Profit is the opposite
side of poverty and deprivation, which is ignored by mainstream although
the mainstream takes the posture of crusader against poverty. Profit
fattens itself by pushing many to the world of poverty and deprivation.
The sphere of energy is not free from this equation.
A comparison with the amount profit of the oil
companies helps understand the inequality. The oil industry, Antonia
Juhasz writes, is the most profitable industry in the world. Six of the
ten largest corporations in the world are oil companies: ExxonMobil,
Royal Dutch Shell (Shell), BP, Chevron, ConocoPhillips, and Total. With
over $40 billion in profit in 2007, ExxonMobil is the most profitable
corporation both in the world and in world history. Its profits are
larger than the entire economies of 93 of the world’s nations ranked by
GDP. ExxonMobil had the most profitable year of any corporation ever in
2003 and then proceeded to surpass its own record every year for the
next five years. ExxonMobil’s profits were more than twice those of the
next three US companies on the Fortune 500 list combined: Chevron with
$18.7 billion; General Motors, which lost $38.7 billion; and
ConocoPhillips with $11.9 billion. Similarly, in 2006 ExxonMobil’s
profits were nearly twice those of the next two US companies combined:
United Airlines with $23 billion and Citigroup with $21 billion.
ExxonMobil is not alone. Each major American oil company — ExxonMobil,
Chevron, ConocoPhillips, Valero, and Marathon — has surpassed its own
record-breaking profits in almost every year for the last five years.
Combined, they earned more than $80 billion in 2007 profits. There is
simply no comparison with any other industry in the United States. The
10 largest global oil companies, according to the Fortune’s 2007 Global
500 listing, took in over $167 billion in profits in 2006 alone, about
$50 billion more than the top 10 companies in the second most profitable
industry, commercial and savings banks. (The Tyranny of Oil: the
World's Most Powerful Industry and What We Must Do To Stop It, 2008)
Not only oil, other sources of energy also reap
profit. These are lucrative. Reports on business, trade, investment in
energy sector and its sub-sectors show the fact. Force, political,
diplomatic and military power, manipulations and conspiracies,
assassinations and murders, which are applied in areas of deals, labor,
politics, geopolitics and regime change in countries and regions are
indicators of power of profit in the area of energy. Identifying the
source of profit helps locate source of poverty, and energy poverty is
no exception. Section of political economics has long ago identified
both the sources that have still not been possible to refute and nullify
by the other section.
Any common person from a Fourth World country or
from strife-torn Nigeria or from energy poor Bangladesh can ask: what
the profit could have done in the lives of the billions living in dark,
struggling daily with energy expenses, walking miles to collect biomass
for cooking, in hospitals facing power outages? Even, many citizens in
the US, in the low-income part of a municipality can raise similar
questions. But, the true path of profit does not go along those outposts
of life. Its survival and expansion depend on depriving many. Thus it
creates crisis, crisis in the form of civil strife, violation of human
rights, and ultimately for itself. This aggravates the energy poverty
situation.
Corruption
The energy poverty situation turns grave with the
factor of corruption in the entire energy business, and corruption hurts
the poor most. A World Bank study said: corruption “perpetuates or
deepens inequality, as the few amass power and wealth at the expense of
the many.” The study defined two types of corruption: petty corruption
by petty employees and “grand corruption in the allocation of lucrative
monopolies” by company managers and mid-level bureaucrats associated
with energy purchase or sale contracts or debt instruments. Both types
of corruption hurt the common people, but the later one hurts the
country, the broader public interest, the economy.
Grand corruption, according to the study, involves
political campaign contributions and the personal enrichment of
political leaders. It mentioned election finance scandals in industrial
countries, and politicians in “new” democracies acquiring illicit
sources of campaign funding. As example the study mentioned that in a
south Asian country losses of two organizations related to electricity
amount to more than US $100 million each year. Corruption is more common
in unsolicited bids, supplier’s credits, and crash program–type
procurement initiatives.
