Tuesday, 26 February 2013

Should We Leave It In The Ground?

Leaving aside all the current big stories in the media and looking at the longer term, time is passing by and with it our chances of dealing with what needs to be dealt with.  Phil Mullan in the web site “spiked-online” dot com has a substantial two part piece about “Shale, The IT Bubble of the 21st Century”.

In short he argues that the radical change in the economic situation arising from the exploitation of shale oil and gas in the USA may result in “The great economic evasion”, that is that a wide range of fundamental problems may not be dealt with and the consequences only deferred.

It is a long read but an interesting one.  It could apply to the UK as well in the future and we should be aware, because North Sea Oil did the same to us in the recent past, as we know to our cost. 

His concluding paragraphs are as follows:


Given the four-decade track record of the elite in the US in evading addressing the seriousness of its economic challenge, the danger is that the shale energy boom becomes America’s version of the ‘resource curse’.

The belief that things are ‘on the mend’ takes the pressure off addressing the deeper economic challenges. Ironically, the fact that the US is genuinely experiencing an energy renaissance, which could continue for many years, might be a bigger problem than if it were a mirage that soon evaporates.

Just as Britain’s North Sea oil boom in the 1970s and 80s disguised how far the underlying British economy had sunk; so US shale energy could hide from view the pressing need to restructure radically America’s productive base.

Maybe partly influenced by his roots, South African Michael Edwardes, then the chief executive and chairman of Britain’s ailing motor giant, British Leyland, presciently but controversially spoke to the CBI Conference in 1980 about the dangers from Britain’s own resource boom:

‘If the [government] cabinet do not have the wit and imagination to reconcile our industrial needs with the fact of North Sea oil, they would do better to leave the bloody stuff in the ground.’

He was ignored, of course. North Sea oil came and went, and Britain continued its own economic decline.

The American elite could do with remembering that lesson and, instead of hoping for cheap energy to perform miracles on its own, develop the ‘wit and imagination’ to initiate the long overdue restructuring, renewal and revitalisation of the US economy.


Looking down the centuries there are more than enough examples of states who became wealthy and then failed to put in place economic and social arrangements that would outlast its supply. 

Once more it could be déjà vu all over again.

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