will be highlighted. A well head in the desert is not a particularly negative image; it is associated with power and wealth. The large expanse of wasteland from oil sand extraction, where once there was virgin forest, is a powerful negative image of dirty oil.

The shift in perception from ‘black gold’ to ‘dirty oil’ is just terminology but in a world dominated by ubiquitous media, images are a very powerful force (as advertisers know well). There is no alternative in the short-term to reliance on oil but the path to a sustainable future becomes much clearer and more politically acceptable when the image in people’s minds of ‘black gold’ is replaced by ‘dirty oil’.

Monday, 11 April 2011

Prosperity without Growth

I have been off my blog for a couple of weeks whilst I hit a deadline to finish the manuscript of my next book. That is now with the publisher so I have time to withdraw from my shell and engage with the outside world again, spend time with the family and read what others are writing.

The paperback version of Tim Jackson’s book, Prosperity without Growth: Economics for a Finite Planet landed on my doorstep last week for me to review. This is well timed and I am looking forward to reading again Tim’s ideas. His original report for the SDC (under a similar title) raised a number of important questions about the way we run the economy and the priorities that are set. These are very important questions that need to be debated to discuss how the management of society could be different.

The first stage is to question what we have. Anyone who believes that the economic system is perfect has been living on another planet for the last few years. For those who believe that it is the best system available in an imperfect world, this is a valid viewpoint but at best lacks ambition and at worst is plain wrong.

The rescue of the economy following the financial crisis has been a process of papering over the cracks and restoring confidence. If an estate agent was selling the world economy, the financial edifice would look impressive, large and gleaming with a new coat of paint but buyers should take care to examine the foundations and check what lies behind the new wallpaper. A qualified surveyor would need to be employed to do a full structural survey, who may report that the house appears to be in good order but without access to the basement or the authority to peel back the wallpaper there is no way of being sure. When I talk with economists I get a range of views. I met one in Helsinki who believed that the crisis was now behind and the world economy safe. If you have a role in selling the house, then nothing is wrong, but if you an expert impartial observer you would be very wary of claiming that the crisis is past.

Prosperity without Growth raises important questions; we need to peel back the confidence building statements of central bankers and mainstream economists to look for the answers to how the economy can support a sustainable society.