On what basis will the P&O boss be knighted?

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It was a sheer stroke of luck that P&O, a company owned by an oil-rich state in the United Arab Emirates, would choose the day after the UK’s PM had travelled to the UAE, to beg them to increase the supply of oil, to sack 800 people with no notice and with blatant disregard for the requirement to consult. Who could ever have foreseen that the UK government’s response would be of the huff-and-puff-as-much-as-you-like-but-don’t-do-anything-serious variety? I mean, it’s not as if the UK would ever give ground to just any old despot for the sake of a few barrels of oil – not the new Global Britain, emboldened by Brexit, which is striding the world stage as a colossus to be reckoned with.

The Labour Party have said that the government’s lack of action is “bewildering” – a statement which only goes to show how easily they can be bewildered. Whilst it’s true that Johnson promised all sorts of tough action, they should surely realise by now that those were Johnson promises: the tougher they sound, the lower the likelihood that they will be acted on. It isn’t only facts with which he has an inverse relationship, and no-one is supposed to remember what he said yesterday. He certainly doesn’t. If it wasn’t obvious sooner, it surely should have been obvious from the moment he told parliament last week “P&O plainly aren’t going to get away with it” that that was exactly what was going to happen. The nearest that we can get to certainty with Johnson is to assume that whenever he says that something has happened, is happening, or will happen the opposite is likely to be true.

Given that he, like others in his party, has called for the head of the P&O boss, Peter Hebblethwaite, the only two remaining questions are when will Hebblethwaite get his knighthood, and what will it be for: services to the procurement of oil at a time of crisis; services to the demolition of red tape in relation to employment law; or services to tax evasion in its newly established freeports. And no, that isn't intended as some sort of April Fool joke.

Opposing tyranny

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What a difference a day makes. Just when some journalists were (rather foolishly and prematurely, given his past record) beginning to argue that Boris Johnson’s leadership at a time of crisis had saved his premiership in the eyes of the only people who matter, Tory MPs, he goes out of his way to show what a complete buffoon he is, and how utterly unfit he is to represent the UK on the world stage, by comparing the bloody and desperate struggle of Ukrainians against a Russian invasion with the UK’s vote to leave the EU. It’s a poor comparison in so many ways – not least because, on one interpretation, Putin is actually trying to ‘help’ Ukrainians avoid choosing to join what Johnson and Putin both apparently see as the evil and tyrannical EU. Johnson sees Brexit as his victory and is determined to celebrate it – but it was actually more of a victory for Putin who did so much to assist and fund the leave campaign in his aim of sowing division amongst his perceived enemies. Brexit is on course to do almost as much damage to the UK economy as sanctions will do to the Russian economy, just a little more gradually. Who needs sanctions when your opponent can be persuaded with a relatively small amount of cash to shoot his own foot?

When it comes to opposing tyranny, the PM has had a bad week all round. Repaying the UK’s debt to heavily-sanctioned Iran, something which has been ‘impossible’ for decades, sucking up to the United Arab Emirates the day before a company owned by the government of Dubai sacked 800 British seamen with a flagrant disregard for the law, and pleading for help to a Saudi government which is daily using the same tactics of bombing civilians in Yemen as Russia is using in Ukraine, all in pursuit of their oil, doesn’t exactly burnish his credentials as a supporter of freedom and democracy. Going on to warn the rest of the world not to make any deal with Putin, saying, “I know there are some others around the world who say it’s better to make accommodation with tyranny,” when that’s exactly what he’s spent the week trying to do with three other tyrants is just the hypocritical icing on the hollowed-out cake.

There is a very clear message from Johnson to Putin in all this: No matter how much we sanction you now, when a crisis arises somewhere else in the future and we need your help, we will reach an accommodation, just as we are now seeking to do with Iran. We will then turn a blind eye to your atrocities, just as we are doing with the Saudis, to whom we are even selling the weapons. Oil and money trump everything ultimately. It’s just a matter of time. Ethics don’t enter into the equation at all.

And it’s a message being delivered in our name for as long as we allow ourselves to be governed by a man demonstrably devoid of any sense of ethics or morality.

Time to change the rules

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One of the few things which almost everybody ‘knows’ about economics is the law of supply and demand, which crystallises the relationship between supply, demand and price. Theoretically, if supply falls or demand increases, the price rises; and if demand falls or supply increases, the price falls until, in either case, a new balance is reached (the achievement of which new state might also involve the entrance of new suppliers or substitute products, or the exit of existing suppliers and old products). But, as with most over-simplistic rules, the reality is more complex.

We are currently seeing a huge spike in oil prices as a result of a combination of fear that Russian oil will be cut off and the decision by some customers to stop buying from that source, although there is no reduction in demand. The oil market, in terms of its effects on price, is working as one might expect, leading to price increases. There is currently, though, no increase in the cost of production of oil: the same oil, at the same cost of production, is simply being traded at a higher price. We know who’s paying the increased price – all of us – so who’s getting the extra money? The answer, of course, is that it’s going in increased profits – to oil companies, speculators, market makers etc. They are, in effect, getting a huge boost in their income for no extra cost or work. The market is working to transfer money from the poor to the rich – not just within countries like the UK, but also between countries. It is working to ration the supply of oil, based on price and ability to pay. That is what markets do – unless we change the rules.

