The Sunday Times - UK (2022-06-05)

The Sunday Times June 5, 2022 27

COMMENT

Helen Thompson

Here’s the crux of the crisis — we in

the West are running out of energy

Spiralling

Asian energy

demand has

transformed

life for Russia

New oil flows solved the 1970s price shock but a changing world means there is no easy fix this time

I

t is easy to imagine we are back in

the 1970s. To those who lived

through that tumultuous decade,

the economic news feels eerily

familiar. With energy costs soaring,

inflation in the UK has hit 9 per

cent. Only two years after the

recovery from the economic slump

induced by the first lockdown, the Bank

of England is signalling that another

recession is probably coming. So far

there has been no energy rationing of

the kind that, after the 1973 oil price

shock and 1974 miners’ strike, led to

petrol ration books and electricity

blackouts. But the government has let it

be known that it is modelling

“reasonable” worst-case scenarios for

the autumn under which Russia halts gas

and oil exports to Europe and there are

electricity shortages and limits placed

on industrial gas use.

Geopolitically, a 1970s vibe prevails

too. Then, tumult in the Middle East

from the 1973 Yom Kippur War to the

1978-79 Iranian revolution inflicted a

series of energy blows on western

economies while the Soviets projected

their power deeper into central Asia and

Africa. Now, Russia’s war to annihilate

Ukraine’s independence has sent energy

and food shock waves around the whole

world, not least the Middle East. In Iran,

where the government is reducing food

subsidies, the security forces have

already killed protesters. Arab

governments have proved slow to

produce the extra oil needed to push

prices back down. This has invoked

sufficient anger in Washington that a bill

opening up Opec members to antitrust

lawsuits has been working its way

through Congress.

But to think that we have returned to

the 1970s is a comforting illusion,

suggesting there is a similar path to the

relative economic improvement of the

second half of the 1980s and 1990s. The

way out of the 1970s was both harsh and

fortuitous. Only severe recessions driven

by a sharp increase in interest rates and

new oil supplies in the West brought the

energy crises to an end.

The oil that flowed out of the North

Sea and Alaska also transformed the

world geopolitically. The Saudis reacted

to the glut by increasing production to

win market share, sending prices

tumbling in 1986. This caused a

profound crisis for the Soviet Union

from which it did not recover. High

energy prices in the 1970s had been an

opportunity for the increasingly

moribund Soviet economy. Yet in using

oil export revenues to allow a massive

volume of grain imports from the West,

the Soviet state left itself existentially

reliant on foreign currency earnings that

from 1986 the oil industry could no

longer provide. For two years, it got by.

But in 1988 there was a bad harvest. A

year later the Soviet empire in eastern

Europe duly ended; within two more the

Soviet Union itself dissolved.

Now we live in an economic world far

removed from the 1970s. Inducing

recession may be the only way to reduce

the inflationary pressures from energy

prices, but the high interest rates

pursued by the American Federal

Reserve Board and Margaret Thatcher’s

first government are not an option.

Quite simply, there is too much debt in

the world for interest rates in any

advanced economy to rise very far. For

more than a decade, central banks have

set rates to facilitate high debt. Whatever

the inflationary pressures in play, they

have only a little latitude to turn away

from that imperative.

The geopolitical world is also scarcely

recognisable. The 1970s were an

immediate turning point, marking the

end of the historical Middle East created

by western territorial and commercial

imperialism, and a deepening reliance of

western Europe on Soviet energy

exports. But western countries could

adapt to those changes under conditions

in which high per capita energy

consumption was largely a western

affair. By contrast, from the 2000s,

China and India’s spiralling demand

transformed energy consumption, at the

same time as the supply of oil coming

from the Middle East began to stagnate.

During the first half of 2008 the world

experienced an economic crisis

generated by exceptionally high oil

prices, the significance of which was

disguised by the financial crash that

September. It was the American shale oil

sector that allowed the world to escape

repeats of this oil crisis during the 2010s.

But shale output cannot grow as rapidly

again as it did over the past decade.

In sanctioning Russian oil exports,

western countries are, meanwhile,

reconfiguring the supply and transport

chains for oil. By contrast, most west

European governments responded to

the shock of the Yom Kippur War by

siding with the invading Arab states over

Israel to protect their oil supplies.

Through the 2010s, the Asian demand

shock spread to gas. But it did so as the

American capacity to export gas across

the world surged, producing a period of

low prices. This cushion for European

countries buying seaborne liquid natural

gas abruptly changed last year when

China’s demand for imports rapidly

accelerated, pushing up prices

dramatically. Now, another shock has

arrived with Germany — Europe’s largest

gas consumer — planning to join the

liquid natural gas market to replace

pipelined Russian gas.

From the first years of this century,

Asian energy consumption also

transformed Russia’s geopolitical

options. Unlike the Soviet Union, Russia

became a Eurasian energy power able to

sell westwards and eastwards. Just as

significantly, Vladimir Putin has

reversed the old Soviet agricultural

vulnerability by turning Russia into the

world’s largest wheat exporter.

