High Energy Prices and Private Security

Dinner table conversation about rising energy prices and the arguably higher costs incurred by energy corporations on private security. Upstream and downstream, private security is intertwined with the exploration, production and transport of hydrocarbons, and your energy bills.

This is an annual ritual. Every year, as the winter approaches in the northern hemisphere, energy prices go up. Be that gas or electricity and whichever is your energy company, the timing of the announcement always ads insult to injury. Indeed, as soon as the first chilly spell is in the horizon, the announcement that prices are going up by X percentage soon follows. The catalog of justifications for higher prices includes many reasons, with an old favorite being that wholesale prices over the last few months have gone up been somehow higher than expected. Well, that is sometimes hard to comprehend given that energy companies often hedge purchases to protect themselves from market volatility. Current favorites include anything related to greening technologies and environmental protection. One wishes that was true. Nevertheless, even if technological upgrade is mandatory, why consumers and not shareholders need to bear the lion's share of the costs, as it should be the case? Hence, shareholders' record profits will continue breaking records, so too your energy bills. This is a recipe for future economic and social disaster.

Yes, around the dinner table all these issues were discussed, but then someone asked what about the alleged higher prices of private security. And so, the discussion shifted to some other matters little discussed by the mainstream media and ordinary people:

• Exploration and production in dangerous places. As hydrocarbon demand increases, energy companies are forced to source supplies from ever more dangerous places. This is both true and a myth. Oil and gas exploration do takes place in ever more remote spots. However, downstream, this has always being the case. It is just a matter of finding the next promising oil field and comparatively speaking, at the beginning of the production cycle, the location is likely to be remote and perhaps dangerous spot.

• More private security is needed because production takes place in hot-spots. Private security wages have gone down over the last decade and increasingly local workers -at local prices- comprise the bulk of the security forces protecting operations, however imperfect these forces might be. The 1990s image of a bunch of very expensive ‘mercenaries' being hired to secure operations is long gone. You would be surprised to hear how many highly-skilled security contractors are actually struggling to find a half-decent job.

• The growing problem  maritime piracy poses is making the transport of hydrocarbons hugely expensive. The problem has generated the need to hire maritime security experts,  but never on the scale entertained by many. This is particularly the case when the issue is blown out of proportion and offered as a justification for higher extraction and production prices. In addition, governments are now deeply involved in maritime security operations off Somalia 's coast and other affected regions. Governments do not bill energy corporations for the enhanced security of international waters! Are we indirectly paying for the enhanced maritime security provided by state navies via our energy bills? 

We also discussed the myths of green technologies being deployed to remote spots by energy giants to protect the local habitat. The security contractors protecting operations in remote spots can provide first-hand accounts on the issue. But that belongs to a future post.

India Mars mission vs UK aircraft carriers

21st century contrasts on an otherwise ordinary November 5, 2013

At the Satish Dhawan Space Center on India's southeastern coast, India’s first mission to Mars successfully launched. A rocket lofted a satellite into Earth orbit on the first stage of a voyage that, if everything goes according to plan, will reach Mars orbit in 2014. Cheers erupted against the background of India moving up the technological and power ladder. Even if something goes wrong over the voyage’s next 300 days or so, India has achieved a milestone.

In the UK, there are reasons to celebrate too. Firework displays are to be watched everywhere, as November 5 marks the annual Guy Fawkes bonfire night. After the fireworks extinguish, however, it will be difficult to ignore the drama that building two new aircraft carriers has become. About six years ago, when the contract with the Aircraft Carrier Alliance was eventually approved, the costs of building them were estimated at about £3.65 billion. Leaving aside design failures and delays, the usual post-tender drama associated with any infrastructure project in the UK, the costs are now estimated at about £6.2 billion. Off course a multi-million enquiry on the issue will follow and its conclusions will be, “lessons have been learnt.” Please expect further delays and the totals costs for the two carriers, the HMS Queen Elizabeth and the HMS Prince of Wales, to be even higher, and a few more lessons to be learnt as a consequence. Add to the music other cheerful news announced this same day. For example, BAE Systems is likely to cut hundreds of jobs, around 1,000 mentioned, at its UK shipyards in Glasgow and Portsmouth. Indeed, economic stagnation has a heavy price attached.

Riches and poverty, technological might versus technological aspiration, vociferous rhetoric versus unassuming pragmatism, success and failure; these are some of the qualities setting the two stories apart. Yet, on this otherwise ordinary November 5, these qualities are no longer easy to associate in the manner accustomed over the previous century. Good luck to India, as a successful mission to Mars is something that all nations, emerging and declining, should cherish.