• 2 minutes Rational analysis of CV19 from Harvard Medical School
  • 4 minutes While U.S. Pipelines Are Under Siege, China Streamlines Its Oil and Gas Network
  • 7 minutes Renewables Overtake Coal, But Lag Far Behind Oil And Natural Gas
  • 20 mins China wields coronavirus to nationalize American-owned carmaker
  • 1 hour Joe Biden the "Archie Bunker" of the left selects Kamala Harris for VP . . . . . . Does she help the campaign ?
  • 7 hours Open letter from Politico about US-russian relations
  • 1 day US will pay for companies to bring supply chains home from China: Kudlow - COVID-19 has highlighted the problem of relying too heavily on one country for production
  • 3 days Trumpist lies about coronavirus too bad for Facebook - BANNED!
  • 3 days China's impending economic meltdown
  • 3 mins Trump Hands Putin Major Geopolitical Victory
  • 16 hours Trump is turning USA into a 3rd world dictatorship
  • 7 hours Oil Tanker Runs Aground in Mauritius - Oil Spill
  • 21 mins COVID&life and Vicious Circle: "Working From Home Is Not Panacea For Virus"
  • 2 days Liquid Air Battery
  • 2 days What the heroin industry can teach us about solar power (BBC)
  • 3 days The Truth about Chinese and Indian Engineering
Russia May Feel Pinch From Oil Cut Deal This Year

Russia May Feel Pinch From Oil Cut Deal This Year

Russia’s central bank warned that…

Goldman: Automated Trucks To Cost 300k Jobs Per Year

Goldman: Automated Trucks To Cost 300k Jobs Per Year

The race for automated trucking…

Did Venezuela Just Default?

Did Venezuela Just Default?

S&P Global Ratings declared Venezuela…

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

Premium Content

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


Download The Free Oilprice App Today

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