Energy company executives are lying about their costs and ever increasing profits - here's the proof - time to nationalise the energy industry

The energy companies claim their profits are not increasing. Yet Scottish Power’s own 2012 accounts show it more than doubled its net profits from £267 million in 2011 to £648 million in 2012 (1)

The energy companies claim the vast majority of any profits they do make are re-invested in new generation capacity. Yet in February Scottish Power’s parent company Iberdrola announced it was spending £890 million from Scottish power revenues on share dividends (2) – (4).

It also spent £23,000 sponsoring Labour, Conservative, SNP and Plaid Cymru conferences and events in 2012 (5). An investment to ensure no real regulation or renationalisation maybe? If so, cheap even if it had been ten times that.

Accountants who looked at the Big Six energy firms’ accounts, interviewed by Channel 4’s Dispatches, found they all issue similar share dividends of hundreds of millions of pounds a year (6).

The accountants also found the firms’ claims on their profit margins include only retail, excluding big profit margins on generation and wholesale of energy, with all six firms being generators as well as retailers (7).  

Office of National Statistics and Ofgem figures show that while wholesale energy costs increased by 38% between 2005 and 2010, customers bills increased by 73%, almost twice as much. Add in that the companies were making profits on generation and wholesale and energy costs can’t possibly account for the increase in bills (8).

A study by Manchester University in 2011 found the big six energy firms systematically profiteering over years by raising their prices by the full amount every time wholesale gas costs increased, but, when costs fell, delaying passing on the savings to customers and only passing on part of them when they did (9).

Ofgem, the energy regulator, recently estimated that energy companies have been increasing prices by up to 10% a year while wholesale gas costs are falling (10).

It also estimates that their profit margins have doubled in the last year , while infrastructure costs, wholesale energy costs and green levies have added just £35 to the average bill in the same period (11) – (12).

It's not the green levies -
they're under 4% of the average household’s bill

The energy companies, PM David Cameron and the Daily Mail want you to believe that the main cause of rising bills has been “immoral” green levies added to them by the last government (13) – (15).

Yet most of these levies have nothing to do with renewable energy or reducing CO2 emissions. They’re to reduce energy bills for the poorest households.

Only four are ‘green’ measures – the Renewables Obligation, the EU Emissions Trading Scheme and the Carbon Price Floor, and Feed In Tariffs, which allow consumers to save on their bills by generating electricity using small wind turbines or rooftop solar panels. The four together put £50 or about 3.95% on the average household’s annual bill of £1,267 a year (16) – (17).

So green measures are under 4% of the average bill ; apart from the fact that as global demand for fossil fuels is rising faster than supply, if we don’t invest in alternatives to increase supply, energy prices will rise faster.

The other two main government levies on fuel bills, the Energy Companies Obligation and the Warm Home Discount, reduce bills for people on low incomes. The final two, and smallest, are for Smart Meters and Better Billing to reduce all consumers’ energy bills. These four non-green levies add £61 a year to the average bill or 4.81% (18) – (19).

Privatisation is only a success for the 1%
at everyone else’s expense :
time for renationalisation

Privatisation of the energy industry is only a success for the wealthy executives and major shareholders of the companies, at everyone else’s expense.

The average income of the majority of people in the UK relative to inflation has been falling ever since the financial crisis ; by 2% in this year to August alone (20).  

Almost one in four people in the UK are spending their savings to pay energy bills, one in six have gone into debt to pay them. Thousands are estimated to die each winter due to illnesses caused by cold due to being unable to afford to heat their homes (21) – (22).

Yet the energy companies’ executives are still increasing their profits and spending them on dividends. That kind of massive redistribution of wealth from the vast majority to a tiny and already wealthy minority is unacceptable. Nationalisation must follow.

Even with the economy growing again, so much existing and new wealth is being taken from the majority by a small majority that economic growth is not stopping the majority continuing to get worse off. Unless we want to end up like Brazil, with a tiny wealthy elite and everyone else in poverty, we have to reverse the inequality.

What you can do

• Sign this 38 degrees petition and/or this petition on the government’s website calling for the renationalisation of the energy industry to end profiteering by the energy companies.

