It might seem odd that you never see advertising for crude oil, or petrol (gasoline). Oil companies may advertise their “brand”, but not their product.
No super-bowl half-time extravaganza, no online pop-ups or side-bars on Facebook, no “influencers” on Instagram, no pyramid selling-schemes.
Yet somehow, activists think that by targeting “Big Oil” and hitting the producers, they will stop consumption. The approach of consumer-activism has worked in many areas, notably Tobacco, Pharma and now in certain areas of processed foods and single-use plastics.
Generally, this approach works if the targeted product is not a necessity. How can you tell if a product is not necessary? Well chances are it has to be “marketed”, “advertised” and indeed “sold”. It may be the case that you just need to get your next great product in front of consumers, and they will lap it up. But mostly consumers are force-fed.
There is a vast subset of the working population who “innovate” products (ie make cosmetic changes and then try and sell more of them) and then use every psychological and psychosocial trick in the book – and in the cases of opioid based painkillers, cigarettes and alcohol, physiological tricks also – to get you to part with your money. It is not uncommon for people to have permanent storage solutions for the stuff they don’t need. There is now an industry of consultants ready to help people overwhelmed with stuff. When did that become normal?
Ironically, many people who work in the great machinery that is the consumer society are very middle-class, and very concerned about the eco-agenda. Undoubtedly recycling, doing carbon-off-setting wherever possible, and shopping organic and not using plastic straws at children’s birthday parties, maybe even cycling or driving a hybrid or EV to work. All the while pointing the finger at Big Oil as the cause of the problem and protesting that “something” must be done about climate change. Watermelons: green on the outside, red on the inside.
To the credit of the Extinction Rebellion, many (although clearly not all) try to live the lifestyle of less, not just evangelise about it.
Mad Men or Bad Men?
At a social event, there is no shame in saying you are a designer, a product-champion, an advertising account manager or a sales executive. Woe betide you if you work in the extractive industries though. However, if you start to believe that consumerism is at the heart of the problem, and that extractive industries are just servicing the demand that consumerism creates, then I would suggest that advertising, sales and marketing folks (and bankers and lawyers and, well, almost everyone) should look hard in the mirror before claiming any moral high-ground.
Probably the best thing to come out of the climate-angst groundswell is the growing realisation that the problem really isn’t as simple as swapping dirty energy for clean. Indeed, you can explore this by thinking about what would happen if we had the Avengers’ Tesseract or Nuclear Fusion – providing “limitless clean energy”: the logical conclusion would be increased affluence, albeit on a stabilizing but very large human population. However, with increased affluence comes vastly increased use of resources. Not necessarily oil and gas in this theoretical future, but just about everything else. We know this world is finite and that pollution is affecting just about every corner, no matter how remote. In a world of limitless free energy, it is hard to see that improving as billions of people achieve the excessive levels of affluence that typify many OECD countries. We might one day have a zero-carbon footprint and climate-angst may be a thing of the past, but our energy footprint is huge and very destructive, carbon intensive or not.
Article on plastic waste coupled with advert for pure consumerism… no irony here.
With this realization, and in the absence of limitless clean energy, one likely future is one of “less of everything” (at least for the comfortable OECD nations). Some people are making this as a conscious choice, for others it is less of a choice but more of a necessity as costs rise. And herein lies the rub (and the limits of my knowledge of economics), less of everything may not be an easy solution either.
Tightening the belt
Growth is generally a good thing. From a human perspective, the global growth over the last 70 years has lifted billions out of poverty – which must be good. The externalities (costs) of this are environmental degradation. The ethical balancing of these two opposing factors is the current dilemma.
Less is not More: the Paradox of Thrift
So what happens when people start using less, travelling less?
A fundamental concept in economics, described by John Maynard Keynes is that such actions are not isolated. What is good for a family is not good for society.
Imagine a town where a major employer cuts wages or a factory closes, people will start to make savings – go to the hairdresser less frequently, eat out less, space-out servicing the car, travel less etc. The knock-on effect is that all the service businesses have less revenue and hence the owners and employees have less money, so they in turn will start to tighten-their-belts and consequently spend less. Thus a de-growth feedback-loop is established.