This underlying geopolitical

environment makes it impossible to

minimise the economic disruption

wrought by Moscow’s war, or to inflict

sufficient harm on the Russian economy

to force Putin to recalibrate. Russia’s

export earnings are still rising, and its

naval blockade of Ukraine’s ports,

leaving Ukraine unable to export food,

means its market share of the

international grain market is growing.

Adaptation to the economic crisis

must recognise it for its singular

particulars. Since the rate of new oil

discoveries has been falling since the

1960s, there are nothing like the same

energy fixes available that there were 40

years ago. If these hard realities

incentivise a rapid energy transition,

they do not detract from the serious

difficulties that reducing fossil fuel

energy dependency entails. What can be

taken from the 1970s is a belief that the

future can be faced. But that faith must

start from an understanding that there is

nothing that can be done to bring back a

western-centric energy world where the

supply of oil is plentiful.

Helen Thompson is author of Disorder:

Hard Times in the 21st Century.

Matthew Syed is away

Y

ou may by now have watched

Ricky Gervais’s latest comedy

special on Netflix, in which he

employs his usual routine of

making cruel gags about

everything from Aids to Hitler

and then cackling to himself.

Or you may have heard about

it, because Gervais touched the third rail

of modern culture: he mocked

transgenderism.

Or at least, it used to be the third rail.

Gervais’ jokes about “new women”, the

“ones with cocks”, inevitably upset

people, sparking outrage online and

threats of boycott, with everyone in their

usual culture war corners. Intriguingly

though, the backlash hasn’t really gone

anywhere. No shamefaced apologies

have been made. No one has promised

to go away and “work on themselves”. In

fact Netflix’s chief executive, Ted

Sarandos, responded by unambiguously

defending the right to “free expression”.

What’s going on? Where are the

struggle sessions and heads on pikes?

Whisper it, but I think we might have

passed peak outrage. Companies are

finding their feet again, realising that

making decisions based on the fury of

relatively small online groups isn’t

necessarily a wise commercial strategy.

More broadly, there is a sense emerging

that the demands of social justice must

be balanced with the right to free

expression. That everyone and

everything can be a target for satire.

A critical moment was Dave

Chapelle’s stand-up show last October,

in which the American comedian

accused supporters of transgenderism of

being “too sensitive”. Netflix employees

staged a walkout and Sarandos

apologised for his handling of the furore.

But Netflix stood by Chapelle, clearing a

path for others to follow in his wake.

Last month, the company issued an

uncompromising memo, saying: “if you

find it hard to support our content

breadth, Netflix may not be the best

place for you.” Ouch. It has clearly made

a commercial decision to stand up to the

scolds, presumably because its

algorithms (and accountants) are telling

it that many people want to hear from

the likes of Chapelle and Gervais.

There have been other recent

We are realising

that a society

run on the

whims of social

media is cruel

and arbitrary

examples of this hardening, particularly

when big money is involved. Spotify

stood by the super-podcaster Joe Rogan

despite a committed attempt to cancel

him for various crass remarks. Jimmy

Carr is similarly bloodied but unbowed

since his grim Holocaust gags.

Despite being pummelled for it, Simon

& Schuster is to publish a memoir by

Mike Pence, the former US vice-

president. “I’m someone who just

believes we have to understand the

country and the world we’re living in,”

said the company’s Dana Canedy. “It

can’t just be information you agree with.”

Well said. This is about more than just

rich dude comedians making mean jokes

and rich companies standing by them.

It’s even about more than free

expression. There is a sharper

awareness emerging that a society

ordered by the whims of social media is

a cruel and arbitrary place. That things

have gone a little too far.

Why might this be occurring? Possibly

due to circumstances. The anxieties of

spiralling costs at home and the horrors

of Putin’s war machine abroad hopefully

make ruining people’s lives over dumb

cultural solecisms seem appropriately

petty. In America, where so much of our

discourse is defined, the hushing of

Donald Trump’s clownish malevolence

has been a calming influence.

It may also be that the rest of us are

starting to shy away from the kind of

vicious and unforgiving expressions of

group outrage that have been so

common. That we’ve had enough.

Digital McCarthyism may be in

retreat, but it won’t disappear. We live in

an age of passing furies and social media

is built to amplify the worst passions. As

long as we keep using it in huge numbers

then cancellations and pile-ons will

endure on all sides of the spectrum.

Naturally, now I have written this,

someone will be dismembered by an

apoplectic mob within hours. Perhaps

I’m guilty of wishful thinking. But

maybe, just maybe, we’re reviving the

familiar yet neglected idea that you don’t

have to approve of Gervais’s cutting jibes

to vigorously defend his right to make

them.

Josh

Glancy

Don’t be

offended,

but we may

have passed

peak outrage

“Whoever’s emailing in, I categorically

deny the baby’s mine”

“Wow, amazing! Flights that haven’t

been cancelled”

NEWMAN’S

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