 

• Contact your MP asking him to urge his / her party to adopt renationalisation of the energy industry and call for it in parliament and in his or her column in the local newspaper. You can find who your MP is using your post code and contact them on this site.

 

• Email letters or text messages to newspapers, magazines and radio and TV programmes when they’re discussing energy prices to call for renationalisation

 

Sources

 

(1) = SCOTTISH POWER UK PLC DIRECTORS’ REPORT AND ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012, page 3,
http://www.scottishpowerrenewables.com/userfiles/file/Consolidated_Report_%26_Accounts_Scottish_Power_UK_plc_2012.pdf

(2) = BBC News 11 Jul 2013 ‘Profits soar at Glasgow-based Scottish Power’,
http://www.bbc.co.uk/news/uk-scotland-scotland-business-23270146

(3) = Financial Times / ft.com 17 Feb 2013 ‘Iberdrola defends £890m UK unit dividend’,
http://www.ft.com/cms/s/0/b020833a-78fb-11e2-b4df-00144feabdc0.html#axzz2jiPiV4Q5

(4) = thisismoney.co.uk 17 Feb 2013 ‘Spanish owner takes £900m dividend from Scottish Power despite pushing through a big increase in bills for British customers’,
http://www.thisismoney.co.uk/money/markets/article-2280170/Scottish-Power-defends-900m-Iberdrola-dividend.html

(5) = SCOTTISH POWER UK PLC DIRECTORS’ REPORT AND ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2012, page 14,
http://www.scottishpowerrenewables.com/userfiles/file/Consolidated_Report_%26_Accounts_Scottish_Power_UK_plc_2012.pdf

(6) = Channel4.com 04 Nov 2013 ‘Dispatches delves into the accounts of the Big Six energy suppliers’, http://www.channel4.com/info/press/news/dispatches-delves-into-the-accounts-of-big-six-energy-suppliers

(7) = See (6) above

(8) = BBC News 11 Jan 2012 ‘Energy bills explained’,
http://www.bbc.co.uk/news/business-15352599

(9) = Guardian 02 Dec 2011 ‘Big six energy firms face fresh accusations of profiteering’,
http://www.theguardian.com/business/2011/dec/02/energy-firms-accusations-profiteering-electricity

(10) = Guardian 29 Oct 2013 ‘Energy firms raised prices despite drop in wholesale costs’,
http://www.theguardian.com/business/2013/oct/29/energy-firms-raised-prices-as-wholesale-costs-fall

(11) = Independent 29 Oct 2013 ‘Big Six energy producers under fire over excessive profits ahead of grilling by MPs’,
http://www.independent.co.uk/news/business/news/big-six-energy-producers-under-fire-over-excessive-profits-ahead-of-grilling-by-mps-8909608.html

(12) = Guardian 29 Oct 2013 ‘Energy firms 'overcharge by £3.7bn a year'’, http://www.theguardian.com/business/2013/oct/29/energy-firms-overcharge-accusation

(13) = Telegraph 29 Oct 2013 ‘Scrap green tax and energy bills will fall, say Big Six’, http://www.telegraph.co.uk/finance/newsbysector/energy/10413396/Scrap-green-tax-and-energy-bills-will-fall-say-Big-Six.html

(14) = theguardian.com 23 Oct 2013 ‘David Cameron pledges to reverse 'green charges' on energy bills’,
http://www.theguardian.com/business/2013/oct/23/energy-industry-competition-test-cameron

(15) = Daily Mail 13 Oct 20134 ‘Red Ed's great green obsession... and the real reason YOUR bill has gone through the roof’, http://www.dailymail.co.uk/news/article-2456760/Red-Eds-great-green-obsession--real-reason-YOUR-gone-roof-The-hidden-subsidies-household-pays-year-thanks-Milibands-laws.html

(16) = theguardian.com 23 Oct 2013 ‘Green energy levies: how much do they cost and will they be cut?’, http://www.theguardian.com/money/2013/oct/23/green-energy-levies-how-much

(17) = Full Fact 23 Oct 2013 ‘How much do 'green taxes' add to energy bills?’,
http://fullfact.org/factchecks/energy_bills_green_taxes-29250

