Sticker Shock and Awe
During the British parliamentary debate on the Great Reform Bill of 1832 – officially recorded as The Representation of the People Act which extended the vote beyond the aristocracy – Macauley said:
“The great cause of revolutions is this, that while nations move onwards, constitutions stand still.”
For the most part, the luckiest among us inhabit countries where the voting system predates the computer, and we get one (often effectively or actually binary) choice every 3-5 years. In between times, focus groups and pollsters rule (anyone with more than a passing understanding of statistics understands the limitations of this), and we the people get to enjoy being force-fed details of the mandate we allegedly gave.
Yet… We can select our preferred orange sequinned gyrator on Dancing with the Stars in real time from our couch. Platforms like Twitter in theory allow us to engage with pretty much anyone in in mere moments (and who knows what Elon will do as Twitter’s newly-minted largest shareholder? Hopefully better than Bezos at the WaPo…).
At the other end of the scale, some problems (and therefore required actions) are decades long and cannot be achieved in a single parliamentary cycle. Australia’s 3-year Federal cycle is particularly prone to flip-flop governance - anyone remember the short-lived carbon tax? Clearly, climate issues fall into this category.
I am not going to start proposing alternative governance models today (although I do have some ideas…), but without a doubt there is the technological capability for more granular participation. I am going to talk about how this is causing problems in the energy sector, and how this may spill over.
I’ll start in Canada, because that’s where I live at the moment*. We have a PM claiming a mandate from minority, having failed to win neither the popular vote nor a house majority. Where do Canadians stand on emissions reduction vs. supplying energy (amongst other things like minerals and fertilizers) to allies? Honestly, I don’t believe that he or anybody else knows, and it’s certainly more complex than the Prairies vs. the rest.
In this ambiguity, instead what we have is an attempt to create a mathematical tautology that in effect more closely resembles a Euclidian point**. Canada has pledged to increase exports – but the 100k bpd oil + 660mmcfd of gas is frankly, pardon my French, pissing in the wind in the context of the European call to action. If I was in the mood to be more polite, I might recall MLK’s “In the end, we will remember not the words of our enemies, but the silence of our friends.”
At the same time there’s the accelerated attempt to force a 42% emissions reductions from the sector by 2030 – at least 2 elections away. This is the moment for “Record Profits” to be reinvested, according to the PM. I’m not sure when he gifted himself authority to tell shareholders what to do with their money, beyond setting a tax level.
All of this is to be achieved without new pipelines or infrastructure. So, let’s summarize: We’re going to make oil and gas harder and therefore more expensive to produce, we’re going to export more of it (enough to negatively impact Canada, not enough to help anyone else) and oh, the carbon tax ticked up another $10/t to $50/t on April 1, on its way to $170/t (sadly, not a joke). Net impact: higher prices to consumers, which invariably hurts the poorest the most.
The US seems to be making a reasonable fist of the natural gas situation, but on the oil side Biden prefers to blame Putin whilst ‘encouraging’ OPEC+ (yes, including Russia) rather than fixing the problem within the lower 48. The State elections actually give us a more nuanced view of where the electorate stands, which I’d summarise thus: producing regions tend to be in favour of production; big cities think that they know better, and agricultural areas are caught in the crossfire.
Elsewhere, the natural gas bill for many households in the UK has just doubled – and only regulation prevented it from increasing even more. I don’t follow UK politics as closely as I used to, but my recollection is that no-one campaigned in support of higher energy prices. Now people in food banks are declining potatoes because of the energy cost of cooking them. In the UK. The 4th largest economy in the world.
Price sensitive developing countries will be tempted to deal with the deep discounts on offer from Russia, as we’re already seeing in India. Combining Chinese debt diplomacy with Russian energy diplomacy to me sounds like an abdication of Western democratic responsibility.
I’ll offer an update to Macauley’s quote: The greatest current risk of revolutions is this: making the poorest people in any country choose between food, energy and freedom.
The pendulum will swing – it always does – the question is how far and how fast. We would be wiser to be moving out in front of this by updating our institutions to handle the slings and arrows of modern life.
Make no mistake, energy has been at the heart of revolutions – in addition to the current European situation, think control of oil in WW2, almost any Middle Eastern war, the Arab Spring, Giles Jaunes and the Kazakhstani LPG protests that caused a government to be dismissed.
As gasoline prices in Canada touch $2/litre, Canadians with chainsaws are going to find all those trees pretty appealing.
AB
* Probably not for much longer, but that’s for another post.
** A mathematical tautology is true in all outcomes. A Euclidean point (a famous Rutherford put down) is defined as the intersection of two axis, meaning that it has a position – but no substance.