ENERGY FINANCE


ENERGY AS BARTER


Energy as Barter is something that sounds very old fashion and USSR-like, as only suitable in for a non international banking traffic dominated before the '80ties world. But this is a misconception. For long term contracts Energy as Barter is for both parties very attractive: the energy supply side of the barter deal ensures by this very easy a hedge on the future deliveries against declining currency values as the energy demanding side of the barter delivers real products instead of rapid in value declining currencies (as measured against a basket of commodities instead of against other -also declining- currencies). Thereby barters delivers more actual future purchase power as in currencies nominated long term contracts. Barters also can be used to guarantee the future supply of products not available in the domestic market. The importance of barters will grow as currency values stay declining at current speed. Bartering is also about the new multi-polar global model, in which bilateral contacts between two nations will increase enormously. Contacts that grow into contracts. The multi-lateral contract model was an illusion. It have never been there, still is not functioning, nor has a future. Too complex to reach agreements, too much noise on the lines. All supra national contexts have not a good figure for negotiations that require tact (and each negotiation does). The future of international relations is very strong in bilateral contact/contracts and if there will be multi-lateral contact and contracts they will serve a cause all parties agree on when they start to negotiate. And where companies can deliver a function as joint venture, this will replace politics totally. We see that already on the issue of gas-lines and oil-lines: political bodies where not able to fix these agreements for decades and suddenly joint ventures solve these problems. Even the toughest (for example the Russia/Ukraine gas-line issue). Complex projects like North Stream is a result of such joint ventures. Politics have proven to be poor deliverers of multilateral functions. That's mainly because politics sees supra national bodies as free to rip warehouses with no check-out. The main attitude of national bodies to international bodies is take as much as possible and bring as less as possible. Power, gas, oil and rail lines will be realized by companies, multilateral, in joint ventures: delivering economic democracy and economic bi/multi lateral cooperation/development: corporations that represent their respectively customers is in its essence an ultimate type of democracy: people can vote with their purchase power. People who complains about the power of corporations should stop complaining and start their own corporation. That would be 'something' harder than complaining (as in: very hard work and failures are included in creating corporate structures), but it would be a signal of really understanding the concept of economic democracy. Corporations should explore economic democracy as very valid (social media drivable) marketing tool. The role of economic democracy will be extended more and more, even into tax budget uses: the one that pays is the one that decides what to do with it. The old model of democracy is the parliamentary one (representative democracy). Economic democracy will not replace it, it will complement it by other means: the voting power the demand side of the economic model has. Or governments will like it or not: economic democracy will certainly become more important that it is now. The Shell / Brent Spar issue unveiled the power of economic democracy and this ghost will never return into the bottle again. When these infrastructural works crossing the high seas, international legislation is needed. Not a world government (that just will deliver new taxes, taxes that repress economic activities instead of stimulating them), but just international legislation hosted by the IMO and enforced by the International Court of Justice in The Hague, Holland will do the job perfectly. Rural energy will be produced local by PV. Farmers will grow their own bio-oil and produce in local farmer cooperatives or small local/regional factories bio-diesel of it. But the industries and cities always will have an energy deficit and that where remote energy concepts like GeoThermal and DesertTech kicks in. The infra to it will be designed, financed and build by companies in the respective countries that are feed by this power supply. Bilateral contacts based on real mutual benefits will rise severely in volume and quality. That's the future of international politics. And it will re-install bartering as massive tool. Energy for X (x is the subset of what's available in the one nation and what's needed in the other nation). Most of the new to establish National Energy Bodies will get a place just like Central Banks: attached to the government, but independent operating under tight regulation and law enforcement. Energy as Barter is a concept capable of generating a massive energy transition investment wave.


Author: Gijs Graafland


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