(18) = see (10) above

(19) = See (11) above

(20) = guardian 16 Oct 2013 ‘UK unemployment data: 0.7% average pay rise dwarfed by inflation’,
http://www.theguardian.com/business/2013/oct/16/uk-unemployment-average-pay-rise-inflation

(21) = see (6) above

(22) = BBC News 19 Oct 2011 ‘Rising energy bills causing fuel poverty deaths’,
http://www.bbc.co.uk/news/business-15359312

A sense of entitlement doesn’t mean wanting a job and a pension , Sir Roger Carr, it means unlimited greed at the expense of others

Many of the same people who are paying themselves  salaries from several hundred thousands to millions every year, plus the same again in bonuses, are condemning public sector employees for their ‘sense of entitlement’ in wanting jobs and pensions; and the unemployed for wanting to have enough money to eat. One of them is Sir Roger Carr, the head of the CBI (Confederation of British Industry).

Last month the Independent reported Sir Roger telling a conference sponsored by Barclays bank’s corporate division that

 “Most of us... have grown up in the West with a sense of entitlement – to jobs, opportunity, wealth,” he said. “What's happening all around us is a cultural cold shower, a move from entitlement, a recognition that things have changed, nothing is by right: we have to earn our place in a vigorously competitive world as individuals and as nations.”

adding that  “We need to encourage all those in positions of authority – government, opposition, regulators and commentators – to stop the demonisation of industry: banking, energy or defence.” (1)

Because of course it’s “demonisation” to place the blame for the crisis on the people who actually caused it, who demanded deregulation, got it and used it to commit fraud on a massive scale – often by buying and selling worthless ‘assets’ like collateral debt obligations and demanding a commission on each sale.

In Carr’s world, if regulators so much as criticise these industries now, never mind actually regulate them (little sign of that) that’s ‘demonisation’.

Demonising energy industry executives’ sense of entitlement

Since 2004 Sir Roger has been chairman of Centrica, which owns British Gas, of which Scottish Gas is a subsidiary.

According to Centrica’s website, Carr’s salary in 2010 was £470,000, up from £450,000 in 2009,  while in 2011 there was an average fall of 4.5% for everyone employed in the UK(far more for those made unemployed). Carr earned an absolute amount 18 times higher than median earnings in the UK of around £26,000 for most people in 2010 and 2011(2) – (4).

That’s only the pay for one of his four paid jobs, which, according to the CBI website, also include ‘deputy chairman & senior independent director of the Court of the Bank of England... senior advisor to KKR - the world's largest private equity company’ and ‘visiting fellow of Said Business School, University of Oxford’.

The Bank of England jobs seem to pay at least £150,000 a year based on the bank’s annual report, bringing Carr’s annual income to a minimum of £620,000 in 2010, or 23 times median earnings, without including his pay from KKR or the University of Oxford (5) .

Sam Laidlaw, the Chief Executive of Centrica, had a basic salary of £2 million in 2010. He also had shares and pension payments worth between £2 millionand £8million. That makes Laidlaw’s pay somewhere between 76 and 380 times median earnings in the UK (6) – (7).

I’d be surprised at his lack of self-consciousness in accusing the majority of people of ‘a sense of entitlement’ in these circumstances, but as the late American economist J.K Galbraith often pointed out, people making huge amounts of money often convince themselves this must be due to their own genius rather than to any unfairness or fault in the system they work in – and that anyone who has far less must have less due to their moral failings.

British Gas is one of the ‘big six’ British energy companies found to have continually increased it’s prices above rises in it’s costs, to have maintained price increases permanently after short term increases in the price of buying gas wholesale and to have failed to pass on anything like the full reduction in wholesale costs when prices fell.

A study by Manchester University found that‘In the first six months of 2004, retail electricity prices were on average £1.93 per 100 kilowatt hour higher than the wholesale measure. By 2010 this gap had more than doubled, to over £4. It narrowed in 2011 as a result of well-publicised cost increases in the wholesale market, but averaged £2.73 in summer – even before the price rises passed on to householders by the big six this autumn….. around 80% of the winter price spike was passed to the consumer price, but when wholesale markets fell in summer, retail prices moved far less – only around 50% of the amount… The data also shows that when wholesale prices suddenly spike – as they did in 2009 – consumer prices rapidly follow suit. However, prices fall back more slowly and to a lesser degree after the wholesale price spike abates.’ (8)

In short, profiteering on gas prices when the majority are suffering pay cuts in real terms and the poorest and pensioners are having to choose whether to heat their homes or eat.

