The price of oil - shall we celebrate? -- Il-prezz taż-żejt - niċċelebraw?

 

I had come to Australia on holiday fourteen years ago, and remember buying petrol at less than an Australian dollar a litre.  I had resigned myself that with the passage of time, the oil supply, which is a fossilised resource and so limited, would be more and more difficult, meaning that its price should always increase more or less.

 

For many years, this was in fact my experience and that of those driving conventional vehicles, however these last few weeks have seen me again buying petrol at less than a dollar a litre.  What is happening?

 

If one considers the oild pirce, from which petrol, diesel etc are made, in 2016 was worth around $40-50 a barrel (this measure is equivalent to 42 American gallons, or 159 litres), which is around double what it was in 2002 ($20-40 a barrel), but much less than it was in the intermediate years, where the price even reached $140 a barrel in 2009.1

 

These high prices some years back has led to the production of oil from unconventional sources, such as shale, which can contain organic material which can be processed to extract oil.2  This process, which can include the controversial technique of fracking,3 is much more difficult than digging a well to a layer of oil which can simply be pumped upwards, and so is viable only when the oil price is high.

 

The potential of unconventional oil sources has led the United States of America a few years ago to once again become the number one producer in the world.  This situation continued until Saudi Arabia decided, together with the other countries in OPEC (Organisation of Petroleum Exporting Countries) to increase its production coming from conventional sources, above the real demand for oil, in order to regain the number one position in oil production, at the cost of dropping the oil price, which has in fact happened.4

 

Several commentators and analysts have concentrated on this commercial battle, that is the fight to dominate the market for oil, to explain this behaviour by Saudi Arabia, which is dragging the rest of the OPEC countries with it.  Nevertheless, I think there is another more strategic reason for this behaviour.

 

In April of this year, Saudi Arabia announced that in 2017 or 2018 it will sell a little less than 5% of the Aramco company, the state company owning the largest oil reserves in the world.  This company is estimated to be worth more than a trillion US dollars, more than the rest of all the other oil companies put together!5

 

On reading this news, I asked myself, why is this, and why now?  And what is the link with the fight over production with the United States?

 

I think that Saudi Arabia has recognised that the oil era is coming to an end before all the discovered reserves are exploited, due to the fight against climate change, and so wants to hit a number of birds with one stone:

• •make some money with its reserves before it's too late; 

• •stop other countries from doing the same, by dropping prices to make their production uneconomic; 

• •the low price weakens as much as possible investment in sustainable sources of energy (these are alternatives to oil which, like coal, are fossilised energy), to maintain the status quo.  The exploitation of sustainable sources of energy, such as wind and sun, are necessary for the world to combat climate change. 

 

It seems that Saudi Arabia wants that if oil reserves really remain in the ground due to action on climate change, it would be those of other countries that remain in the ground, not its own!

 

Although the oil price is very low today, it seems that global demand for oil is still not increasing considerably.  It also seems there is a limit to how much the Saudis and its allies can stimulate demand.

 

There are signs that the world has begun to look more at the future than at the past in the energy sector, which oil forms a substantial part of.  For example, in 2015, for the first time, more than half the increase in electricity generation in that year was carried out from sustainable sources.6  It appears that investment in this area has started to happen even before substantial incentives from governments around the world.

 

There is also the initiative of divestment (the opposite of investment), in which religious and academic organisations, together with investment funds and others commit to get rid of investments which are related to fossilised energy sources.  It is being claimed that to date this initiative has led to the divestment of assets worth more than $3 trillion.7  This initiative is just starting!

 

No wonder this frantic production of oil, don't you think?

 

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Jien kont ġejt l-Awstralja fuq btala erbatax-il sena ilu, u niftakarni nixtri l-petrol b'inqas minn dollaru Awstraljan il-litru.  Kont irrasenrajt ruħi li iktar ma jgħaddi ż-żmien, il-provvista taż-żejt, li huwa riżors ffossilizzat u allura għandu limitu, tkun aktar u aktar diffiċli, jiġifieri l-prezz bejn wieħed u ieħor għandu dejjem jiżdied.

