Fossil fuels

A year ago today, the oil industry was shaken by a blowout on the Deepwater Horizon rig, 1500 metres deep in the Gulf of Mexico. The explosion killed 11 people and spilled 200 million gallons of oil. BP’s bill – over US$8 billion to date – is expected to reach US$32 billion after all damage claims have been made.

BP wasn’t solely responsible for the spill. BP’s contractors were also held to task, including Transocean, the rig owner; Halliburton, who did the cement job; and Cameron International, who built the blowout preventer. The incident highlighted the complexity – and vulnerability – of today’s oil and gas contracting arrangements.

IIED’s new report Shared value, shared responsibility: a new approach to managing oil and gas contracting chains argues that a shift in industry culture is required to manage the challenges posed by complex chains of oil and gas contractors in increasingly risk-laden environments.

Almost unnoticed by the world, Iran has moved towards the adoption of a basic income grant to distribute money from its oil industry directly to its citizens. This could be a good example of how distorting fossil fuel subsidies used in many developing countries could be repealed without adversely impacting upon the poor. Furthermore, the outcomes of this policy could have a wider impact on the way rents from natural resources are used - allowing households to choose how to spend profits from resource extraction.

Developing countries might want to prepare for a future where powerful governments compete for access to dwindling fossil-fuel supplies by taking a realistic look at what's already available.

According to conventional wisdom, there probably never was a great time to pay an unpredictable Latin American country with a doubtful deb