Not only that, but an estimated 2,700 people in Britain will die this winter due to cold – due to being unable to afford to heat their homes(9).

That makes Sir Roger’s condemnation of the ‘sense of entitlement’ of others ring very hollow. In fact it makes it sound like the massive arrogance and smugness of someone who feels entitled to profit at everyone else’s expense – much like the hedge fund managers and the bank chief executives and government ministers.

It also makes his claim that the regulators are demonising the energy industry sound pretty far fetched ; and difficult to understand why a government which claims “we’re all in it together” thought he deserved to be given a knighthood in January this year.

Demonising the Defence Industry

Now I find myself itching at the fingertips to demonise the defence industry some, partly because it’s just so easy.

It has been arming murdering dictatorships like Saddam Hussein’s (in the 1970s and 1980s) and the Saudis (today).  If the dictators fail to pay then the Arms Export Credit Guaranteesystem means the taxpayer in the UK pays the bill, as they did after the 1991 war with Saddam.

Until well into the Arab Spring  British arms companies were also arming the dictatorships shooting protesters across the Arab world, with the approval of the Cameron government (10).

The defence industry gets government subsidies on a scale which most civilian manufacturing companies can only dream of – including the continuation of the construction of two of the largest aircraft carriers ever built by BAEsystems.

The excuse given by David Cameron is that the last government supposedly drafted the contracts in a way that would make cancellation more expensive than paying for both to be completed. Yet when the National Audit Office questioned this and requested documents on the cost and the terms of the contract, Cameron refused to let  them see any of them. When the NAO got hold of some documents, they found the cost has increased from £3.65 billion in 2007 to £6 billion today and probably £10 billion in the end. One will be ‘left in a state of “extended readiness”(i.e left to rust) when it’s finished in 2016, while the other won’t have any planes till 2020, when it’ll have just 6, then 12 in 2023(11) – (14).

That’s just one example of how the MoD subsidises arms companies for billions at taxpayers’ expense every year, using money that could provide services, fund research and development of new technologies and medicines, or provide loans to civilian industries that provide far more jobs.

Here are a couple of others.

The senior management of the banking, financial, energy and defence industries seem to think it’s clever to try to turn accusations of a ‘sense of entitlement’ back onto the majority. It lacks any credibility.

(1) = Independent 22 Nov 2011 ‘CBI president attacks 'sense of entitlement' ’, http://www.independent.co.uk/news/business/news/cbi-president-attacks-sense-of-entitlement-6265921.html

(2) = Centrica Annual Report and Accounts 2010 – Financials – Summary Reports -Directors' emoluments, pension benefits and interests in shares’ , http://www.centrica.com/files/reports/2010ar/index.asp?pageid=49

(3) = Guardian.co.uk 23 Nov 2011 ‘UK incomes fall 3.5% in real terms, ONS reveals’, http://www.guardian.co.uk/money/2011/nov/23/uk-household-earnings-fall?commentpage=last#end-of-comments(including people in part-time jobs, fall is 4.5% including inflation – a 0.5% rise minus 4.5% inflation)

(4) = Office for National Statistics ‘2011 Annual Survey of Hours and Earning -Median full-time gross annual earnings’, http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-and-earnings/ashe-results-2011/ashe-statistical-bulletin-2011.html#tab-Annual-earnings

(5) = Bank of England Annual Report 2010 - Remuneration of Governors, Directors and MPC members, http://www.bankofengland.co.uk/publications/annualreport/2010/renumeration2010.pdf (page 40 under sub-heading ‘Other senior executives’)

(6) = See (2) above

(7) = Centrica – Governance - Aligning rewards with results  - Remuneration mix', http://www.centrica.com/files/reports/2010ar/index.asp?pageid=54 (shows salary makes up only about 20% of executives total annual payments)

(8) = guardian.co.uk 02 Dec 2011 ‘Big six energy firms face fresh accusations of profiteering’, http://www.guardian.co.uk/business/2011/dec/02/energy-firms-accusations-profiteering-electricity

