On Corporate Social Responsibility

A few years ago I was deputed to attend a breakfast meeting and contribute my thoughts on Corporate Social Responsibility, or CSR. (Exciting work, indeed; no, I didn’t volunteer.)

This was the then modish practice whereby companies hired people to burnish their image by persuading customers, and the outside world, that they were more ethical than they might otherwise have seen. Many of the oil companies, for example, invested millions in this; it is known, derisively, as “greenwash” by those unconvinced by their efforts.

One of the companies at the forefront of all this was BP. They even invested in a new corporate logo that looked a bit like a flower. The company’s business continued to be the pulling of hydro-carbons out of the ground, which according to your view is a job essential to allowing our civilisation to continue in its present form, or a hideous eco-crime. (I tend to the first view.)

History does not record how many were persuaded by the company’s efforts that it was anything other than what it was, a global oil producer. Now Lord Browne, who used to run BP, has declared that the era of CSR is over, that it didn’t work anyway and that no one within companies much believed in it either.

I am reminded of that breakfast. When asked for my views, I suggested that CSR was merely a form of political correctness, and largely meaningless. I produced as evidence BP’s decision to rename one of its Gulf of Mexico oil fields, which had been known as Crazy Horse.

This was out of respect for the Sioux leader and victor over Custer at Little Bighorn, after requests from Native Americans/First People/whatever we were then allowed to call the people known in my childhood as Red Indians. I said it was a foolish, empty gesture.

A man a couple of places down from me became restive. It turned out he worked for BP and was the executive responsible for the decision to rename the field. Oddly enough, he didn’t agree with me.

The joke is, though, that the geologists who named the field were not thinking of the Sioux leader. They actually named it after Neil Young’s backing band.

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On Petrol Prices

They are at it again, our elected representatives, treating us as if we are idiots. One Danny Alexander, a LibDem MP who looks from his official photographs to be about 17, has been castigating the wicked oil companies for failing to pass on the lower oil price to consumers, in the form of lower petrol prices.

I hold the oil companies in no great esteem. They are as culpable of corporate weasel-speak as any, and it particularly irks me when one or other of them starts to bang on about their green credentials, and how great it would be if we used less of their product. This is about the last thing they want. (Cf the drinks companies, and their hypocritical bleating about sensible drinking.)

 But without those same oil companies, there would be no fuel to put in our cars, at whatever price.

It is worth examining what Alexander, who apparently works at the Treasury and should know better, is saying. Contrary to his apparent belief, the fall in the oil price on world markets, which largely kicked in at the end of July for reasons economists are still arguing over, does not immediately mean a cut in petrol prices.

This is because it has to be shipped from wherever it comes out of the ground and sent to huge installations. These are called oil refineries, Alexander. There it is converted into petrol and other products that are suitable to be consumed. The petrol then has to be shipped to the forecourt where we can buy it.

(Are you following this, Alexander? Stop prodding Osborne with your ruler.)

There is typically a two month time lag, sometimes longer, from that oil coming out of the ground and going into our fuel tanks. This means that those oil price falls in August – count it on your fingers, Alexander – should be coming through now, and lo and behold, petrol prices are falling. Tesco and the other big supermarkets are making a big deal of cutting prices on the forecourt – out of the kindness of their big hearts, of course. Every little lie helps.

As the oil price falls in September and since feed through, petrol prices will fall further, though not in proportion to the cheaper oil on world markets falls because 60 per cent of what we pay at the petrol pump goes in taxes and that proportion of our bills is not affected. As lower petrol arrives, what is the betting that Alexander will not stand up and say, look what I did? Clever little me.

Intellectual dishonesty. When oil on world markets starts to rise again, will we see politicians standing up and saying, petrol prices must go up, to protect the margins of those oil companies? Don’t they need enough in the bank to develop new fields and ensure there is enough petrol  in ten years’ time?

I rather think not.

Apocalypse Deferred

I hate to say I told you so, but I did rather tell you so. At the start of last week I suggested here that there were reasons to worry about stock markets, and the financial system generally. At that time the FTSE 100 Index, the generally used measure, was at about 6,527. Last night it closed at about 6,212.

A fall of about five per cent in ten working days does not take us into Wall Street Crash territory, but it does suggest plenty of others shared my concerns. The past few days have seen something close to panic. Not that panic is unusual on the markets.

The way stock markets work is that people who suspect their shares are overvalued continue to hold them anyway. This is because they are afraid that, if they sell too early, they will miss out on further rises. They then dump them in an insane scramble when bad news comes along. This is what drives markets. Fear and greed.

I suggested that shares were being held up because people were forced to invest there for any kind of income, there being no ways of generating a return on your savings anywhere else. Meanwhile, there were signs that sophisticated investors, the big banks and other financial institutions, were so disenchanted with the geopolitical/global economic situation that they were preferring to stuff their cash into safe havens, government bonds, even if these were actually losing them money year on year.

What has happened is that most of the negative factors known then have got worse. Ebola, worse. IS and the Middle East, worse. The US economy,  worse. The eurozone, worse, with the three biggest economies, Germany, France and Italy, all apparently going into reverse, for different reasons.

The falling oil price, which is at a level that would have been astonishing a month ago, should be good news, if we as consumers and our basic industries have to pay less for fuel. Except that the price is falling, despite international tensions that would normally force it up, because of global economic weakness, particularly in China.

The other day the UK inflation figures came in well below what was expected. Again, this would once have been good news. Now it is seen as a negative, because it suggests our economy is stagnating.

I suspect the markets will stabilise at around this level, if a little lower. But it leaves an awful lot of clever and highly paid City analysts, many of whom saw that FTSE 100 figure at 7,200 or 7,400 by the end of this year, looking very silly indeed.