Thursday, 29 July 2010

Money lost in the BP disaster

I caught the arse end of a tweet this morning, and having not done a ranty blogpost in a while I think it lit my fuse.

From: @mrrichclark
Sent: 29 Jul 2010 08:09

RT @BrandRepublic What could the money lost in the BP disaster buy? #oilspill #bp <--- A whole country, wildlife haven

sent via web
On Twitter:

I love stats and figures and graphs and stuff, but this brings the taste of ash to my my mouth.

Oil is great, its what makes the modern world go round. You can either have lots of men working in the fields growing crops to feed their families, or just one man driving a tractor running on fossil fuels, whilst the other men design HTC Desire touchscreen smartphones.

I see disasters like the Gulf Oil spill and the Exxon Valdez as part of the package, part of the risk and consequences we accept if we want ubiquitous touchscreen smartphone.

If you want to do away with oil, then chuck away your phone and get back to the fields, and if your crops die, you starve.

Sure, its not a black and white thing, you can tighten up legislation to reduce the risk of such disasters, but that like squeezing jelly. It'll put up the price of oil just a little, so that other sources of oil become more cost effective, such as biofuels and tar sands, but with them comes a whole raft of different problems, like pollution and energy efficiencies. These in turn you can tweak with legislation, which in turn puts up the price.

If the government tightens up controls too much, the oil companies will just break the law, or drill for oil elsewhere with less restrictive controls, or employ less scrupulous subcontracts. As long as we want our ubiquitous touchscreen smartphones oil companies will find a way, its completely unavoidable.

If you accept the package, you accept the inevitability of disasters, the best you can hope for is a decent regime that clears up the mess, an insurance fund if you will, that whenever a disaster occurs, can suck up the oil, hose down the seagulls and get those affected back to business as usual as soon as possible.

Such an insurance fund would need to be huge and inevitably funded by the oil companies. But the get their money from selling oil to us the punters who want smartphones rather than working in the fields.

But here in the UK, about 70% of the cost of fuel at the pumps goes to the government, not the oil companies. The government that legislates to control the risk and is ultimately responsible for clearing up the mess.

Which bring me back to that tweet, and the phrase "money lost in the BP disaster". Whatever money is "lost" to BP, it originally came from the consumer, and on the way the government took more than double that. If the disaster cost BP $30billion, the government has taken $60billion.

If there is to be an insurance fund, don't we already pay for it? Sure, it would be nice if there was a specific pot of gold set aside, but that's just office admin.

When the government started bailing out banks the other year, I saw a similar infographic and possibly a blogpost from Tim Worstall going through what that many billion would buy. Things like the International Space Station or writing off the debts of third world countries, and so forth.

But no, the guvmint chose to bail out banks with money that didn't actually exist. The UK government essentially took out loans to be paid back "in the future" to not pay for third world debt or cool stuff like space travel, but banks.

The government have got far more of our money than BP, we handed it over in good faith for them to spend wisely on making the world a better place.

The money BP get as a cut is exactly the value of the oil to them, otherwise they'd sell us something else. In the UK in return for £1 we get about 30p's worth of oil and 70p's worth of the government making the world a better place.

That's the package, 30p of ubiquitous touchscreen smartphone and avoiding work in the fields and 70p worth of government spending.

Having finally clicked on the tweet's link to Brand Republic I see they're using the loss in value of BP due to the oil spill, which amounts to $100billion, and lists items such as the following:-

  • A new home to replace all 275,000 homes lost in hurricane Katrina
  • An iPad for all US college students
  • 10 years clean water for each of the 884,000 people without access to it

Anyhoo, its all pish. At any point the UK or US government could, at the drop of a hat, take out a loan to buy any of these things, to make the world that much of a better place.<

But they don't, cos they know as well you do, that such gestures would lead to riots, fighting in the streets, buildings on fire, crops left unharvested, starvation and death.

I can't let it lie, every time I click post and walk away some more rantin' goes through my head.

How about this? Instead of paying £1 for petrol and getting 30p of oil and 70p of government spending, you could pay 30p for the same amount of petrol and keep the other 70p in your pocket and then spend that 70p making the world a better place by your own design. Rather than relying on the government deciding who is worthy of their largess, you can choose for yourself whether to give the money to charity, to buy clean water in far off lands, propping up dictatorial regimes, or hosing down seabirds or giving iPads to US college students and making Apple exactly the same amount richer.

I mean really, this lost BP money couldn't have been spent on anything else, there was never any plan to do things on that marvelous shopping list, no plans that have now had to be cancelled due to the oil spill.

Back home, I have these huge credit card debts racked up from a period of unemployment, and I really want an Xbox 360 Elite, my debts equal the cost of fifty Xbox 360 Elite, that's the scale of my disaster. So I can't afford an Xbox 360 Elite. If I somehow came across the money to buy one Xbox 360 Elite, I wouldn't buy one, I'd pay off a fiftieth of my debts.

If I came across enough money to buy forty Xbox 360 Elites, I still wouldn't buy one cos I still have more debt than money to buy an Xbox 360 Elite.

Strangely, even before I'd racked up the credit card debt I didn't have enough money to afford an Xbox 360 Elite. There were other more pressing things to spend the money on, like getting my car serviced, rent, food, flowers for my attractive young ladyfriend, and propping up a small fraction of London and Glasgow's indie music scenes.

Actually, I could, at any point just get an Xbox 360 Elite with my said credit card, whether I have the money or not. The fact there is a huge oil spill or outstanding debts has little bearing on whether I get it or not.

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