UN chief criticizes oil firms for their ‘grotesque greed’
Govts urged to tax excessive profits
UNITED NATIONS, Aug 4, (AP): The United Nations chief sharply criticized the “grotesque greed” of oil and gas companies on Wednesday for making record profits from the energy crisis on the back of the world’s poorest people, “while destroying our only home.”
Secretary-General Antonio Guterres said it was “immoral” that the largest energy companies in the first quarter of the year made combined profits of close to $100 billion.
He urged all governments to tax these excessive profits “and use the funds to support the most vulnerable people through these difficult times.”
Guterres urged people everywhere to send a message to the fossil fuel industry and their financiers that “this grotesque greed is punishing the poorest and most vulnerable people, while destroying our only common home, the planet.”
The secretary-general spoke at the news conference launching a report by the Global Crisis Response Group he set up to tackle the triple interconnected crises of food, energy and finance which have especially hit countries trying to recover from the COVID-19 pandemic and deal with the devastating impact of the war in Ukraine.
Guterres told reporters that “we are seeing excessive, scandalous profits of the oil and gas industry in a moment in which all of us are losing money” because of inflation around 7-8%. And “nothing will be more popular than to tax the excessive profits … and to distribute that money to the most vulnerable families,” he said.
Recommendations
The crisis group has already presented recommendations on food and finance and Guterres said he believes “we are making some progress” in those areas, especially on food.
The report released Wednesday focuses on the energy crisis, and the secretary-general said it aims to achieve the equivalent of the grain deal he first proposed to the Russian and Ukrainian presidents to enable Ukrainian grain to be shipped from Russian-blockaded ports on the Black Sea to world markets in desperate need of food supplies. The first ship to leave Ukraine was headed to Lebanon Wednesday after a three-hour inspection in Turkish waters.
Guterres said speculators and obstacles to getting grain and fertilizers to global markets during the Ukraine war sent food prices soaring. But since negotiations on the grain deal “gained traction,” he said, there has been “a significant fall” and today prices of most foodstuffs and fertilizers are more or less at their pre-war prices.
“But that doesn’t mean that bread in the bakery is at the same price before the war, because these are quotations in wholesale markets, some of them related to futures,” he said, and there are a lot of other factors contributing to rising prices including transportation and insurance costs and supply chain disruptions.
UN trade chief Rebeca Grynspan, who coordinated the crisis group, said wheat prices are down almost 50% from their peak, corn and fertilizer prices have dropped almost 25% in the past month and crude oil is now around $93 a barrel compared to $120 dollars a barrel in June. “Only natural gas has bucked the trend and is still higher than a month ago,” she told reporters by video from Geneva.
Poverty
Falling prices are “good news,” Grynspan said, but they have been high for too long and since June forecasts for extreme poverty have risen by 71 million people and forecasts for food insecurity by 47 million.
In another key recommendation, the crisis group urges richer developed countries, especially, to conserve energy including by reducing air conditioning and heating use and by promoting public transport “and nature-based solutions.”
Guterres said new technologies including storage for batteries “should become public goods,” and governments must scale up and diversify supply chains for raw materials and renewable energy technologies.
The group also recommends scaling up private and multilateral finance for “the green energy transition.” And it backed the International Energy Agency’s goal of increasing investments in renewable energy by a factor of seven to meet the goal of cutting greenhouse gas emissions to “net zero” by 2050 to help curb man-made climate change.
“Today, developing countries are spending around $150
Falling gas prices matter more than OPEC nos: WH
WASHINGTON, Aug 4, (AP): US President Joe Biden traveled to Saudi Arabia last month on the possibility that he could get some additional oil production out of OPEC+ in coming weeks, but the cartel and other nations announced a scant increase Wednesday.
The White House responded by stressing that what matters is the steady decline in oil and gasoline prices from summer highs, not the actions taken by OPEC+ to pump an additional 100,000 barrels of oil in September. White House press secretary Karine Jean-Pierre noted that the decline began June 14, the day the administration disclosed plans for Biden’s trip to Israel and Saudi Arabia.
“The fact of the matter is that oil and gas prices are coming down,” Jean-Pierre told reporters at her briefing. “The moment he announced his trip we saw gas prices and oil prices coming down.”
While there may be a correlation, it is unclear whether the announced trip caused prices to decline. Oil prices can be determined by a wide range of factors including changes in supply, the pace of economic growth, geopolitical events and extreme weather.
Behind Jean-Pierre in the briefing room was a blue chart that showed a 17% drop in average US gas costs since prices peaked at about $5 a gallon. AAA puts the current national average at $4.16 a gallon. Crude oil prices fell Wednesday to just below $91 a barrel, down from more than $120 in early June.
Still, gas prices are 31% above their level last year, frustrating voters ahead of the midterm elections and heightening concerns about an economic downturn in the US and Europe as central banks try to get inflation under control.
Energy prices jumped after Russia, a major energy producer, invaded Ukraine in late February. That prompted a series of sanctions and other measures at a time when refining capacity was tight and oil production was still recovering from the pandemic that began in 2020. The Biden administration has called on OPEC+ as well as domestic producers and refineries to increase output, an effort the administration tried to bridge by releasing 1 million barrels daily from the US strategic reserve.
Shortages
The war in Ukraine quickly rejiggered global politics. Natural gas shortages threatened Europe and Biden’s approval ratings sank as prices at the pump climbed. Biden’s Saudi Arabia trip was something of an about-face, given that at a 2019 debate during the presidential campaign, Biden had called the kingdom a “pariah” for the killing of Washington Post contributor Jamal Khashoggi.
Yet after Biden met with Saudi Crown Prince Mohammed bin Salman in mid-July, Biden raised expectations that a meaningful amount of supply could be coming onto the market. Asked about the impact his meeting would have on oil prices, he said “you won’t see that for another couple of weeks” in what appeared to be a reference to Wednesday’s meeting of the OPEC oil cartel.
In a world that uses nearly 100 million barrels of oil daily, the added production amounted to a miniscule 0.1% increase. In a prior meeting, OPEC had boosted oil production by 648,000 barrels per day in July and August.
But in a statement, OPEC+ warned about the reasons why it was being cautious in adding oil to the market. The countries in the cartel, which is led by Saudi Arabia, needed to keep some of their oil capacity in reserve in case of future disruptions. They also noted the “chronic” lack of investment in oil production that has coincided with wealthier nations’ shift away from fossil fuels to address climate change.
Biden is trying to reduce the US reliance on fossil fuels. Democratic allies are working to push through the Senate a measure that includes $369 billion in climate change-fighting strategies over the next decade. That spending would include tax breaks for wind and solar as well as for purchasing electric vehicles.