(9) = guardian.co.uk 19 Oct 2011 ‘Fuel poverty 'will claim 2,700 victims this winter'’, http://www.guardian.co.uk/money/2011/oct/19/fuel-poverty-2700-victims-winter

(10) = guardian.co.uk 21 Jul 2011 ‘MP attacks Hague over review of arms sales to Arab regimes’, http://www.guardian.co.uk/politics/2011/jul/21/uk-arms-sales-middle-east , ‘Senior MPs have delivered a severe rebuke to the government over its approval of the sale of a wide range of arms, including sniper rifles, machine guns and "crowd control goods" to countries in the Middle East and north Africa……….Britain supplied the weapons despite official guidelines stating that exports of equipment that could be used for internal repression must be blocked. In a damning report earlier this year, the Commons arms export controls committees demanded an urgent review of exports to "authoritarian regimes worldwide"………..They referred specifically to the Mubarak and Gaddafi regimes in Egypt and Libya, to Bahrain, Syria, Yemen and Saudi Arabia. Observers said military trucks sent by the Saudis to help suppress demonstrations in Bahrain were British.’

(11) = Guardian 07 Jul 2011 ‘National Audit Office challenges £6bn project to build aircraft carriers’,http://www.guardian.co.uk/uk/2011/jul/07/nao-report-aircraft-carriers-navy

(12) = guardian.co.uk  11 Jul 2011 ‘David Cameron 'prevented independent watchdog seeing aircraft carrier papers'’,http://www.guardian.co.uk/uk/2011/jul/11/david-cameron-aircraft-carriers

(13) = Channel 4 News 07 Jul 2011 ‘Guardian 07 Jul 2011 ‘Full fact check : the real cost of cancelling aircraft carriers’http://blogs.channel4.com/factcheck/factcheck-the-real-cost-of-cancelling-aircraft-carriers/7210; ‘In 2007, the Labour government decided to build two 65,000-ton Queen Elizabeth-class aircraft carriers at an estimated cost of £3.65bn….But since then, costs have spiralled dramatically, with the projected outlay now thought to be £6.24bn for just one fully operational carrier, the Queen Elizabeth…..The second ship – the Prince of Wales – will be built, but left in a state of “extended readiness”, meaning that fighter planes won’t be able to launch from or land on its deck…..It gets worse: the NAOnow thinks the eventual bill for the programme “will significantly exceed £10 billion”.’

(14) = Guardian 29 Nov 2011 ‘MPs warn Royal Navy's carriers will be costly, late, and of limited use’, http://www.guardian.co.uk/uk/2011/nov/29/royal-navy-carriers-impaired-use-public-accounts-committee ; government admits one carrier to be mothballed on construction in 2016, one to have no planes on it till 2020, when it will have only 6, raised to 12 in 2023

More on the oil motive for NATO's intervention in Libya

The difference between the Gaddafi government’s oil policies and those that oil importing governments (such as NATO countries) and companies based in them would prefer are one of the main motives for NATO’s military intervention in Libya – and certainly more of a real motive than protection of civilians.

(A previous post covered some of this and the parallels between US intervention in Libya and in Iran and Venezuela – all primarily due to disputes over oil profits and control of production levels.)

Libya experts like Geoff Simons and Ronald Bruce St. John have described the Gaddafi government’s oil policy as one of playing foreign oil companies off against one another to ensure the best returns for Libya, in deals that get the country the investment and expertise it requires for oil exploration and production. From the beginning Gaddafi’s government used the threat of possible nationalisation in negotiations – a threat that has remained credible as they have sometimes carried it out (e.g in September 1973). (1) – (2).

St. John wrote that ‘In retrospect it seems obvious that the RCC [Revolutionary Command Council including Gaddafi] was determined from the start to reduce oil production to conserve supplies, increase oil revenues by maximising the price, develop upstream and downstream capabilities, and use oil revenues to diversify the economy’ (3).

(‘Upstream’ refers to exploration to find oil and production (i.e extraction) , ‘downstream’ usually means storage, refining e.g oil into petrol, distribution and sale.)