The study cited a few examples of corruption: A
former prime minister in Ukraine personally granted exclusive rights to a
gas trader that was reportedly controlled by him and his associates.
The trader imported gas from Russia at a price of US $50 per thousand
cubic meters and sold it to captive industrial consumers for US $80. The
prime minister used the financial wealth generated by this lucrative
monopoly to establish a political party. Diversion of utility revenues
had become such a problem in Pakistan that in 1999 the government
mobilized the army to supervise meter reading and billing. The scale of
theft surprised the authorities, especially the extent to which the
affluent benefited. Industries, shopping centers, and large residences
accounted for a large share of the stolen electricity. Subsidies in
power sector in one country, the study mentioned, amount to more than
US$100 million a year, more than expenditure on health. The
beneficiaries of the subsidies are the relatively affluent 16 percent of
households that have electricity service.
The World Bank study commented: “The poor lose from
the budget subsidies to the power sector in two ways: lower rates of
economic growth and less social expenditure from which they would
benefit directly.” Corruption that grows along the modus operandi of the
dominating classes contributes to energy poverty.
With intensified competition among capitals and
accelerated and almost complete globalization by capitals, corruption is
a tool in the hands of capitals. Each of competing capitals aspire and
demand a fair game for all but self. Each of competing capitals
Political economy of the crisis should not be missed
Political economy of the crisis should not be missed
The energy crisis is part of the world crises now
overwhelming the planet. The fundamental aspect of the energy crisis
will be missed if it is only viewed in terms of the prospect of
dwindling oil supply and is viewed without connecting it to the world
production and distribution system. The approach pushed by the donors in
the poor countries in the name of development, part of the world
production and distribution system, is contributing to the crisis. A
major part of this approach is oil intensive. The life style the
dominating segments in the poor countries have jealously adopted is
contributing to the energy poverty, and widening the gap.
Plundering of public property is the lifeline for
the dominating segments in many poor countries, and the process of
plundering increases energy disparity. The plundering process and the
plundering class/segment is part of the present world system while the
plundering of the energy resources from poor countries is an act of the
world system.
Metropolitan states with their all might stand by
their owners: the energy giants. The world power structure stands by
their compradors, the junior partners in appropriating/plundering and
squandering of public resources including energy.
Increased energy poverty is the consequence of
energy loot from the poor countries. The political economy of energy
poverty is thus connected to class rule and the world system.
Degradation in environment and changes in climate is worsening the
energy poverty situation. All these are part of the energy crisis.
The energy poverty situation puts forth a few tasks:
(1) Explain this disparity and deprivation to the masses so that the
possibility of drying up of oil, a major source of profit, could not be
depicted by the mainstream as the only aspect of energy crisis, so that
the people at the bottom turn aware of the way they are being deprived,
and so that the private sector could not make the pockets of the poor a
big market. (2) Demands for energy equality, environment-friendly energy
for the common people, affordable energy not harmful to health should
be raised. An equitable distribution of energy will stop many of the
luxuries that squander energy. (3) Cooperatives for energy could be
organized at community level. This will provide people, through mistakes
and failures, space for debating related issues, getting mobilized,
practicing democracy, running organizations, fighting bureaucracy, and
articulating greater demands. (4) The designs and attempts to take
control of energy sources by external actors should be exposed. (5)
Popularize the approaches: (a) the lower the more, and (b) no
transparency no deal. The first one is for proportionately more subsidy
in energy to the poorer, more participation from the bottom in planning
and decision making while the next one is for demanding all energy
related deals to be made public and to be debated. Debating the energy
squandering life style of the energy rich and the “development” approach
prescribed by the donors will create scope for broader space.
[This section, 4th in the series, modified and
elaborated, is the last part of the chapter “Energy Inequality and
Energy Poor” in The Age of Crisis (2009) by Farooque Chowdhury, a
Dhaka-based freelancer.]