 

Għal ħafna snin, fil-fatt din kienet l-esperjenza tiegħi u tal-bqija ta' dawk li jsuqu karrozzi konvenzjonali, imma f'dan l-aħħar ġimgħat sibt ruħi nixtri l-petrol mill-ġdid b'inqas minn dollaru l-litru.  X'qed jiġri?

 

Jekk wieħed iħares lejn il-prezz taż-żejt, li minnu jiġi magħmul il-petrol, id-diżil eċċ, fl-2016 kien jiswa madwar $40-50 kull barmil (kejl equivalenti għal 42 galluni Amerikani, jew 159 litru), li huwa madwar id-doppju ta' dak li kien fl-2002 ($20-30 kull barmil), imma ħafna inqas milli kien fis-snin ta' bejniethom, fejn il-prezz laħaq anke $140 kull barmil fl-2009.1

 

B'dawk il-prezzijiet għolja ta' xi snin ilu wassal lill-produzzjoni taż-żejt minn sorsi mhux konvenzjonali, bħat-tafal u l-ħama (shale), li jista' jkollu materjal organiku li minnu jkun ipproċessat biex joħroġ iż-żejt.2  Dan il-proċess, li jista jinkludi t-teknoloġija kontroversjali tal-fracking,3 huwa ħafna iktar diffiċli minn meta tħaffer bir sa saff taż-żejt li sempliċement tippumpjah 'il fuq, u għalhekk huwa vijabbli biss meta l-prezz taż-żejt ikun għoli.

 

Il-potenzjal tas-sorsi mhux konvenzjonali taż-żejt wassal lill-Istati Uniti tal-Amerika biex ftit snin ilu għal darb'oħra issir l-produttur numru wieħed fid-dinja.  Din is-sitwazzjoni kompliet sakemm l-Arabja Sawdija ddeċidiet, flimkien mal-pajjiżi l-oħra tal-OPEC (Organisation of Petroleum Exporting Countries) li żżid il-produzzjoni tagħha li ġejja minn sorsi konvenzjonali, iktar milli hemm domanda għaż-żejt, biex terġa tieħu l-ewwel post fil-produzzjoni taż-żejt, akkost li twaqqa' l-prezz taż-żejt, kif fil-fatt ġara.4

 

Bosta kummentaturi u analisti kkonċentraw fuq din il-ġlieda kummerċjali, jiġifieri l-ġlieda biex jiddominaw is-suq taż-żejt, biex jispjegaw dan l-aġir tal-Arabja Sawdija, li qed tkaxkar lill-pajjiżi tal-OPEC magħha.  Madankollu, jien naħseb li hemm raġuni oħra iktar strateġika għal dan l-aġir.

 

F'April ta' din is-sena, l-Arabja Sawdija ħabbret li fl-2017 jew 2018 se tbigħ ftit inqas minn 5% tal-kumpannija Aramco, il-kumpannija statali li għandha l-kbar riżervi taż-żejt fid-dinja.  Din il-kumpannija hija stmata li tiswa iktar minn żewġ triljun dollaru Amerikan, iktar mill-bqija tal-kumpanniji taż-żejt l-oħra fid-dinja flimkien!5

 

Meta qrajt din l-aħbar, staqsejt lili nnifsi, għalfejn dan, u għalfejn issa?  U x'rabta hemm mal-ġlieda tal-produzzjoni taż-żejt mal-Istati Uniti?

