UAE leaves OPEC - should we care?

As of tomorrow, the United Arab Emirates (UAE) will officially leave the Organization of Petroleum Exporting Countries (OPEC), the cartel that has historically exerted a strong influence over global oil prices through its ability to impose production quotas over its members. This is probably not going to change your life overnight. In fact, you're probably not even going to see any change in gas prices, at least in the near term, and certainly not while the Strait of Hormuz remains effectively closed. But in terms of geopolitics and the global economy, it could be significant in the longer term. It has been called "the beginning of the end of OPEC".

UAE is OPEC third or fourth biggest crude oil producer after Saudi Arabia, Iraq and maybe Iran, and has been a member of OPEC (and the expanded OPEC+ group) since 1967, soon after the group's inception in 1960. 

Crucially, though, the UAE's "spare" oil capacity is second only to Saudi Arabia's, making it an important "swing producer". It has a sustainable production capacity of 4.85 million barrels a day, but due to its OPEC quota it only actually produces 3.4 million barrels a day. OPEC (effectively Saudi Arabia) is therefore causing it to lose a lot of potential revenue which, given that oil accounts for about a third of its GDP, has always rankled. 

The UAE must also be painfully conscious that, as hydrocarbons are substituted by other energy sources, oil will not always be such a sure source of income. It makes sense, then, for the UAE to maximize its income from its oil reserves now, before demand craters.

UAE's exit widens its rift with Saudi Arabia, the de facto leader of OPEC, and deals a considerable blow to the influential oil producers' group and its ability to dictate oil prices. Freed from the constraints of OPEC, the UAE will almost certainly increase its crude oil output, which could have a significant effect on global prices.

The move is also seen as a win for Donald Trump, who has long railed against OPEC and its price-fixing. Trump needs gas and diesel prices to fall before the mid-term elections, and increasesd oil production by UAE could help with that.

UAE has long been a valued ally of the US, and even of Israel in recent years. UAE's decision to move now, with a US-Israeli war against Iran going on, can be no coincidence. (It has publicly complained that Saudi Arabia has offered it no support during Iran's bombardment, while Israel cleverly extended its protective Iron Dome to the Emirates.)

OPEC has gradually been losing influence for some years now. Back in the 1970s, it controlled over 50% of the world's oil; today, with the huge production increases in the USA, Canada, Russia and China, among others, that figure is closer to 30%. Several members have already defected: Indonesia left in 2016, Qatar left in 2019, Ecuador in 2020, and Angola in 2024. UAE's exit is a much bigger deal than any these. 11 members remain. And next? Almost certainly Venezuela.

Two tech billionaires face off

The press is fairly salivating over the prospect of two tech-bro billionaires facing off agaist each other in court in California. It involves betrayal, deceit and unbridled ambition. And lots and lots of money.

Elon Musk and OpenAI CEO Sam Altman used to be best buddies. Musk actually bankrolled much of OpenAI's early research in the heady days of 2015, back when it was an idealistic not-for-profit looking to save AI (and the world) from the rapacious designs of the less caring technology companies that were starting to emerge.

It soon became apparent, though, that a lot of money could be on the table for Altman and OpenAI, as the company's ChatGPT became the world's go-to AI platform, and Altman's altruistic vision wobbled. The company converted to a for-profit corporation last year, and is now valued at nearly a trillion dollars. Altman, OpenAI president Greg Brockman, and many others in the organization have become very rich indeed. (Altman's own fortune is estimated to be around $3 billion.)

Musk, the world's richest man, whose own net worth is heading inexorably toward the trillion dollar mark, has accused Altman and Brockman of double-crossing him, and of abandoning the company's founding vision of "an altruistic steward of a revolutionary technology". The picture of Musk, not known for altruism himself, taking the moral high ground is a confounding one. Plus, Musk now has his own AI company, xAI.

It's not going too well for Musk thus far. He has abandoned his original bid for $100 billion in damages after a series of pre-trial.rulings went against him. He is now seeking an unspecified amount of money to be paid into the charitable arm of Open AI (which still exists). He is also looking to oust Altman from OpenAI's board because, after all, this is personal.

