The collapse of the oil price has several
major implications. It is an economic tsunami. For the oil-producing developing
countries, in Africa and elsewhere, it means an extraordinary loss of revenue. That’s
the case for Nigeria, Angola, Congo, South Sudan, Algeria, Libya, Indonesia,
Mexico, Brazil, Venezuela, Iraq, Iran, and so on. It adds fuel to social
instability in those countries. It brings, at least, a new level of poverty and
hardship to their populations. For the developed countries, it carries serious capital
losses for the pension funds and other sovereign funds that were heavily invested
in oil corporations and all the other companies that deal with bits and pieces
of the oil industry. For all of us, it discourages new investments in renewable
sources of energy. The bottom rock oil price makes any renewable too expensive
to contemplate at this stage.
The
oil consumption is at present very low, because of the lockdowns that are implemented
all over. But also, because the United States has continued to pump vast
amounts of oil. They are now the largest producer, with 12.3 million barrels
per day. President Trump could have compelled the industry to reduce daily
production. There was a recommendation to cut it by 2 million barrels per day.
He decided not to act because he saw this branch of the economy as a key pillar of his political basis. There are 10 million oil and gas sector jobs in
the US, plus many billionaires that inject money in the Republican camp. Now, he is promising them billions of dollars
in subsidies. Public money being wasted when the solution was to reduce exploitation. His political choice has a huge impact on the domestic taxpayers’
money and on the world economy. It is inexcusable.
They
say that misfortunes never come alone. Indeed.