While the details of Gaddafi’s policy have varied, the key aims have remained the same. These aims have often conflicted with the aims of oil importing countries (including all NATO countries) and the oil companies based in them. In his book ‘Fuel on the Fire’ Greg Muttit quotes a report by the US Center for Strategic and International Studies, written by former members of the CIA, US government and American oil companies in 2000. They concluded that, with the increase in demand from developing economies like China, India and Brazil, the ideal scenario from the point of view of oil importers and oil companies based in them would be a 50% increase in production by 2020 to allow oil companies to profit fully from the growing demand and to maintain oil prices at a level low enough to allow continued economic growth in oil importing countries (4).

It’s also likely that Libya developing it’s own refineries (and it’s acquisition of the European oil refining firm Tamoil in 1986 (5)) cut into profits the oil companies could make from refining oil and selling the more valuable final products such as petrol back to Libya, as they do in some oil rich countries (e.g Nigeria ) (6).

The three countries who the CSIS report said would have to maximise production to achieve the 50% increase were Iraq, Iran and Libya – whose production levels were all limited by US government and/or UN sanctions (7). Lifting these sanctions without getting governments who had defied the US either replaced or made to make big concessions would result in huge loss of face and influence for the US government. So the US and it’s allies invaded Iraq and got contracts with their oil companies negotiated while the occupation and insurgency continued, forcing the Iraqi government to negotiate from a position of weakness. They’ve imposed sanctions on Iran and continue to threaten possible military action against it; and they’ve imposed Iraq style sanctions on and carried out air strikes in Libya.

The overthrow of Saddam Hussein failed to promote democracy in the Arab world, but it certainly promoted the interests of US and British oil companies. They got contracts on very favourable terms with the government of Iraq, while hundreds of thousands of their troops and mercenaries were still there (8) – (9). A week after Saddam Hussein was captured by US forces Gaddafi agreed to inspections of it’s nuclear facilities which would be accompanied by the return of US oil companies to Libya, later followed by BP (10) – (12).

While Gaddafi had allowed western oil companies contracts in Libya before the current fighting he was also haggling for a higher share of oil profits from them and hinting at the possibility of nationalisation if they refused. American oil companies became worried he might kick them out (13) – (14).

Oil profits, prices and supplies are one of the real motives for NATO’s intervention in Libya.

(1) = Ronald Bruce St. John (2008) ‘Libya From Colony to Independence’,  Oneworld Paperback/Oxford, especially Chapter 8, p145 -148; Chapter 7, p174 – 177;Chapter 9, p250-254, p 260

(2) = Geoff Simons (1996) ‘Libya the struggle for survival’ 2^nd edition, MacMillan, London, 1996, paperback

(3) = St. John (see 1 above), Chapter 6, page 145

(4) = Center for Strategic International Studies  (2000) ‘The geopolitics of energy into the 21st century’ cited by Gregg Muttitt (2011) ‘Fuel on the fire’, The Bodley Head, London, 2011; chapter 3, pages 35 and 370

(5) = St. John (see 1 above), Chapter7, page 176

(6) = BBC News 6 Jul 2010 ‘China to build $8bn oil refinery in Nigeria’, http://www.bbc.co.uk/news/10527308

(7) = See (4) above

(8) = Gregg Muttitt (2011) ‘Fuel on the fire’, The Bodley Head, London, 2011

(9) = AP 1 Jul 2009 ‘Iraqi government approves BP oil field offer’, http://www.independent.co.uk/news/business/news/iraqi-government-approves-bp-oil-field-offer-1727287.html

(10) = Jordan Times 23 Dec 2003 ‘Libya could provide intelligence bonanza’,http://www.aljazeerah.info/News%20archives/2003%20News%20archives/December/23n/Libya%20could%20provide%20intelligence%20bonanza.htm

(11) = See sources (55) to (59) on this link

(12) = CNN Fortune 28 Jun 2004 ‘Libya's Black Gold Rush With sanctions lifted, Big Oil is lining up to do business with Qaddafi’, http://money.cnn.com/magazines/fortune/fortune_archive/2004/06/28/374397/index.htm

(13) = CNBC 03 Mar 2009 ‘Libya Wants Greater Share of Its Oil Revenue’, http://www.cnbc.com/id/29494495

(14) = Forbes Magazine 01 Jan 2009 ‘Is Libya Going To Boot U.S. Oil Companies?’,http://www.forbes.com/2009/01/22/libya-gaddafi-oil-biz-energy-cx_ch_0122libya.html

Libya : Why oil profits are the common factor behind calls for military intervention in Iraq, Libya and Venezuela

There’s a second similarity between current calls for military intervention in Libya and the Iraq war, apart from false claims made by defectors to try to encourage a US invasion – a government the US and British governments want rid of because it’s getting in the way of maximising their firms’ oil profits.

