Apocalypse and oil

Franklin Johnston




Earth is the Lord's but a deep well opens Pandora's box!


April 20, 2010 is a date mankind may not forget. The day earth fought back! We had abused her; ravished forests, polluted waters, darkened her skies and on this day we pierced her mantle and oil gushed! She cried, "This is my blood, all the oil you desire!" BP replied, "No problem", but as it gushed even more, no man could staunch the flow and panic set it!

The earth confounded men of Congress, of business and science. But the men of oil had a solution - garbage! Let's plug the well with garbage! Garbage? "Yes, when in doubt try garbage!" This was Big Oil's best solution! And garbage it proved! The US was angry, the UK was miffed and said Obama should not blame them as BP was not British; shareholders bawled at lost dividends and we watched aghast as the world's wise men scurried about like headless cocks. We trusted them to dig a proper well; they did not! But, as this will not be the last deep well, can we trust them with the next one? God only knows!

The Macondo well is not the beginning of the end, but it may be the beginning of wisdom. Deepwater Horizon, a semi-submersible drill rig leased by BP Plc (a UK-registered company with offices in London) until 2013, at some US$500k a day, bored a hole six miles into the earth's crust - almost to the mantle, to find oil to feed our lust and their greed. The wreck now lies a mile down on the ocean floor. The insurance claim was settled, owners are happy, but three million gallons of crude oil still gush into the ocean each day and they can't stop it. Mother Earth is taking revenge! What will deeper wells bring?

For millennia man lived in harmony with earth and respected it as the sustainer of life. Jewish stories in the Bible say, "Be fruitful, multiply, replenish the earth..." The result? There are now seven billion mouths to feed! We multiply but we do not replenish, replant or restore; we harvest, but do not rest or restock the species and now we drill this bleeding wound in the Gulf of Mexico! When did we lose respect for Mother Earth?

In the last three centuries man has been an arrogant know-it-all! We know a bit about earth, gravity, our body; split the atom, went to the moon and mapped the human genome. We now have a cocky certainty about things where the ancients were cautious and respectful; we will soon programme our Sat Nav to locate God! Will Armageddon come from the sea? Not by demons, evil men, nuclear bombs, global warming, Bin Laden or poverty, but by simple businessmen. BP opened Pandora's box and a haemorrhage of oil can end life as we know it! Scary! It is so like God to confound prophets and priests. What if hell is our own earth saturated with oil and ignited by the spontaneous combustion of the sun? "No more water - the fire next time?" And why not? Who knows God's mind? God is God, consults no one, gives or destroys life at will! Those "not chosen" are also His and He used them to destroy His son, Jerusalem His city, and enslave His "chosen people". God makes rules and is not bound by them! You pray and expect God's help. Guess what? God answered your prayer, but not as you wished it; you are not in the picture or even part of the solution - tough! Do we limit God's end time to a Jewish story about beasts with four heads? Can the issue of oil be His Armageddon? Only God knows God's mind; this is why God is God! As humans, we must care for the earth and get on with living!

Some time ago, a small Australian undersea well gushed for two months and polluted waters as far as East Timor, so when the massive Macondo well blew I encouraged Jamaica to get involved. Why? We are all joined at the hip! Consider this scenario:

*The oceans are one body of water, given various names by Europe's explorers; if you urinate at Whitehouse beach it eventually reaches Europe, Africa and Asia thanks to the Gulf Stream, Benguela, Agulhas and Humboldt currents.

*Mankind is one, and Europe's proto scientists labelled people by phenotype (mainly colour) as so-called races, after characters (Ham, Shem) in Bible stories. Conclusion? One people breathe one air, live on one earth, beside one sea. If Apocalypse by oil continues, progressive pollution of the Caribbean, Atlantic, Indian and Pacific oceans means marine life will die. Pollution from the coast inland means as crops and potable water fail we all die! Extreme and not pretty, but species have died out before! So what are the less atavistic implications of Macondo and other deep wells to come?

* If oil gushes to year end the damage may be US$1t and life as we know it will not return to some areas. Who heard the last dinosaur scream? The full is hard to bear!

*The impact on land and marine ecosystems may mean loss of use, plant, animal, sealife, birds and micro-organisms we know so little about - all priceless!

* First, the economy, quality of life, tourism, etc, of Gulf states will be hard hit. In stage 2, Central, South America and the Caribbean will suffer, and stage 3 will kick in when the ocean currents circulate the crude oil globally - possible global disaster! The earth lived with Krakatoa, tsunami, earthquake, storm, Eyjafjoll, all natural disasters and it recovered. Bhopal was man-made, and thousands were killed and maimed with little global impact. BP's incision in the earth's mantle is different. It may affect all on earth!

But we are not yet at worst case; so what can we learn from Macondo?

*We do not know as much as we think we do; so we should respect earth and be cautious.

*God - however you conceive Him - may intervene in the world, but we can't predict the outcome for man as our agenda is not His and we may not be part of His solution.

*The environment must be our priority. We must apply pressure on ourselves, business and government to do right by our earth. We came, it was here and it's all we have!