 

Jien naħseb li l-Arabja Sawdija għarfet li l-era taż-żejt se jiġi fit-tmiem tiegħu qabel ma fil-fatt jiġu sfruttati kull riżerva li nstabet, minħabba l-ġlieda kontra t-tibdil tal-klima, u għalhekk trid tolqot numru ta' għasafar b'ġebla waħda:

• •tfittex li tagħmel negozju mir-riżervi tagħha qabel ma jkun tard wisq; 

• •twaqqaf lil diversi pajjiżi oħra li jagħmlu dan, billi twaqqa' l-prezz ħalli l-produzzjoni tagħhom ma tkunx ekonomika; 

• •il-prezz baxx idgħajjef kemm jista' jkun l-investiment f'sorsi sostenibbli tal-enerġija (alternattiva għaż-żejt li bħall-faħam huwa enerġija ffossilizzata), sabiex jibqa' l-istatus quo.  L-isfruttament ta' sorsi sostenibbli tal-enerġija, bħar-riħ jew ix-xemx, huwa neċessarju biex id-dinja tikkumbatti t-tibdil tal-klima. 

 

Jidher li l-Arabja Sawdija trid li jekk riżervi taż-żejt verament jibqgħu fl-art minħabba azzjoni dinjija kontra t-tibdil tal-klima, ikunu ta' pajjiżi oħra dawk li jibqgħu fl-art, u mhux tiegħu!

 

Għalkemm il-prezz taż-żejt huwa baxx ħafna llum, xorta waħda jidher li d-domanda għaż-żejt mhux qed jiżdied kunsiderevolment, u jidher li hemm limitu għal kemm is-Sawdi u dawk miftiehmin magħhom jistgħu jistimulaw d-domanda.

 

Hemm sinjali li d-dinja bdiet iktar tħares lejn il-futur milli lejn il-passat fis-settur tal-enerġija, li ż-żejt jifforma parti importanti tagħha.  Per eżempju, fl-2015, għall-ewwel darba, iktar min-nofs taż-żieda ta' dik is-sena fil-ġenerazzjoni elettrika saret minn sorsi sostenibbli.6  Jidher li l-investiment f'dan il-qasam beda jsir anke mingħajr inċentivi sostanzjali mill-gvernijiet madwar id-dinja.

 

Hemm ukoll l-inizjattiva ta' divestiment (l-oppost ta' investiment), li fih organizzazzjonijiet reliġjużi, akkademiċi, fondi ta' investiment u oħrajn jintrabtu li jeħilsu minn investimenti li għandhom x'jaqsmu ma' sorsi ffossilizzati ta' enerġija.  Qed jiġi sostnut li s'issa din l-inizjattiva wasslet għad-divestiment ta' assi li jiswew iktar minn $3 triljun.7  Din l-inizjattiva għadha biss tibda!

 

Mhux ta' b'xejn din il-ferneżija fil-produzzjoni taż-żejt, x'taħseb?

 

 

 

1http://www.tradingeconomics.com/commodity/crude-oil, retrieved 20/9/2016

2http://www.investopedia.com/terms/u/uncoventional-oil.asp, retrieved 20/9/2016

3http://www.investopedia.com/articles/active-trading/051215/cost-shale-oil-versus-conventional-oil.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186, retrieved 20/9/2016

4https://www.iea.org/oilmarketreport/omrpublic/, retrieved 20/9/2016

5http://www.bloomberg.com/news/articles/2016-04-01/saudi-arabia-to-sell-stake-in-parent-of-state-oil-giant-by-2018, retrieved 20/9/2016

6Global Trends in Renewable Energy Investment 2016; Frankfurt School - United Nations Environment Programme Collaborating Centre; p. 13

7http://gofossilfree.org/commitments/, retrieved 20/9/2016

1http://www.tradingeconomics.com/commodity/crude-oil, retrieved 20/9/2016

2http://www.investopedia.com/terms/u/uncoventional-oil.asp, retrieved 20/9/2016

3http://www.investopedia.com/articles/active-trading/051215/cost-shale-oil-versus-conventional-oil.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186, retrieved 20/9/2016

