Magazine Issue 5&6 - Winter 1997
New Labour - slick ‘n’ sleazy

When inaugurating BP’s Andrew Field development last year, Tony Blair announced that he would not strengthen the oilworkers unions’ weak position in the North Sea industry - new unionism, new rhetoric, no change.

• Energy Minister John Battle has made it clear which side of the climate change fence he’s on. He said at the Offshore Europe conference in Aberdeen in August this year, “I see class - world class. This is an industry with a future well into the next century”.

• John Battle has promised that there will be no shock oil taxes in next spring’s Budget. “We do not want to drive people away”, he said. This despite the fact that Petroleum Revenue Tax has fallen from 58.6% in 1986/7 to 16.5% in 1994/5, making the UK the second laxest tax regime in the world (after Ireland). Amerada Hess boss Francis Gugen said “It would be tragic if higher taxes were to divert investment funds, depress the oil and gas industry and rob it of a golden chance”. Tragic indeed.

• In a leaked letter in September John Battle described how he had been working with the industry to prevent Greenpeace getting publicity for its climate change campaign. He had also advised companies to sue Greenpeace - a strategy which when adopted by BP provoked widespread criticism from across the environmental movement.

COMMENT: Hooray for John Browne?
Following BP’s plans to expand its solar activities, Shell last month announced its own huge investment in renewable energy. Many environmentalists are applauding the companies for their progressive stance. Greg Muttitt argues that to believe that this can be their first step toward conversion into renewables companies represents a fundamental misunderstanding of how the companies work.

amidst all the cheering at taking the carrot, campaigners have failed to see the limpness of the far more important stick. Many campaigners have now grasped that if we are to limit climate change, fossil fuel consumption must eventually be stopped. Yet because our society is so dependent on oil, and because the required cultural revolution is a profound one, campaigners celebrate the small positive moves and dare not mention the negatives. Clearly the introduction of renewables by itself will not solve the problem; renewables have to REPLACE hydrocarbons. But amidst all the cheering at the taking of part of the carrot, campaigners have failed to see the limpness of the far more important stick.

Companies can develop new renewables markets, for example by technology transfer to developing countries; indeed there are healthy subsidies to boost the profitability of these extra activities. What they cannot do is to simultaneously wind down their hydrocarbons interests.

Solar will never create the kind of profits the oil business does. Renewable power generation is far less dependent on the high-tech transnational infrastructure for its supply, and a domestic generator can last 20 or 30 years, rather than requiring constant inputs from the companies. Furthermore, even if BEING a renewable energy company were an attractive business proposition, converting an oil company into one would not be. It would involve extensive restructuring, and the writing off of vast assets - intellectual capital (engineering, geological, scientific and marketing knowledge), staff skills, infrastructure and organisation, brand image, untransferable and unsaleable equipment. The return on the capital invested in making the conversion would be pitiful compared to that achieved by continuing to invest it in oil.

While senior executives of BP, Shell and the Norwegian Statoil have all recently made public speeches about the need to take action on climate change, campaigners make the mistake of assuming the personal beliefs of industry bosses can over-ride commercial objectives. Chief executives, like all company staff, are just the cogs in the machine who make the day-to-day decisions. If those decisions do not maximise profit and growth, they face massive disinvestment from the company by shareholders, or sacking of the directors by the institutional investors. This is the way markets work. The oil executives are not evil men. They just take advantage of a highly destructive economic structure, which none of them have the power to change. Their grand speeches can only be seen as public relations gestures.

It is for these reasons that the real momentum for change must come from OUTSIDE the industry. An obvious candidate is government, through regulation, public education and economic instruments; indeed this is why the diagnosis opposite of the DTI’s failure is so important. This is not to say that the companies can pass the buck. The companies are responsible for climate change, but we cannot expect them to mend their ways.

As stakeholders in the future of the planet, we all have a responsibility to force the necessary change, not by relying on the elites in the companies, but by withdrawing our support for the industry and encouraging others to do the same. Universities must cease to provide subsidised research and recruits for the industry. Schools should discourage pupils from going on to work in oil. Insurance companies, facing massive claims arising from extreme climate events, should withdraw their huge oil investments. And the victims of the oil industry should organise civil disobedience against the industry, from the Ogoni people in Nigeria to the fishermen who blockaded Sullom Voe oil terminal in the Shetlands in May.