at the macro level erm is all about energy

By Dr. Jim Castagnera, Esq. 

Partner, Portum Group International

According to Eurasia Group’s “2023 Top Risks” Report, energy ranks number six.

“Energy consumers are breathing a sigh of relief now that the oil-supply shock expected after the Russian invasion of Ukraine failed to materialize and gas prices, especially in Europe, have fallen back from their 2022 highs. But despite mostly sanguine forecasts for this year, a combination of geopolitics, economics, and production factors will create much tighter market conditions, especially in the second half of 2023. That will raise costs for households and businesses, increase the fiscal burden on consumer economies, widen the rift between OPEC+ and major consumers, and create yet another source of increased tensions between the West and the developing world.”

[https://www.eurasiagroup.net/live-post/top-risks-2023-6-Energy-Crunch]

Energy has always been a major source of conflict… between capital and labor, and between nation states.  Consider these examples:

In 1902 in the hard-coal counties of central-eastern Pennsylvania, the miners of John Mitchell’s UMW of A launched what is remembered as “The Great Strike.” As the strike, begun in May, dragged through the summer, President Theodore Roosevelt created an Anthracite Coal Commission to arbitrate the labor dispute. No less a lawyer than Clarence Darrow represented the United Mine Workers.

On the other side was George F. Baer, president of the Reading Railroad. In those days, 96 percent of the hard-coal fields were controlled by the eastern railroads. In August ’02 Baer wrote a letter to a local clergyman in which he claimed, “You are evidently biased in favor of the right of the workingman to control a business in which he has no other interest than to secure fair wages for the work he does…. The rights and interests of the laboring man will be protected and cared for --- not by the labor agitators, but by the Christian men of property to whom God has given control of the property rights of the country, and upon the successful management of which so much depends.” 

The letter leaked and the national press excoriated Baer’s “Divine Right” policy. For instance, the New York Times noted, “A good many people think they superintend the earth, but not many have the egregious vanity to describe themselves as its managing directors.” The Chicago Tribune added, “It is impudent, it is insulting, it is audacious, of the coal presidents to speak of ‘lawlessness’ in the coal regions when they themselves are the greatest offenders of the law. They are the real anarchists, the real revolutionists, the real subverters of law and order.” Darrow referred to Baer as “George the Last.”

Well, of course, he was not the last. Exactly 100 years later, we had our own King George for nigh on eight years. Pearl Jam’s Eddie Vedder sang about W in the 2002 tune “Bushleaguer,” “Born on third, thinks he got a triple.” Less pithy, but more enlightening, are the observations of Professor Michael T. Klare in his 2004 book “Blood and Oil,” concerning the report of the Cheney Energy Task Force in May 2001. The group, dominated by oil and mining interests (including the late and not-so-great Kenneth Lay of the late and not-so-great Enron), raised the alarm about America’s dependence upon petroleum from the unstable Middle East. The Nine-Eleven attacks, carried out by Arab terrorists, most of whom hailed from Saudi Arabia, added urgency to these concerns.

According to Dr. Klare, “In the face of these problems and dangers, the Bush-Cheney team could draw only one conclusion: that, on their own, the Persian Gulf countries had neither the will nor the capacity to increase their petroleum output and protect its outward flow. If the administration’s energy plan was to succeed, the United States would have to become the dominant power in the region, assuming responsibility for overseeing the politics, the security, and the oil output of the key producing countries.”

Like George Baer and his corporate colleagues, George Bush and his corporate cronies decided that they knew best, and that we ignorant citizens had neither the ability nor the right to evaluate the facts for ourselves. And, so, they fed us a bowl of hogwash: Hussein had weapons of mass destruction; he had ties to Al Qaeda; the good citizens of Baghdad will welcome us with little American flags, just like the Parisians in 1944. None of this was true and five years later we continued to swallow this bitter gruel. 

Meanwhile Halliburton, where Cheney served as CEO for some five years, walking away with a $33.7 million retirement package, has amassed billions of dollars in government contracts in Afghanistan and Iraq. No doubt, Mr. Cheney believed that he and Halliburton both have a moral right to every penny they’d been paid.

George “Divine Right” Baer would no doubt have fully agreed. Like Baer, Mr. Bush and Mr. Cheney not only believed they knew what was best. They also believed that what was best for them was best for us. They clearly dismissed our ability to determine that for ourselves. 

Discouragingly, on the other side, Barack Obama seemed to feel much the same way. Reminiscent of Baer’s arrogance was Obama’s April ‘08 campaign comment about small-town Pennsylvanians: “You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing’s replaced them…. It’s not surprising then that they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.” 

A century after the Great Strike, many Americans were as severely strapped and challenged as their ancestors were in 1902. And our leaders, and wanna-be leaders. were every bit as arrogant and paternalistic as was George Baer.

Fast forward another two decades, and we find energy --- and, in fact, fossil fuels --- once again lurking just over the horizon, ready to stir the pot.  

“High oil prices will place a heavy burden on poorer developing countries, which have limited cash for expensive energy imports and face surging borrowing costs to fill the hole, resulting in energy shortages and social discontent. Angry over having to shoulder costs for sanctions on Russia they didn't agree to, emerging markets will chip away at the Western sanctions regime by continuing to trade with Russia. Two of the world's three biggest energy consumers, China and India, will continue to buy large quantities of Russian crude at a steep discount. The United States will respond by hitting some emerging markets (albeit not China or India) with secondary sanctions, further inflaming tensions between industrialized economies and emerging markets already rocked by high inflation (please see risk #4), the war in Ukraine, the Covid-19 pandemic, and climate change.”

[https://www.eurasiagroup.net/live-post/top-risks-2023-6-Energy-Crunch]

Does this sound like a formula for conflict?  

NOTE:  Dr. Jim will present the webinar “2023 HR Law Developments: First Quarter Update”

On April 18 at 1:00 PM EDT. Register right here: https://assentglobal.us/webinar/2041/2023-HR-Law-Developments--First-Quarter-Update