by Jerome a Paris
Sun Apr 27th, 2008 at 10:03:37 AM EST
Strikes close BP pipeline in Scotland
A pipeline that carries nearly half of Britain’s North Sea oil was closed on Sunday as 1,200 workers at the Grangemouth refinery, near Edinburgh, started a two-day strike over pensions. The closure is estimated to cost the UK economy £50m, according to an industry body.
In spite of last-minute industry pleas for government intervention, the trade union Unite refused to supply enough sufficient steam from the refinery to maintain the operation of BP’s adjacent Kinneil plant, which processes crude oil coming ashore from 70 North Sea fields.
There is a lot more information in the most recent thread over at The Oil Drum (from which the above image by Euan Mearns is taken), but I'd like to flag just a few points that seem to be typical of our times, and maybe warrant making this a symptom of the Anglo Disease:
- the strike is about company-provided pensions. With falling or stagnant stockmarkets, market based pension funds, especially those run by corporations on behalf of their workers, are in trouble and need to find ways to reduce their liabilities. Pension contributions are seen as a source of "fat" to be trimmed by corporations at the expense of their workers;
- in line with that, you can of course read outraged quotes from corporate voices blaming unions for taking the "whole economy hostage." The problem is always unions, and workers, and never management and their decisions to cut "fat";
- the strike is taking place in a bit of infrastructure that was spun off by BP and sold to a private equity fund while still be, technicaly speaking, part of a coordinated industrial complex that needs to be run as a whole (pipelines, refineries, power generation). Losing power or capacity in one bit can trigger closures in other activities, with knock-on effects. Resilience, and industrial common sense have lost out to short term financial return requirements...
- amongst knock-on effects are the consequences not so much on oil markets, but on gas markets, in particular the UK one, which has been built on the asusmption that there would be permanent oversupply. Now that it needs to import, and with very little storage capacity, lost production will have immediate impact on natural gas prices. The markets will provide, in the form of demand destruction from industrial users with interruptible contracts, but is that a serious way to run an economy in the long term?
- finally, it is worth noting that a small local conflict by just a thousand workers will have a global impact, pushing prices of our most precious commodity up worldwide (the run-up in the past few days was already linked to expectations surrounding this strike). This is both a sign of our increased vulnerability to a tight oil supply/demand balance, and possibly a sign of hope that the balance of power between financiers and the rest of the world is finally changing as reality (and in particular physical and human bottlenecks) reasserts itself against the mad rush for short term profit.
Infrastructure
matters whether it is transport, basic industry or institutional frameworks. You can only ignore it for so long. Countries that do infrastructure well (and which include people in what is meant by "infrastructure") are likely to do a lot better in the long run.
