by Peter Franklin
Tuesday, 21
April 2020
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11:28

The poison in the veins of the global economy

by Peter Franklin
It is sticky, dirty, smelly, toxic and carcinogenic. Credit: Getty

Crude oil is very crude indeed. A science fiction writer would be hard pressed to come up with a more disgusting substance.

It is sticky, dirty, smelly, toxic and carcinogenic. It variously vaporises, seeps, oozes, floats, adheres, solidifies and sinks — anything to insinuate itself into the environment and spread its poison.

It is literally death in liquid form. Millions of years of corpses pressed and cooked into the terminal phase of decay.

If you had just a jar of it in your possession, you wouldn’t want it in the house. But a single barrel of crude is 42 US gallons or just under 159 litres. If you had one of those it would be a local disaster waiting to happen — requiring specialised storage facilities.

In the oil futures market, traders deal in contracts for thousands or millions of barrels. Of course, it’s just pieces of paper to them, numbers on a glowing screen. They never expect to take delivery of what they’re notionally buying — it’s always sold on to someone else.

Except that yesterday, there was no one else. The refineries weren’t buying, the storage facilities were full, the oil tankers fully laden but with nowhere to go.

The terrible truth dawned in trading rooms across the world. Metaphorically, the glowing screens cracked, oil gushing through the fragments. Panicking, the traders paid others whatever it took to move a previously valuable asset off their hands. And so, for the first time in history, the price of oil went negative.

We may see in all of this a satisfying morality tale — the greedy traders in their clean white shirts suddenly splattered with the consequences of their actions. But, of course, we’re all complicit. Every time we fill up at the petrol station or take a flight or buy cheap Chinese imports, we too are dealing in crude oil and it’s not-so-refined products. Out of sight, out of mind, we’re doing our part to spread its pollutants around the planet — from the oil-slicked seabird to our children’s lungs.

Of course, that’s because we’re addicted to oil’s energy content — the life blood of the global economy.

It’s only now that the pandemic has forced us to stay still that we can see crude for what it really is: a liability, a curse, a poison worth less than nothing.

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