4https://www.iea.org/oilmarketreport/omrpublic/, retrieved 20/9/2016

5http://www.bloomberg.com/news/articles/2016-04-01/saudi-arabia-to-sell-stake-in-parent-of-state-oil-giant-by-2018, retrieved 20/9/2016

6Global Trends in Renewable Energy Investment 2016; Frankfurt School - United Nations Environment Programme Collaborating Centre; p. 13

7http://gofossilfree.org/commitments/, retrieved 20/9/2016

EU vs Apple - Implications - Implikazzjonijiet

 

Many of you will have heard of the decision by the Commission of the European Union to intervene in the financial system of a member of the EU, Ireland, and order the massive company Apple, which has an important office in that country, to pay tax in arrears of €13 to Ireland.

 

The EU is doing this not because Ireland has a low income tax rate (which it has), but because apart from that, Apple has a 'sweetheart deal' with Ireland through which it has ended up paying next to no tax.1

 

Ireland, like Malta, uses tax rates lower than the rest of other European countries to attract foreign investement.  Both can be said to have been successful in this strategy, especially with multinational companies, which seek to minimise the amount of tax that a financial group pays in total around the world.

 

This fact is permitted in the EU, which allows member states to have their own fiscal policy independent from the EU.  From the perspective of the member state, especially when having its currency being the Euro, this flexibility is important, as it is not possible for a country to devalue its currency in precarious financial situations.  Fiscal policy can be a way in which a country can stimulate its economy.

 

So what is the problem?  The problem is that large multinational companies, which make billions each year, organise themselves us such a way that globally in fact they pay next to no tax.  There is therefore the problem of equity.  Why should a worker who works hard and earning a few thousands, or a small local company, end up paying much lower taxes as a percentage than the multinational giants?

 

These companies play governements against each other, and often seem to cite places of work with governments, threatening to leave if they don't get such and such a condition.  And many times, governments, and also unions, end up giving in.

 

The EU has decided to take a political decision with Apple, and probably take some more against other large companies.  It is ironic that Ireland, which stands to gain these billions if Apple decides to pay them (which it has no intention of doing), is determined to fight this decision.

 

One can see here how governments are, in fact, powerless next to multinational companies.  This is a negative consequence of globalisation.

 

If the EU is serious in pursuing this line, this has serious implications for other countries.  In Malta, the classic example is the multinational ST Microelectronics.  This company is so important for Malta that year after year it accounts for half the exports of the country.  Half!  It is also said to be the largest private employer on the island.

 

You can imagine the attention paid by government ministers to every sneeze heard at Ħal Kirkop.

 

ST Microelectronics, then SGS ATES, became interested in investing in Malta at the time of the Labour administration of Dom Mintoff in 1981, with an agreement reportedly giving it the right to operate in Malta without paying income tax for fifty years.2  Naturally, this is not the only advantage - Maltese workers are well known for their diligence, high levels of education and use of the English language.

However to come back to the subject, can the EU now decide to object to an agreement of this type, as old as it might be?

 

The storm clouds are gathering.  As an example, at the start of this month, the Austrian Chancellor grumbled that some countries of the EU like Malta, Luxembourg, Holland and Ireland offer low taxes for multinational companies, with detriment to the economy of the rest of Europe.3  Naturally, grumbling does not achieve anything, as the right for countries to choose their fiscal policy is part of the Euro monetary union,4 and Malta intends to maintain its position that fiscal policy is the prerogative of the country's government,5 as it should do in the national interest.

 

Nevertheless, governments around the world need to realise that in this globalised world of today, multinational companies are playing the tax game very well (for them) with detriment to the global economy.

 

It seems to me that governments are strong with the weak, and weak with the strong.  There is scope for more cooperation on this subject between governments around the world, and certainly in the EU, although the temptation for a government to take advantage of the situation will probably also increase!