For those who argue that we should not interfere in markets, I’ll just point out that ALL markets have rules of one sort or another. The questions we need to ask are who makes those rules, and whose interests they serve. In principle, markets are the best solution that humanity has come up with for the exchange of goods and services, but we should never forget that they are in essence a human invention, and they should be there to serve us, not to enslave or impoverish us. If they’re not doing that, then they are not working for humanity, only for a section of it – and changing the rules is a wholly rational response.

All the ‘solutions’ to the current crisis that I’ve seen politicians putting forward (more nuclear, more renewables, opening up new oil fields) necessarily involve long term projects, whereas the problem is here and now. There is an alternative, but it involves those governments wanting to hit Russian oil revenues working together, even if only for the short term, to share what oil is available rather than leaving it to the market. Effectively, it means forming a temporary cartel of purchasers to deliberately ration oil on the basis of need rather than accidentally on the basis of ability to pay. There’s still an economic hit from the reduction in availability, it’s just shared more evenly rather than disproportionately affecting the poorest people and the poorest countries. It would be uncomfortable, to say the least: we’ve seen the economic results of a shortage of energy in the past (three-day week, anyone?). But it raises the questions that have been referred to here before – how serious are we about stopping Putin, what price are we prepared to pay to achieve that, and who in society should pay that price? For all the rhetoric, the answers I’ve seen to date, based on actions rather than words, are ‘not as much as we want you to think’, ‘as little as possible’, and ‘those who can least afford it’. Words are too easy – it’s action that is needed.

Canute and the price of oil

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It probably wasn’t Benjamin Franklin who first claimed that only death and tax are certainties, but it would probably be safe to add ‘rising oil prices’ to the list.

The reasons are obvious – rising world population, aspirations for a rising standard of living, finite supply, and increasingly difficult and costly extraction.  Even if we haven’t reached peak levels of production yet, we will do at some point (and it’s certain to happen before we reach peak levels of demand unless there is a rapid and radical move away from oil, which seems unlikely).  There will be price variations en route, of course, but underlying them is an inexorable upward trend. 

The problem, and the reasons, may be most acute and obvious in the case of oil, but there is a more general issue around energy prices.  As we move to more sustainable energy generation – rather than simply exploiting the apparently cheapest sources – all energy prices are likely to rise.

And we need to be clear – this will not just be an absolute increase in prices in line with inflation, we’re looking at a relative increase as well, meaning that energy is likely to take a higher percentage of disposable income for many if not all.

For a number of reasons – some of them quite similar – food prices are also likely over the long term to increase as a proportion of disposable income.

There has not, to date, been much by the way of an open and honest political response to these issues.  Some politicians still talk as though governments can and should ‘do something’ to control price rises – hence the reference to Canute in the title.  Canute, of course, sat in front of the tide to prove to fawning courtiers that he could not control it; I somehow doubt whether that is the objective of those who are calling for control of food and energy prices.

So, two absolute basics of life, food and energy, are inevitably going to take a higher proportion of our disposable income.  Most of our political leaders know and understand this, but rather than tell us how we should be preparing for it, they continue to talk as though governments can control the prices – they fear that honesty would lose them elections.  They might well be right on that final point, but that doesn’t make it a valid excuse.

What governments can do is change the way resources such as food and energy are shared out – with the aim, as an absolute minimum, of protecting the most vulnerable in society.  Sharing simply on the basis of ability to pay (aka ‘market forces’) will provide no such protection.  That actually means that the underlying problem also contains a real opportunity to move towards a more equal society – if we’re imaginative enough to seize it.

Following the trail

Tweet On Monday, the Western Mail caught up with the story about an oil tycoon who is also one of the former bosses of a mercenary army giving £5,000 to the Tories in Carmarthen West and South Pembrokeshire, on top of the £50,000 he had given to Conservative Central Office.

As quoted, I found the reaction of the local Tories both interesting and inadequate on three counts, and it perhaps deserved the asking of a few further questions.

Firstly, the response by the MP was to say that he didn't know the donor. Well, no, and I agree that he couldn't be expected to know everyone who contributes a few bob to his funds - although £5,000 is hardly a run-of-the-mill donation. The issue, however, isn't whether he knows the donor; it's how the money was made - an issue which both he and his party have simply ducked.

Secondly, they denied that the money was going on election campaigning, saying that "It will be used to meet the day-to-day running costs of the association". So that makes it OK, then, does it?

And thirdly, the money was apparently received through a personal friend of Mr Buckingham, a certain Stephen Crouch, who is a former chair of the constituency association. I sort of wondered what the connection is. According to the MP's website, "Stephen is currently working in the Middle East, particularly in Iraq as an advisor to governmental, non-governmental, and economic institutions". Iraq, of course, is another country where Mr Buckingham's company has major interests and where 'private security firms' are in regular action. It's probably just one of life's little coincidences though.