Russia announced on Thursday it would not export any gasoline next month and would direct all sales to the domestic market in a bid to curb a recent shortage that saw a jump in prices.

“In May, the (Russian energy) companies are not going to export. All volumes will be delivered to the domestic market,” (…) The move from the world’s leading oil producer came after two dozen Russian regions reported gasoline shortages, prompting Prime Minister Vladimir Putin to order officials to get to grips with the situation.

Much like China’s behaviour after establishing a virtual monopoly in Rare Earth elements, Russia is demonstrating that Economics, important and relevant though it is, is one part science, one part fantasy and part wishful thinking. Political Economy is what our elected politicians need to be looking into, to understand how we have come to open our borders, dismantled our industries and productive activities, and now are dependent on countries which have had the good sense of protecting their industries and employment. How long until the double movement?

We need a proper understanding of the world around us, concerted government, citizen and business action, to make sure we can move on and keep some independence. If that does not happen, we may find ourselves begging and wishing all the way to bankruptcy.

The politics of energy pricing:

President Barack Obama on Tuesday urged world oil producers to lift crude output, as he sought to deflect public anger over high gasoline prices that has hurt his popularity among voters.

…

The rising prices at the pump are fueling voter discontent with Obama’s leadership, opinion polls show, and could harm his re-election chances in 2012.

…

Obama, until now, had focused on trying to reduce oil demand, but he made clear in his comments on Tuesday that increasing output was also part of the solution.

When re-election beckons, everything goes. And this shows our reality for what it is: physical limits and economic reflections of those limits are – and will always be – dependent on politics. Of course increasing production to reduce prices (and will it?) is not sustainable, but it is on the nature of politics to be governed by voting cycles, not by physical constraints.

That does not mean that politicians are to blame; it is in the nature of democracy that politicians are indeed dependent of the will of the people; Mr Obama is simply calling out for what people want. Perhaps concerned Americans can blame the media and the corporatist interests that keep on selling the idea that energy supplies are not constrained and that increased consumption is possible and desirable; or maybe they can point out their uninterested, consumerist fellow Americans. But, for now, they can always do one thing.

Drive less.

On Saturday, supporters of the environment can text message “tree” to the number 85944, pledging $5 for the United Nations’ Year of Forest. The running tally will play out on large screens supplied by corporate sponsors including CNN, MTV, Reuters and Toshiba.

A “virtual” forest sprouting on Times Square’s renowned billboards, 1,000 free rain barrels for gritty city backyards and a parade of clean energy vehicles including hybrid garbage trucks are all helping New Yorkers go green for Earth Day on Friday.

Re-arranging the deck chairs in the Titanic.

Standard & Poor’s (S&P) is to routinely including an assessment of climate risk into its corporate credit ratings across all industrial sectors, in anticipation of when climate policy begins to “bite hard” in the next few years.

Michael Wilkins, the London-based global head of carbon markets at the rating agency, told Environmental Finance that, up until now, the impact of climate change policies on the financial position of corporate borrowers “has been pretty benign”.

“But there’s a growing realisation that will change, and … our group is working out to best to analyse that change … and how to incorporate that into the credit rating process,” he said

Like we discussed before, the measurement is poised to be key:

The details of the methodology are still being finalised but, by the middle of this year, companies across all industrial sectors will undergo an initial automated screening and, if they are deemed to be exposed to climate risk, a more in-depth assessment will be carried out.

This will include an examination not only of their emissions profile, but also where those emissions are produced (with European assets facing greater risk of carbon constraints than those in developing counties), the company’s ability to mitigate those emissions and its ability to pass any carbon costs through to suppliers. The output will be “carbon exposure per euro or dollar of EBITDA [earnings] – a financial metric”, he said.

“This goes into the heart of how a business operates. That is something that investors need to understand. This is still cutting edge stuff – there are very few people in the City who understand it,”

Nobody has a good word to say about credit rating agencies these days, which is fair enough – they are social, not techno-scientific entities, and as such they are prone to spectacular judgement failures, conflicts of interest and, yes, probably corruptible to boot. But let’s make it clear: these days, Moody & Poor’s has more power to get companies and countries to comply with laws than the law-makers themselves.