The trial is expected to provide some riveting theatre as the two larger-than-life characters face off. As US District Judge Yvonne Gonzalez Rogers says, "Part of this is about whether a jury believes the people who will testify and whether they are credible". In his opening remarks, Musk laid out his views: "The fate of civilization is at stake". Altman, for his part, gushed about Musk: "You're my hero". Yikes!

Musk has other ongoing legal challenges too: he was recently held liable by another jury for defrauding investors during his $44 billion takeover of Twitter in 2022. Altman and OpenAI are also being sued by residents of Tumbler Ridge, BC, after a mass shooting that they claim should have been prevented by OpenAI. It's a messy old (new) world out there.

Maybe we shouldn't really care that two such uncongenial figures are having at each other like slightly grubby quondam titans. But it is hard to look away.

How bad is the Iranian economy?

Here's an eye-opening article about the parlous state of Iran's economy after two months of battering by American and Israeli forces. Spoiler: it's substantially worse than I thought.

At least a million jobs have been lost directly due to the war, and 10-12 million - almost half of Iran's labour force - are at risk from the ripple effects.

Although Israel claims to have landed precision strikes on Iran's paramilitary Revolutionary Guard facilities early in the war, in fact their air strikes destroyed or damaged some 20,000 civilian factories, hobbling about 20% of the country's manufacturing capacity, particularly in the essential pharmaceuticals, petrochemicals, aluminum, cement and steelmaking sectors. This has crippled Iran's main non-oil exports, and raised domestic prices for everything from plastics and pipes to fabrics, packaging and construction materials. There was little or no military targeting involved in this; this was an opportunistic Israel gleefully moving to incapacitate its arch-enemy's economy under cover of US bluster, while it thought it could get away with it.

Iran's internet has been largely shut down since the start of the war (or even before, during the domestic protests that preceded it), gutting all the small- and medium-sized businesses that rely on online sales. 

Before the war, Iran made about $98 billion in exports, just under half of it from oil. A good proportion of that is now gone, mainly due to the US blockade on exports, with no end in sight (although actually about half of Iran's non-oil trade goes overland and through Caspian Sea ports, and not through the blockaded Strait of Hormuz).

Pre-war, Iran relied substantially on the United Arab Emirates for up to a third of its imports. Since the US strikes, it has had to retaliate however it can, including strikes on UAE, leading that country to cut off all trade with Iran. No more imports.

The city of Kashan, where most of Iran's lucrative carpet production was centred, has all but closed down. Exports have plummeted and domestic sales petered out. Prices for synthetic fibres have surged by 30-50%, largely due to ongoing hits on Iran's petrochemical facilities.

Most new construction has ground to a halt, with priority going to the reconstruction of essential infrastructure. The price of iron sheeting has more than doubled. Savings of individuals and companies alike are starting to run out, those that had any.

Even with all that litany of grimness, Iranian officials are however still trying to reassure the public that the country can withstand all the economic pain. Certainly, if any country could, it is Iran. After decades of sanctions, the country has built up a lot of resilience, and is well-prepared for "worst case scenarios". It maintains large reserves of vital supplies, and even resources like electrical machinery, cement, iron and steel, for just such an emergency. The US has clearly been shocked by how resilient Iran has proved, although a bit more inquiry and less hubris could easily have alerted them to that.

Such reserves and resilience are not, of course, unlimited. While it is thought that Iran could still bounce back once the war ends, that would largely depend on whether international sanctions were lifted, and that in turn depends on a whole load of other things, things that are currently unknown. Whether Iran can outlast the United States - which has its own constraints and determining factors - is an open question.

Alternative climate conference gets under way in Santa Marta

I have neglected to mention it thus far, but I would be remiss to ignore the First International Conference on the Just Transition Away from Fossil Fuels, happening right now in Santa Marta, Colombia.

With all that they need to come up with a more succinct name or acronym (FICJTAFF?), this seems like a wholly laudable attempt to rescue the climate action movement from the tyranny of the majority. While great things were once hoped for from the UN Climate Change Conferences (or COPS - Conference of the Parties), in recent years they have been increasingly taken over by oil-producing countries that either don't believe in, or don't care about, climate change.

The Netherlands and Colombia have been at the forefront of this new initiative. Over 50 countries are attending the Santa Marta conference, a so-called "coalition of do-ers", representing almost 50% of the global population. Sub-national actors, Indigenous Peoples, social and youth movements, and invited non-governmental organizations will also be represented. 