 

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Ħafna minnkom aktarx semgħu dwar id-deċiżjoni tal-Kummissjoni tal-Unjoni Ewropea sabiex tintervjeni fis-sistema finanzjarja ta' membru tal-UE, l-Irlanda, u tordna lill-kumpannija ġganteska Apple, li għandha uffiċċju importanti tagħha f'dak il-pajjiż, biex tħallas taxxa b'arretrati ta' €13 biljun lill-Irlanda.  

 

Qed tagħmel dan mhux għax l-Irlanda għandha rata ta' taxxa baxxa (li għandha), imma għax apparti dan, l-Apple ingħatat 'rata tal-maħbubin' mill-Irlanda li biha spiċċat tħallas ftit li xejn.1

 

L-Irlanda, bħal Malta, tuża r-rata ta' taxxa iktar baxxa mill-bqija tal-pajjiżi Ewropej biex tħajjar investiment barrani.  It-tnejn irid jingħad li kellhom suċċess b'din l-istrateġija, speċjalment ma' kumpanniji multinazzjonali, li jfittxu li jnaqqsu l-ammont ta' taxxa li l-grupp finanzjarju jħallas fit-total madwar id-dinja.

 

Dan fil-fatt huwa permess fl-UE, li tippermetti lill-pajjiżi membri tagħha li jkollhom politika fiskali tagħhom indipendenti mill-UE.  Mill-perspettiva tal-pajjiż membru, speċjalment jekk il-munita tiegħu hija l-Ewro, dan il-flessibiltà hija importanti, għax mhux possibbli li pajjiż jiżvaluta l-munita tiegħu f'sitwazzjoni prekarja finanzjarja.  Politika fiskali jista' jkun mezz kif pajjiż jista' jistimula l-ekonomija tiegħu.

 

Allura x'inhi l-problema?  Il-problema hi li l-kumpannija kbar multinazzjonali, li jagħmlu l-biljuni kbar kull sena, jorganizzaw lilhom infushom b'tali mod li globalment fil-fatt iħallsu ftit li xejn taxxa.  Allura hemm il-problema tal-ekwita.  Għaliex ħaddiem li jmur għax xogħol li jaqla l-ftit eluf, jew kumpannija żgħira lokali, jistgħu jispiċċaw iħallsu taxxa bħala perċentwal ħafna inqas mill-ġganti multinazzjonali?

Dawn il-kumpannija jilagħbu lill-gvernijiet kontra xulxin, u spiss jidhru li joqogħdu jdendlu l-postijiet tax-xogħol li joffru lill-ħaddiema quddiem il-gvernijiet, u jheddu li jitilqu jekk ma jkollhomx it-tali kundizzjoni llaxkata.  U ħafna drabi l-gvernijiet, u anke l-unjins, jispiċċaw iċedu.

 

L-UE ddeċidiet li tieħu deċiżjoni politika fil-każ tal-Apple, u probabbilment tieħu deċiżjonijiet simili kontra kumpanniji kbar oħra.  L-ironija hi li l-Irlanda, li għandha biex tieħu dawn il-biljuni kollha jekk l-Apple tiddeċiedi li tħallashom (li m'għandha l-ebda intenzjoni li tagħmel), beħsiebha tiġġieled din id-deċiżjoni.

 

Hawnhekk wieħed jista' jara kemm il-gvernijiet, fil-fatt, huma bla saħħa ħdejn il-kumpanniji multinazzjonali.  Din hija konsegwenza negattiva tal-globalizzazzjoni.

 

Jekk l-UE hija serja li ssegwi din il-linja, din għandha implikazzjonijiet serji għal pajjiżi oħra.  F'Malta, l-eżempju klassiku huwa l-kumpannija multinazzjonali ST Microelectronics.  Din il-kumpannija tant hi importanti għal Malta li sena wara sena tkopri nofs l-esportazzjoni tal-pajjiż.  Nofs!  Jingħad ukoll li hija l-iktar impriża privata li timpjega nies fil-pajjiż.