“Today there is no disclosure requirement for companies of your cost to nature, or your cost to society,” he told Reuters on the sidelines of a seminar by insurer Storebrand in Oslo. “We’re saying that it is possible to quantify this.”

Whether we can or not is open to discussion (for instance, Michel Callon says that framing of externalities always leads to further overflows elsewhere in the economic system). That means, for example, that local communities get hammered by restrictions to use, created artificially anew to compensate for global companies’ activity.

Another observation: this is a fabulously long and complicated endeavour:

Pavan Sukhdev, head of the U.N. Environment Programme’s Green Economy Initiative, said it could take five to 10 years to develop rules that would enable comparisons about which firms were best or worst in protecting the natural world.

The Institute of Chartered Accountants in England and Wales (ICAEW) is helping study how to track impacts such as greenhouse gas emissions, pollution, strains on fresh water or involvement in deforestation.

Personally, it sounds like sheer understatement to me. Necessary activity, but lots still to do.

The gray wolf would become the first creature ever removed from the U.S. endangered species list by an act of Congress under a provision in the budget deal set to be passed by U.S. lawmakers this week.

So, here’s the point: markets for biodiversity conservation, like markets for carbon emissions (and markets for labour centuries before) depend on political positions to enforce them. When the political changes, the regulatory basis on which the markets depend upon is compromised. What happens then?

Markets cannot be isolated from politics; that is simply the reality, and to imagine otherwise is only an instance of discourse. How do we ensure that conservation continues despite the limitations of markets is the challenge.

Standard & Poor’s put a “negative” outlook on the long-term AAA credit rating of the U.S., citing a “material risk” the nation’s leaders will fail to deal with rising budget deficits and debt.

“We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013,” New York-based S&P said today in a report. “If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.”

For all the political profiteering that House and Congress Republicans will try to get from this, this is a change in the tide. The financial system, spearheaded by the rating agencies, wants to start dictating the policy in the US, much as it already does in Greece, Ireland and is negotiating to to in Portugal. The short-term results are clear. What will happen in the future?

For further reference, you may want to read Karl Polanyi’s The Great Tranformation. Just a thought.

I especially like the way MacKenzie approaches what Common Tragedies  looked at with a simplistic assertion of efficiency, back in the days: the problem of the initial allocation of permits. It is wrong to look at the problem simply as market allocation; what we have here is, according to the author, two different markets, presumably consecutive:

- the primary market sees the regulator allocating permits to polluters – through auction or simple give-away;

- the secondary sees polluters trading between themselves.

My question; is it correct to call these markets? Let’s look at Appadurai (1986)’s definition of value: the value of a commodity is established in the exchange. There are three types of exchange: gift (the commodity is given away for free); barter (the commodity is exchanged for another commodity, without any medium of exchange); and market (whereby the commodity is traded for a given quantity of medium of exchange – money).

So, is the value established in the primary and the secondary markets? Yes. However, in the first exchange the value is $0.00, and only in the secondary exchange is there a price tag put on the commodity – the emissions allowance. As far as I can tell, MacKenzie’s primary market is a effectively a gift exchange, and his secondary market indeed a market exchange.

Punchline: Who, among graduates of an Economics Department, would argue these days that the very existence of a market depends entirely on a non-market mechanism as “crude” as a gift?

- The Big Sleep

- Catch-22

- The Old Man and the Sea

- The Master and Margharita (note: I knew my teenage obsession with Poncius Pilatus would help me at some point)

- 100 Years of Solitude

- The Picture of Dorian Gray

- 1984

- The Name of the Rose

That was all very well, wasn’t it? I mean, any list of my favourite novels would include most, probably all, of those. Imagine then my dismay when I realised that, included in the list, is the second-worst waste of paper I have ever been forced to read, Antoine de Saint-Exupéry’s The Little Prince. Oh well, no list is perfect.