The USA, under the climate-denying Trump administration, is not even invited, and neither are a whole swathe of other potentially obstructive countries like Middle Eastern oil producers. There is no China, no Russia, to veto promising motions. 

Despite its embarrassing back-pedalling on climate issues under Mark Carney, Canada is indeed attending, although it is sending a team of negotiators rather than higher level government ministers. Along with Nigeria and Australia, it is one of the few oil and gas producers at the summit.

The concept is to see what progressive climate action ideas can be developed without the constant drag and naysaying of the more regressive elements. There will be no flashy binding global treaties, but instead is focussed more on actionable, non-consensus-based pathways. It is seen as a precursor to future negotiations, rather than a final decision-making body. It hopes to set targets and advance concrete pathways to transition away from fossil fuels, which increasingly seems like the only real solution to climate change.

Should we expect much from the conference, other than virtue-signalling and bromides? Is it just a choir preaching to itself? Maybe this first conference might not produce too much, but it will be interesting to see what momentum it generates. And, anyway, do you still expect anything from UN COP conferences?

To tell you the truth, it's nice to be reporting on something other than the United States right now. That feels like a win in itself.

Shells on a beach = death threat?

More US news, I'm afraid (it's hard to look away).

Soon after President Trump's initial attempt to go after ex-FBI boss and one-time nemesis James Comey fell through when the courts dismissed the case with prejudice, the man has prevailed upon his Justice Department to indict Comey all over again, this time claiming that Comey threatened his life. Because, more than anything else, Trump hates to be thwarted, and he will spend million of dollars of taxpayers' money to wreak vengeance.

And, if the last attempt at indictment was flimsy and poorly executed, this one's going to be a doozy. Comey's supposed "threat" was a picture he shared on social media about a year ago, quickly removed, of some seashells on a beach forming the numbers "8647".

Confused? So was I. Apparently, the "47" is supposed to represent Donald Trump (the 47th US president, get it?) And the "86" is apparently slang in some language or other for "remove" or "take out". (I don't know. I don't make this stuff up.) 

So, DOJ's allegation is that, by sharing the image, Comey was personally threatening to kill Donald Trump. A stretch? Just a bit. At worst, it was Comey's hamfisted attempt to call for Trump's impeachment or removal from office. It would be hard to argue that it was a call for his death. It's no secret that Comey dislikes Trump (and vice versa), but a call for assassination? Hardly.

Comey claims that he was not aware of the possible violent implications of the image, thinking it was just a political statement of some sort. (Why would a public person publicly share a political statement that they don't even understand?) He says he took it down from his Instagram page as soon as someone explained to him how it might be interpreted.

So, I guess we'll see whether putting a few shells on a beach constitutes a treasonous threat. It would be the damnedest thing, don't you think?

NASA chief wants to make Pluto a planet again

Back in 2006, poor Pluto was officially demoted from a planet to a dwarf planet. Generations of school children who had learned the mnemonic "My Very Educated Mother Just Served Us Nine Pizzas" have had to re-learn it as "My Very Educated Mother Just Served Us Nothing".

Not a big deal, you might think. But it was controversial then, and apparently it remains controversial to this day. The argument was that a planet has to fulfill three (admittedly rather arbitrary) criteria: to orbit the sun (not another planet), to be massive enough to have been made fully spherical by its own gravity, and to have cleared its orbit of debris. Pluto, they said, failed to fulfill the third criterion, sharing an orbit as it does with the asteroids, icy bodies and other dwarf planets of the Kuiper Belt. 

The curremt (Trump-appointed) NASA chief Jared Isaacman is particularly exercised by the subject, and is making it his mission to reinstate Pluto as a full planet. The odds are against it, though, as the decision rests with the  International Astonomical Union (IAU), a worldwide group of professional astronomers whose job it is to define and name celestial objects and surface features. (Isaacman, on the other hand, is a billionaire finance-bro and a "private astronaut" -  a typical Trump nominee.)

It probably shouldn't surprise us that a Trump appointee is looking to turn back progress. It won't surprise me too much if he turns out to be a flat-earther too.

Does MLS own the Vancouver Whitecaps?

