Nature's Evil

Since the 1970s, there has been no decade that has not seen the price of oil changing by a factor of two, or even five in some decades. No ‘stabilisation of the markets’ was achieved. Instead, we have been moving from one crisis to another – military, financial, political, ecological and epidemiological. If the gold standard was a successful but temporary measure, the oil standard was a non-starter. The majority of fossil resources will never be used. In 2015, British Petroleum released a forecast according to which only a third of proven stocks of oil, gas and coal will ever be extracted and used. If more carbon is burnt it will lead to a rise in average temperature of more than 2º Celsius, and this will be fatal for civilisation as we know it. Since then, the growth of proven energy reserves and the decline of realistic energy needs have decoupled still further. As long as the capitalisation of oil majors depends on their reserves, this decoupling means huge financial losses. American shale has added new volumes of oil, and this oil has a different, non-conventional dynamic: more resilient to price changes, shale oil acts as a shock absorber for the oil market. 32 But for any absorber there is a shock that it cannot withstand. The year 2020 saw the collapse of oil consumption and the inability of the Russian and Saudi producers to agree on supporting the oil price. It also saw a renewed commitment from the European countries to the ‘green recovery’. The consequences of the pandemic have meant that the price of oil has lost its informative value. Decoupled from the global economy, the price of a barrel will continue fluctuating, but its unpredictable moves will make decreasing impacts on the markets. In 2020, Germany was already producing the major part of its energy from renewable sources. Many other European countries have also set the dates for their ‘carbon neutrality’, which largely means a ban on burning coal and oil.

The English and the German language both use the idiom ‘so-and-so is stinking rich’. Taking an example from folklore, Sigmund Freud wrote: ‘The gold which the devil gives his paramours turns into excrement after his departure.’ 33 The kinship of wealth and shit becomes more evident with every shift of the resource platform.

The Russian disease

In 1977, The Economist coined the expression ‘Dutch disease’ to describe the unexpected events which ensued in the Netherlands after a large natural gas field was discovered in the North Sea, off the coast of Groningen. The strengthening of the national currency led to unemployment, inflation and emigration. As had happened many times in the past, profits from a raw material devalued workers’ wages. But Holland, Norway and some other ‘developed’ countries found a way to deal with the resource curse. A popular remedy is ‘sovereign funds’ – state-owned financial institutions which have the task of ‘sterilising’ petrodollars, removing them from circulation and accumulating money ‘for future generations’. In contrast to the utilitarian economics of the ‘welfare state’, which encouraged consumption, ‘sterilising funds’ have the mercantile goal of restraining domestic spending. Like the gold reserves of the past, these funds save petrodollars for the unspecified future. The difference is that the autocratic ruler had complete control over his treasury, while the spending of sovereign funds is conditional on a host of rules and procedures. To meet them, countries need ‘good institutions’ – a powerful parliament, an independent judiciary, a free press. This formulation, ‘good institutions’, belongs to economists – a historian would not dare to use it.