• 45 mins Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 2 hours Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 hours Mexico Says OPEC Has Not Approached It For Deal Extension
  • 5 hours New Video Game Targets Oil Infrastructure
  • 6 hours Shell Restarts Bonny Light Exports
  • 8 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 14 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 19 hours British Utility Companies Brace For Major Reforms
  • 23 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 1 day Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 1 day Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 1 day OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 1 day London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 1 day Rosneft Signs $400M Deal With Kurdistan
  • 1 day Kinder Morgan Warns About Trans Mountain Delays
  • 2 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 7 days Trump Passes Iran Nuclear Deal Back to Congress
  • 7 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
Gary Hunt

Gary Hunt

Gary Hunt is President, Scalable Growth Strategy Advisors, an independent energy technology and information services adviser and a partner in Tech & Creative Labs, a…

More Info

Rio+20 Economic Reality Check

Rio+20 Economic Reality Check

The latest economic statistics are out and it is not good news.  The Federal Reserve’s latest projections for the U.S. economy show significant deterioration as previous GDP growth and other projections since the last report in April.  For example, change in real GDP was 1.9 to 2.4% compared to 2.4 to 2.9% in the April projection. The unemployment rate was 8.0 to 8.2% compared to an April projection of 7.8 to 8.0%.  PCE inflation was 1.2 to 1.7% compared to the April projection of 1.9 to 2.0%.

The Philadelphia Fed index surveys business in the Mid-Atlantic region on their business outlook.  It is a key benchmark of business conditions but the latest report showed business contraction in June. This sets up the same “summer slowdown” pattern seen the past few years where first quarter growth is stronger and then wanes over the second half.  But the -16.6 Philly Fed Index reading is the second lowest reading in this recovery.  Any reading above zero indicates growth a negative reading indicates contraction.  What worried economists most in this Philly Fed report was the -18.8 reading for the new orders since factory orders have now fallen in three of the past four months. The bottom line is the economy is deteriorating materially and the forecast is getting worse not better.

Roiling Economic Discontent in Rio. Against this backdrop, more than 130 world leaders arrived for the Rio+20 Summit on Sustainable Development where the mood was just as surly as the global economy.  The G77 bloc of developing nations lead by China pressed their case that the developed world was responsible for pulling the emerging economies up with a ‘sustainable development (read: financial subsidies) of at least $30 billion per year.  Even in the boom years of the global economy this demand for wealth transfer was a tough sell.  Now in the struggle to restore economic stability in both EU and the US the demand was laughable.

The conference has been on the verge of collapse for months ahead of the delegate arrival in Rio. Perhaps, the developing world sees this as their last opportunity to guilt the first world into signing onto a wealth transfer and technology transfer deal the development world will use to compete against them in world markets.  It clearly was not working.

“We cannot be held hostage to the retraction resulting from financial crises in rich countries. We are here to think about the long term and not about crises that may be overcome in one or two years.” —Luiz Alberto Figueiredo, Undersecretary at Brazil’s Foreign Ministry.

The ‘guilt them and they will give’ strategy no longer is working.  Behind the scenes tempers flared as representatives from groups of nations and nongovernmental organizations hoping to shame the major nations into a new round of funding walked out of a core working group on the “green economy” when the tantrums failed to work.   Reality is setting in both in the first world struggling to stabilize wobbly economies as well as the developing world using the ruse of sustainability to extract giant wealth transfers that enable them to avoid reforming their own economies and ending the corruption that makes them unattractive investment locations.

Then there is this—it is more than ironic that this conference is being held again this year in Brazil one of the more promising BRIC developing nations.  Yet even Brazil is struggling with balancing the realities of its dependence upon a global economy and its desire for national development.  Brazil wants more foreign direct investment yet it permits local prosecutors in Rio State to threaten Chevron executives with jail time and huge fines over natural oil seaps in the offshore deepwater Frades play because Rio State and the Brazilian Federal Government are at odds over the split of oil money expected from the project.  I wonder what the reaction in Rio would be if Chevron told the Brazilians that it was pulling out of the Frades project and moving its people and equipment to Angola or Israel or back onshore in North Dakota where the business climate is more ‘sustainable’ because it was focused on the long term.

The tough love lesson from Rio+20 is that true sustainability begins at home by creating economic, tax, policy and business conditions that encourage private investment, respect contracts, property rights and the rule of law, set clear environmental rules and enforce them evenly, and replace corruption with healthy competition.

By. Gary L. Hunt

Back to homepage

Leave a comment
  • Mel Tisdale on June 28 2012 said:
    No matter how much he might believe that:

    "... true sustainability begins at home by creating economic, tax, policy and business conditions that encourage private investment, respect contracts, property rights and the rule of law, set clear environmental rules and enforce them evenly, and replace corruption with healthy competition."

    Mr. Hunt needs to realize that we live in a globalised world and all, or nearly all, of the items on his list are global in nature, i.e. far from being confined to "home."

    It is the height of hypocrisy for any citizen of a nation that has done so little to curb its global pollution, especially with regard to climate change and given the rest of us the finger in the process, to tell us how to behave. Thanks Mr Hunt, thanks a million!

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News