Rumour has it that Major League Soccer (MLS) is considering relocating the Vancouver Whitecaps franchise to somewhere more profitable, like maybe Las Vegas. They say the "long-term health" of the league is at stake. They say that "stadium economics, scheduling restrictions and a lack of government and corporate support" will make keeping the Whitecaps in Vancouver very difficult.  

The current owners, a group of Canadian businessmen, have put the team up for sale, although they do say their priority is to keep the team in Vancouver. There are currently only two Canadian teams in the MLS league, Toronto (added as an expansion team in 2007) and Vancouver (added in 2011), and losing one would be pretty hard for the Canadian psyche. 

Although the Whitecaps had their most successful season ever last year, only falling to Miami in the championship game, and they currently sit second in the league this year, their on-field success has not translated into all-important revenue, in which stakes they sit at the very bottom of the league, trailing much worse clubs in the middle of the standings.

I confess the whole idea of "moving" a team from one city to another seems bizarre to me, coming from a British background. I can''t imagine "moving" Manchester City to Blackpool, or Chelsea to Portsmouth!? But I guess I just don't understand the franchise business model of North American sports. Certainly teams (or franchises) do get moved all the time: the Brooklyn Dodgers became the Los Angeles Dodgers, the Montreal Expos became the Washington Nationals, the Washington Senators became the Texas Rangers, etc, etc.

But what is the role of MLS in this current case? Google AI says that "Major League Soccer (MLS) does not own the Whitecaps directly, though it operates under a single entity structure where owners are investors in the league". The best explanation I can find for this confusing claim comes from Medium.com: "Unlike the National Football League (NFL), Major League Baseball (MLB), National Basketball Association (NBA), and National Hockey League (NHL), the MLS is considered a Single-Entity business model. This structure allow the teams to be considered "individual investors" of the league, allowing Major League Soccer to be the sole owners of all 29 teams and not be considered a Limited Liability Corporation (LLC)", although the article then goes on to question the legality of this Single-Entity status.

So, clear as mud. I still don't know how it works, but it does seem that MLS somehow has "full autonomy" over business deals, exclusivity player negotiations, and many other aspects. Weird.

Yet another productivity analysis

It's a constant taunt of the Canadian right wing that, after ten years of Liberal rule, Canada's productivity is poor (the worst in this cherry-picked category, the lowest in that, you know how it goes). The unstated implication is that the Conservatives, somehow, would have done a much better job. 

Productivity - GDP per capita, or sometimes per hour worked - has become the tub to be thumped in recent years by many in the business community, one metric to rule them all. But it's a notoriously blunt instrument, open to all manner of misinterpretations and vagaries.

The redoubtable Visual Capitalist has produced an updated analysis of global productivity, which yields some eye-popping, but actually pretty explicable, results. Way out at the top are not the USA or China, or even Sweden, but Ireland, Norway and Luxembourg. But this doesn't necessarily mean that Irish workers are much more efficient or hard-working than those in the rest of the world, or even that they are better at harnessing technology.

In the cases of Ireland and Luxembourg, their productivity dominance is almost entirely due to their status as tax havens. Both countries host the headquarters of many multinational companies, particularly in the pharmaceutical and technology sectors in Ireland's case and finance in Luxembourg's, so most of the work that generates such high productivity figures is actually done elsewhere. In both cases, productivity drops dramatically when measured using Gross National Income, rather than Gross Domestic Product.

In Norway's case, it's productivity is more to do with its high-value energy industry, although some of it is "genuine" productivity efficiency, and its adoption of capital-intensive and knowledge-based work. Most of the other (mainly European and Scandinavian) countries in the top ten or twenty similarly benefit from those same choices or circumstances.  

And Canada? In this particular listing of 37 countries, which is based on GDP per hours worked in purchasing power parity (PPP) dollars, Canada comes in at a middle-of-the-road No. 18. This is above the OECD average, and about the same as the UK, Italy and Spain. It is just below Australia, although significantly above the likes of Israel, Japan, New Zealand Mexico. Canada also comes in well below arch-rivals the USA which, at No. 7 according to this metric, is the only non-European country in the top 15. (China is not included in this analysis.)

In general, countries whose economies are more reliant on agriculture, tourism, or lower-value services tend to report lower productivity levels, while those which are more based on technology, finance, pharmaceuticals and energy typically show higher productivity. So, such lists are perhaps not all that useful.