From The Barrel: Proxies of the oil price wars and their gins of inequity
CAPE TOWN – For some time since the 6th of March, at that critical moment of the precipitous decline of the crude oil prices, the world has been awaiting with palpable anxiety on when and how this unforeseen market contingency would end. Scrambling to find a prescience of definition, the pundits quickly dubbed the novelty of the moment the ‘Oil Price War’, at least for the simple reason that it has a fancy ring around it and also delivers adequate melodramatic purchase.
There are reasons for sure, either to bedazzle our common imagination or where needed by the crafty, to deign innocence when confronted, whichever is the case. With justifiable reason, there wasn’t enough time for the innocent to delve beyond the ghastliness of the headlines and the deadlines of their implacable editors. Besides, a war between the oil behemoths, the House of Saud and the Russian Bear, truly portended and deserved a special caption. Those in the know however, were content that the 6th of March kerfuffle was the world’s greatest puppet show, where POTUS 45 occupied centre stage to manipulate the devious contraption. Turns out that the circuitous puppeteer is adroitly ventriloquist in equal measure. He was having fun. After all, Raymond Chandler wittily observed that ‘a nice state of affairs is when a man has to indulge his vices by proxy.’ A big proxy he got!
By the close of business of the 10th of April, long after the short-lived Oil Price war had ended, the war still continued by other means with an unexpected global player announcing awkwardly into the stage. The war, or the puppet show had to go on because Trump always inclines towards the instincts of Bertrand Russell that a war does not determine who is right-only who is left. Mexico sauntered in with honourable intent. With President Obrador refusing to cut oil production beyond 100 000 barrels over the designated period, especially because this was his sacrosanct campaign promise that must not be broken, new battle lines were hastily drawn. The 11th of April therefore saw a new group of producers who could either scupper or validate the covenants of the day before. Norway, Brazil, Canada, Mexico and the U.S convened virtually for deliberation.
Three oddities occurred in quick succession during and after that converse. Rocio Garcia of Mexico departed from the meeting without providing her support to a 400 000 production reduction. She simply pointed towards Trump and his magic pants to cut on their behalf the volumes which they themselves were unwilling to. The U.S for its part simply agreed to adhere to 23% oil production cut without providing the details of the how, except to say that the Covid 19 pandemic and its effects has already achieved that market objective for them. Above all, D.J Trump made light of the Mexican deficit exhorting everyone not to worry, insisting in his inscrutable prose that he had already budgeted for the Mexican short fall as well.
Replacing the expanse dunes of the Arabic desert, the shadow war moved to the undulating and luscious plains of the Mexican landscape, with Pemex attracting all the world attention. This new paradigm was a response to the subtle and not so subtle pressures of the wiles of American presidential electioneering antics. You can’t blame Mexico, they saw how it was done and they were bewitched by the magic of the moment. Whether or not Mexico wanted to forcibly extract something from its querulous northern neighbour or vice versa, it is hard to predict. In a proxy war however, the weaker always does the bidding of its counterpart. All things are matter, including political knowledge, and sooner or later they must bend however so briefly, to the inflexible will of the American presidential elections. After all, it is still magic even if you know how it’s done, Terry Platchett remains convinced.
The 2016 Presidential elections yielded two diametrically opposing results. Hilary Clinton won the popular vote by a clear margin, even though she was running on the strength of other veritable attributes. Donald J. Trump lost the popular vote, the one attribute whose rising wave he sought to ride all the way to the White House. To this day, it remains a blemish on the insatiable vortex of his ego and he has vowed to prevent it in the upcoming 2020 Presidential elections.
Shale extraction territories represent a significant voting complexity per head count. Importantly in that group are states like Ohio, Pennsylvania, Kentucky and Tennessee. If Shale Oil bows out in humiliation, dragged through debt, forceful breakups, asset stripping and bankruptcies, it already knows the source of perfidy. The payback is sure to play out outside the farcical razzmatazz of the puppet show. It will be loud, colourful and vengeful in many acrimonious ways . And someone will pay. But the Donald is unwilling to pay that price. He would rather clown his way around the world just to keep all his voting constituencies happy, including the harvesting of an assembly of proxies in the Middle East and the near abroad.
There was no Russian versus Saudi Arabian Oil Price War all along. Neither have all the proxies big and exotic, ever sought to attenuate the dominion of their principals by an infantile display of public umbrage, nor by any calculated devise of improbity to bury once and for all the communion of shale evangelists. Watching it casually from afar, the show unlike magic, is akin to contemporary poetry, a Nick Hornby kind of Reykjavik. It is a place where accessibility and intelligence have been fighting a cold war by proxy for the last half century.
After the November elections, the black swan will move into 1600 Pennsylvania Ave, and the lady sawn in half will be seen perambulating around the circuit tenements waiting for the next Presidential elections to bedazzle the markets. And so COVID 19 reduced into a seasonal flu of a familiar kind, will turn away in disgust with nothing to do but to irritate anyone busy touching their faces.
Ambassador Bheki Gila is a Barrister-at-Law.