*Truly "no man is an island". If the US and China pollute the air it is our air; if men dynamite fish and cut down our forests to burn coal, if Caricom accepts "payola" and votes to destroy whales, they threaten our earth! Let's oppose them all! The Gulf gusher may not be the Apocalypse, but "take sleep and mark death", my friend.

Dr Franklin Johnston is an international project manager with Teape-Johnston Consultants, currently on assignment in the UK.

franklinjohnston@hotmail.com

July 02, 2010

jamaicaobserver

Bahamas Blog International

Gulf of Mexico Oil spill, failure of laissez-faire governance

Oil spill, failure of laissez-faire governance

By Dennis Morrison, Contributor:

AMERICANS ARE feeling helpless as there appears to be no end in sight to the oil spill in the Gulf of Mexico and the round-the-clock cable coverage with images of coastal wetlands being overrun and beaches tarred in a large section of the region. It is a catastrophe not just for the Gulf region but for North America, as these wetlands comprise nearly a half of the total wetlands of the continent and support a substantial part of the United States (US) seafood industry. The Obama administration is taking a shellacking for the inevitable chaos that has resulted as confusing layers of federal, state and local bureau-cracies scramble to mount clean-up operations.

I suspect, however, that the frustration Americans are feeling arises from the sense that their society, which prides itself on technological mastery in all human activities, is powerless to plug the leak. This sense of powerlessness does not fit at all well with the psyche of the all-conquering America that has dominated the race to outer space and outdone its rivals in military technology for the last century. Shouldn't the US military with its smart technology and super-efficient command and control systems be able to sort out the mess? Surely, this ought not to happen to Americans, of all people.

What the Deepwater Horizon disaster has laid bare is not so much American technological inadequacies, but the failure of its oil industry regulatory system at all levels. It comes 30 years after laissez-faire ideology gained ascendency in the Reagan-Thatcher era and the crusade to roll back government involvement in regulating markets. We now know, too, that in the new milieu, relations between public officials and the oil industry were marked by rampant corruption. This is how BP came to have been permitted to drill for oil at record depths below the ocean floor with scant consideration for disaster mitigation, as their plans were simply rubber-stamped.

Painful fallout

The calamitous failure of government regulation has not been limited to the oil industry or, for that matter, to the United States. The near collapse of the US and British financial systems in 2008 can be traced directly to the liberalisation of Western financial markets that was at the centre of the resurgence of laissez-faire capitalism in the 1980s. Regulatory systems put in place after the banking system meltdown in the 1930s were upended on the altar of ideology. Only after massive bailouts were major economies able to avert disaster, but now the painful fallout is being felt and the recovery appears tepid.

In the porous regulatory systems that existed since the 1980s, yuppies on Wall Street and in the City of London turned financial markets into casinos, gambling with the savings of the economies. With financial institutions collapsing like ninepins, credit markets froze, sending the world economy into decline for the first time in 70 years, and simultaneously with world trade for the first time ever. The US, and more so Europe, are struggling to emerge from recession, which is being made harder by the huge fiscal and debt burdens arising from the financial crisis, and the Americans are plagued by record levels of long-term unemployment.

Jamaica did not escape the liberalisation fever, freeing up its financial system in the 1980s and 1990s. Leaky regulations allowed reckless lending between connected parties, backed by inadequate collateral. Banks, especially indigenously owned ones, operated without regard for prudent risk management. After what was an enormous govern-ment bailout in the late 1990s, among the highest as a percentage of the size of the economy, new financial regulations to tighten the system had to be promulgated, which is partly why Jamaica's financial system was unaffected by the recent crisis.

Where Jamaica perhaps suffered the greatest damage from economic liberalisation was the premature abolition of exchange controls in September 1991. That action, taken at the behest of Washington-based international financial institutions and the leadership of the local private sector, came ahead of the necessary fiscal and monetary measures to ensure a less-turbulent transition to a stable foreign-exchange market. What transpired was a protracted period of high inflation which was only put down by repressive monetary policy [high interest rates] that contributed to the financial sector meltdown of the late 1990s.

Costly failures

The business failures arising from escalating debt due to the hike in interest rates hurt several sectors of the local economy. Moreover, the high interest paid on 'safe' government instruments distorted the risk appetite of investors, even as it sent government debt payments skyrocketing. Borrowing had to be increased to service existing debts, and with interest payments eating up a greater share of revenues, less was available for investment in education, health, and national security.

The failure of markets globally has been costly and, in the aftermath of the Great Recession, the rationale for regulation of markets has regained legitimacy. Reflecting this, the International Monetary Fund, World Bank, and other institutions that shape the Washington Consensus have adopted a more pragmatic view of the role of the State in regulating economies. The resurgence of the political right in the US, notwithstanding, the ideological centre has shifted to the left globally, hence we have in Britain a Conservative-Liberal-Democratic coalition, which is projecting a softer face for British capitalism.

Financial markets, though, are exerting pressures to rein in government economic stimulus that could set back the recovery. It would be a mistake to put the state back into a laissez-faire mode, bearing in mind the consequential damage to the economy as is being witnessed even now in the Gulf of Mexico.

Dennis Morrison is an economist. Send feedback to columns @gleaner jm.com.

June 20, 2010

jamaica-gleaner

Bahamas Blog International