After the 1991 war Saddam stopped giving oil contracts to British or American oil companies, switching to giving them to the French, Russians and Chinese instead – which is why the first two countries supported war on Iraq while the last three opposed it (1).

At the same time as condemning the brutal, murdering, torturing dictator of Iraq (who they’d supported, funded and armed even after the gassing of Halabja) the US and British governments kept backing murdering torturing dictators from the Saudi monarchy to Mubarak in Egypt and Karimov in Uzbekistan, strongly suggesting the issue was oil and not democracy, torture or Saddam killing his own people (especially as they continued killing and torturing many of them even after he was overthrown).

The US Energy Information Agency says Libya has Africa’s largest proven oil reserves and that “most analysts agree that the country is still under-explored” - i.e there's a lot more to be discovered. BP's annual statistical energy review 2010 found Libya has proven reserves of 44 billion barrels of oil - the 10th largest in the world.

Western governments were reconciled with Gaddafi’s government and approving arms sales to it since he agreed to pay reparations to the families of those people killed in the Lockerbie bombing and began giving them oil contracts again from 2004 (with US firms going back five years before BP) (2).

However Gaddafi has been less generous on the share of the profits than they’d hoped, having demanded an increasing share of those profits and even making noises about possible nationalisation, leaving American oil firms worried he might kick them out altogether (3) – (4).

Similar actions by Mohammed Mossadeq, democratically elected President of Iran, in 1953, resulted in the British and American governments sending CIA and MI6 agents to organise a military coup which overthrew him and installed the Shah’s dictatorship (5) – (7).

When Hugo Chavez was elected President of Venezuela and set out plans to make US and other foreign oil firms operating in the country pay higher shares of profits, the US government backed a coup attempt against him too, in 2002, but it failed (8) – (10).

So those actions by Gaddafi are much more likely to be the reason the US and British and other European governments want rid of him than him ordering his forces to kill his own people.

This would also explain why Hague and Clinton find Gaddafi’s actions “horrifying” and want a UN resolution against him, while they were merely “deeply concerned” about Mubarak having hundreds of his own people killed – and ditto for the monarch of Bahrain ordering democracy protesters shot - and having the mourners at their funerals shot too. Clinton even said “We call on restraint from the government, (and) to keep its commitment to hold accountable those who have utilized excessive force” as though the monarch of Bahrain had no responsibility for it. The killings in Bahrain haven’t stopped any more than they have in Libya (11) – (17). (Hague seems to dutifully parrot whatever Clinton says almost word for word)

(1) = Washington Post 15 Sep 2002, 'In Iraqi War Scenario, Oil Is Key Issue : U.S. Drillers Eye Huge Petroleum Pool', http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&contentId=A18841-2002Sep14 ; ‘A U.S.-led ouster of Iraqi President Saddam Hussein could open a bonanza for American oil companies long banished from Iraq, scuttling oil deals between Baghdad and Russia, France and other countries, and reshuffling world petroleum markets, according to industry officials and leaders of the Iraqi opposition...."It's pretty straightforward," said former CIA director R. James Woolsey, who has been one of the leading advocates of forcing Hussein from power. "France and Russia have oil companies and interests in Iraq. They should be told that if they are of assistance in moving Iraq toward decent government, we'll do the best we can to ensure that the new government and American companies work closely with them." But he added: "If they throw in their lot with Saddam, it will be difficult to the point of impossible to persuade the new Iraqi government to work with them.’