Imagine this on a global scale – caused either by higher energy costs or by consumer choice. Either way, the result will be a recessionary spiral which will put people out of work and millions, or billions will sink back into poverty. People don’t like change and really don’t like things getting worse. The Gilets Jaunes is the first taste of this in Europe.
Is it any wonder the super-rich are building bunkers on private islands?
This process of de-growth started during the financial crash of 2008 but was re-routed back to growth by the injection (creation) of trillions of dollars of debt. Imagine the fictive town above – a magic debt-wand is waved over the consumers of the main employer and over its employees: sales go back up, wages go back up, employees’ wages and new cheap debt combine to make them spend again and the economy ticks along again. Until it doesn’t.
Damned if you do, damned if you don’t
Is this the true modern dilemma? If you believe the “Greener, Cleaner and Cheaper” mantra, then there is enough optimism to assume that we can have a utopic future with as much energy and a greener and cleaner environment – and have excess cash (since energy will be cheaper) all without increasing the collateral damage to the environment.
If energy gets cheaper we will have more to spend – this feels like a serious logical fallacy in the making.
Greener, Cleaner but more expensive?
The reality is very likely to be that energy gets more expensive. As renewables increase as a percentage of the electricity mix, countries (or states in the case of the US) are noticing that (a) the overall cost of electricity is increasing, despite unit costs of things like solar panels and wind turbines decreasing and (b) that the incremental cost of adding more (i.e. to go from say 20% to 30% is significantly greater than the previous equivalent increment, and (c) that the poorest sections of society are hardest hit.
Part of the cost is understood as the NIMBY effect, with increasing resistance from individuals and communities to new installations, causing delays and costs. However, the bigger effect is the cost of, and limitations of, adapting the existing grid: the so-called Network Effects. A few concentrated and well placed power stations supplying a distribution grid is very different from multiple diffuse power sources. More importantly the issue of intermittency is having to be factored in. This is not a big problem when renewables make up a small % of the mix, but becomes increasingly and I suspect prohibitively expensive as the threshold increases. There are studies (models) which indicate that this is actually linear, with only a small non-linear effect as you get near the 100% level, but it has not been tested in practice anywhere. Norway – which has over 90% renewables is not representative as it is essentially all hydroelectric, which is not intermittent.
More expensive energy will not be popular; Germany is starting to see a backlash against the Energiewende, France has its Gilets Jaunes. Meanwhile the world is focused on the Apocalypse that is apparently only 12 years away. We are bombarded by headlines of how Climate Change will cause societal breakdown, mass migrations and yes, the apocalypse.
This is a fascinating study by Naho Mirumachi et al. on how the drive to low-carbon “solutions” will have unintended consequences. This is a new area of study and one that will likely remain hugely underfunded and unfashionable – but should not be ignored.
This paper problematizes low carbon development, arguing that there are undesirable, unintended or perverse effects that give rise to distinct and serious security concerns.
As I have argued recently, the desire for “simple solutions” is probably the biggest danger in the political and social processes we are currently experiencing. But people don’t want to hear any counter narrative.
So how to stop Big Oil?
Simple really – hit demand. When people stop using oil, oil companies will stop producing it.
If activist consumers and investors do stop Big Oil from producing oil – whilst ignoring the demand side; oil will still be produced (see demand growth on graph – right).
Only it will be produced by non-public companies – notably National Oil Companies, who are far less affected by activists whether they be on the street or part of Wall Street. As a side note these companies are generally far less efficient and less environmentally aware than Big Oil, so if activists are successful in driving Big Oil out of business, it will be a loss not a win whilst oil demand remains.
Better maybe to protest at Heathrow, Gatwick, Luton and Stanstead as people head off on half-term break? Or BA and EasyJet head offices? Maybe you can convince an airline to voluntarily reduce the number of (profitable) flights it offers? Or how about Unilever, P&G or Diagio – to voluntarily encourage consumers to buy less of their products? A 3-day work-week by advertising executives and creatives? Ban all advertising?
Not holding my breath on seeing this actually happening.
Self-fulfilling prophesy
If, as many studies are showing, an increased reliance on renewable energy increases the cost of energy – a subject I have discussed before; then naturally people will have less excess spending capacity and eventually less affluence. In consequence people will consume less and this will ultimately be good for the planet and meet the goals of the environmental activists. However, as we test The Paradox of Thrift, quite how societies will adjust to the less-is-less future is another matter.