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Paris burns, with cheap oil

Análisis
04/12/2018
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The violent demonstration of the “yellow vests” last weekend in France is the motive for innumerable reflections and analyses these days throughout the world. No doubt there are various causes, as well as explicit and occult interests, and the network of political motivations behind these events. But without a doubt, the source of this problem, the primary reason, the spark that inflamed Paris, was the announcement of a rise in taxes on fossil fuels.

 

It is impossible, at least for Latin Americans, not to recall the “gasolinazos” (gasoline protests) of Bolivia in 2010 and of Mexico in 2017. Unlike what happened in France, the demonstrations in these countries originated with the removal of subsidies for fossil fuels rather than a rise in taxes. But the result was the same: the increase in the price of gasoline and the violent action in the streets by people affected by the rise in pricesi.

 

Also in Bolivia and Mexico the causes and motivations of the governments, the political actors and citizens movements were diverse and there are surely many interpretations of the underlying reasons for these conflicts. But for this analysis, I am interested in focusing on what they have in common: the widespread mobilization of citizens in the streets in the face of a price increase for fossil fuels.

 

These reactions of citizens should alert us to the future that we face. Beyond the habitual comings and goings of international oil prices, it is obvious that in the future the prices can only rise. There may be minor fluctuations but the inevitable tendency is for prices to rise. And this not in the long term, but in the near future. And there are two principal reasons for this: the end of cheap oil and climate policies.

 

“The end of cheap oil” is the title of a fundamental article written by Colin Campbell and Jean Laherrère for the journal Scientific American in 1998, where they brought evidence that the peak of conventional petroleum was imminent and that, in consequence, it would not be possible to maintain the low prices of crude oil. The present exploitation of unconventional petroleum, with much higher costs, has made it clear that it will no longer be possible to return to the epoch of cheap oil. The US companies that early took on this kind of drilling, are accumulating debts of 300 billion dollars and the illusion of present oil prices can only be maintained through subsidies and financial bubblesii. The demand for oil is estimated to reach 106 million barrels daily by 2040, some ten per cent more than present consumption and the majority of this oil will necessarily come from expensive unconventional deposits.

 

Meanwhile, since the negotiations on climate change began in 1992, it was clear that one of the principal enemies of the climate are fossil fuels. Since then, the removal of subsidies and of funds for the exploitation of hydrocarbons have been pillars of climate policy on an international level. With an exasperating slowness for climate concerns, these policies have been advancing: the world subsidies for fossil fuels have fallen from 500 to 350 billion dollars, institutions such as the World Bank have withdrawn their support from this kind of project, national legislators have adopted obligations to invest in technologies of emission reduction, etc. All these measures coming from the struggle against climate change – though still too few, partial and insufficient – have increased the costs of oil production. If countries take the National Contributions presented in the Paris Agreement seriously, and even more, if they really want to avoid the increase of temperature beyond 2 degrees centigrade, these restrictions will be even greater.

 

These two reasons, the end of cheap oil and the climate agreements, will inevitably result in an increase in the cost of fossil fuels. But national economies are highly dependent on petroleum for their functioning: industry, transport, agriculture, mining, are all activities that need fossil fuels for their functioning. The increase in oil costs undoubtedly imply an increase in the price of articles of consumption of the population: transport, food, energy, etc.

 

To make things worse, we citizens have become accustomed to the advantages and benefits of cheap fossil fuels. We have filled our cities with automobiles and the supermarkets with food from distant lands. We have come to consider our quality of life equivalent to our level of consumption, such that the universal access to these goods and services dependent on oil has become a social demand. Unions, social movements and opposition political organizations are thus rising up in the face of what they understand as their legitimate rights.

 

Governments, of every sign and colour, are facing a difficult situation: they have promoted and stimulated a lifestyle for their citizens that they are unable to maintain. They have convinced us that a certain way of living was the object of their political programs and they have won, or will win their elections promising the whole earth. But this promise is based on a material that no longer exists: cheap oil.

 

What happened in Bolivia, Mexico and France is only a preview of a movie that we shall see in full technicolor in years to come. Oil-addicted societies that one day or another will find that they cannot pay for their drug. Everyone will put the blame elsewhere, will focus on the qualities of one government official or another, will accuse this or that policy, blame the poor, or the rich, the rebellious, the corporations or the devil. But there will not be just one guilty party. We have all allowed ourselves to be seduced by the illusion cheap and infinite energy. For sure, some are more responsible than others. But in the end, no one is innocent.

 

03/12/2018

 

(Translated for ALAI by Jordan Bishop)

 

Gerardo Honty is an analyst of CLAES (Centro Latin American de Ecología Social)

 

 

i See “Gasolinazo: Lecciones para América Latina”; www.alainet.org/es/articulo/182865

 

ii See “Una madre contra el fracking”; www.alainet.org/es/articulo/196461

 

https://www.alainet.org/en/articulo/196945

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