(2) = CNN Fortune 28 Jun 2004 ‘Libya's Black Gold Rush With sanctions lifted, Big Oil is lining up to do business with Qaddafi’, http://money.cnn.com/magazines/fortune/fortune_archive/2004/06/28/374397/index.htm

(3) = CNBC 03 Mar 2009 ‘Libya Wants Greater Share of Its Oil Revenue’,http://www.cnbc.com/id/29494495

(4) = Forbes Magazine 01 Jan 2009 ‘Is Libya Going To Boot U.S. Oil Companies?’,http://www.forbes.com/2009/01/22/libya-gaddafi-oil-biz-energy-cx_ch_0122libya.html

(5) = Pollack, Kenneth M.(2004), ‘The Persian Puzzle', Random House, New York, 2005 paperback edition - pages 27-140

(6) = Curtis, Mark (1995), ‘The Ambiguities of Power : British Foreign Policy since 1945', Zed Books, London & New York, 1995 paperback edition - pages 87-96

(7) = Takeyh, Ray (2006), ‘Hidden Iran', Times Books , New York, 2006 - pages 83-96

(8) = Observer 21 April 2002 ‘Venezuela coup linked to Bush team’,http://www.guardian.co.uk/world/2002/apr/21/usa.venezuela

(9) = BBC News 11 Oct 2004 ‘Venezuela raises oil drilling tax’,http://news.bbc.co.uk/1/hi/world/americas/3732224.stm

(10) = Gott, Richard (2005) , ‘Hugo Chavez and the Bolivarian Revolution’, Verso, London & New York, 2005

(11) = BBC News 28 Jan 2011 ‘Hillary Clinton 'deeply concerned' about events in Egypt’,http://www.bbc.co.uk/news/world-africa-12311196

(12) = DipNote US Department of State Official blog 21 Feb 2011 ‘Secretary Clinton: “Libya Has a Responsibility To Respect the Universal Rights of the People”, http://blogs.state.gov/index.php/site/entry/clinton_libya_statement

(13) = BBC News 19 Feb 2011 ‘Hague condemns violence in Libya, Bahrain and Yemen’,http://www.bbc.co.uk/news/uk-12514696

(14) = Human Rights Watch 8 Feb 2011 ‘Egypt: Documented Death Toll From Protests Tops 300’,http://www.hrw.org/en/news/2011/02/08/egypt-documented-death-toll-protests-tops-300

(15) = LA Times 19 Feb 2011 ‘BAHRAIN: Protesters shot as government seeks to smother protests [Video]’, http://latimesblogs.latimes.com/babylonbeyond/2011/02/bahrain-video-protest-khalifa-violence-shoot.html

(16) = BBC News 15 Feb 2011 ‘Bahrain man 'shot dead' at protester's funeral’, http://www.bbc.co.uk/news/world-middle-east-12463600

(17) = MSNBC ‘Stunned U.S. urges Bahrain to show 'restraint' after bloody crackdown’,http://www.msnbc.msn.com/id/41638606/ns/world_news-mideastn_africa/ ; ‘Clinton said she expressed her "deep concern" in a telephone call with Bahrain's Foreign Minister Sheikh Khaled bin Ahmed al-Khalifa and emphasized that violence should not occur on Friday, when many in Bahrain may attend funerals of those killed or prayer services…"Bahrain is a friend and an ally and has been for many years," Clinton told reporters. "We call on restraint from the government, (and) to keep its commitment to hold accountable those who have utilized excessive force."

Craig Murray - Berlusconi's cut

by Craig Murray (this is copied from Craig's blog as comments aren't working on his at the moment)

A very senior diplomatic source told me yesterday that Berlusconi is frantic lest Gadaffi falls and the channels are revealed by which Berlusconi gets a cut on the huge amounts of Libyan oil and gas lifted to Italy. Just at the moment that would be too much even for Berlusconi to survive.

This morning I see the Italian foreign minister is warning 300.000 Libyan refugees will fly to Europe if Gadaffi falls - as though there will be none if he stays. I have checked with other diplomatic sources, and they confirm that Italy is using the refugee warning to argue that Europe should back Gadaffi, and not impose sanctions. That point is not coming over in the mainstream media.

This blog will be back up completely revamped next week. But I thought this snippet was important. If someone wants to repost it somewhere comments are possible...