 

Tista' timmaġina kemm joqogħdu attenti l-ministri tal-gvern għal kull għatsa li tinstema minn Ħal Kirkop.

 

L-ST Microelectronics, dakinhar SGS ATES, ġiet imħajra tinvesti f'Malta fi żmien gvern Laburista ta' Dom Mintoff fl-1981, bi ftehim li rrapurtat jagħtiha dritt topera f'Malta mingħajr ma tħallas taxxa fuq id-dħul għal ħamsin sena.2  Naturalment dan mhux l-uniku vantaġġ - il-ħaddiema Maltin huma magħrufa għall-bżulija tagħhom, il-livell għoli ta' edukazzjoni u l-użu tal-Ingliż.

 

Imma nerġgħu niġu għas-suġġett, tista' l-UE issa tiddeċiedi li toġġezzjona għal ftehim ta' dan it-tip, antik kemm hu?

 

L-irwiefen qed iqumu.  Per eżempju, fil-bidu ta' dan ix-xahar, il-Kanċillier Awstrijak gerger mill-pajjiżi tal-UE bħal Malta, il-Lussemburgu, l-Olanda u l-Irlanda, li joffru taxxi baxxi għall-kumpanniji multinazzjonali, b'detriment għall-ekonomija tal-bqija tal-Ewropa.3  Naturalment, mit-tgergir mhu se jsir xejn, għax id-dritt ta' pajjiżi li jagħżlu l-politika fiskali tagħhom hija parti mill-unjoni monetarja tal-Ewro,4 u Malta beħsiebha żżomm il-pożizzjoni li l-politika fiskali hija prerogattiva tal-gvern tal-pajjiż,5 kif għandha tagħmel fl-interess nazzjonali.

 

Madankollu, il-gvernijiet ta' madwar id-dinja jridu jirrealizzaw li fid-dinja globalizzata tal-lum, il-kumpanniji multinazzjonali qed jilagħbu l-logħba tat-taxxa tajjeb ħafna (għalihom) b'detriment għall-ekonomija globali.

 

Jien naraha li l-gvernijiet jimxu b'saħħa mad-dgħajjef, u b'dgħufija ma' min hu b'saħħtu.  Hemm lok għal iktar kooperazzjoni fuq dan is-suġġett bejn gvernijiet fid-dinja, u ċertament fl-UE, għalkemm it-tentazzjoni ta' xi gvern li jieħu vantaġġ mis-sitwazzjoni aktarx li tikber!

 

 

1http://www.forbes.com/sites/leesheppard/2016/09/05/the-eu-case-against-apples-irish-tax-deal/#4f9ca7a87e2b, retrieved 6/9/2016

2http://www.embedded.com/print/4056364, retrieved 6/9/2016

3http://www.timesofmalta.com/articles/view/20160903/local/malta-tax-regime-lacks-solidarity-with-european-economy-austrian.623927, retrieved 6/7/2016

4https://www.ecb.europa.eu/mopo/eaec/fiscal/html/index.en.html, retrieved 6/7/2016

5http://www.timesofmalta.com/articles/view/20160904/local/taxation-issues-a-matter-for-national-governments-prime-minister.624044, retrieved 6/7/2016

1http://www.forbes.com/sites/leesheppard/2016/09/05/the-eu-case-against-apples-irish-tax-deal/#4f9ca7a87e2b, retrieved 6/9/2016

2http://www.embedded.com/print/4056364, retrieved 6/9/2016

3http://www.timesofmalta.com/articles/view/20160903/local/malta-tax-regime-lacks-solidarity-with-european-economy-austrian.623927, retrieved 6/7/2016

4https://www.ecb.europa.eu/mopo/eaec/fiscal/html/index.en.html, retrieved 6/7/2016

5http://www.timesofmalta.com/articles/view/20160904/local/taxation-issues-a-matter-for-national-governments-prime-minister.624044, retrieved 6/7/2016