A few words about professor Rwengabo’s last report, or the Bayesian rectangle of reality

My editorial, from Amplepuis, France

I am in one of those moments when things to write about just pop up around me and I have trouble to pull it together coherently. No, I am not talking about Harvey, nor about Irma, I am not even talking about Donald (I’m Polish, so I can have at least two Donalds to talk about). I am not even talking about Angela, Emannuel or Theresa. I am talking about things that pop up close to me, kind of in my own existence. I am currently staying, for a few days, in Amplepuis, France, visiting the neighbourhood as well, the city of Lyon included. Some of you might remember that I used to write about those places, in the Spring, this year, in the context of local power systems based on renewable energies. As I am here, I am like ‘What can I do first? Talk to the mayor, see the nearest spot for locating a solar farm or talk to a local business person about my idea of the Wasun, that local currency based on energy?’. On the other hand, yet in somehow related a fairy tale (life is made of fairy tales, did you know?), I received, yesterday, via the Research Gate community, an invitation from Sebastiano Rwengabo, a researcher whose work I had already commented on (see ‘Nation building’ ), to review some of his most recent work, namely a technical report entitled ‘Efficiency, Sustainability, and Exit Strategy in the Oil and Gas Sector: Lessons from Ecuador for Uganda’(Rwengabo 2017[1]). Professor Rwengabo writes quite interestingly and he likes diving into quite broad a range of topics, just like me. As his paper basically treats the issues I am treating now, i.e. energy and what local communities can do about it, I am taking on commenting a bit. By the way, just for you, my readers, to stay hands-on with that topic, you can download the corresponding content either from the source location of the paper at Research Gate or from my own archive at my Word Press site “discoversocialsciences.com”.

Apparently, professor Rwengabo’s paper treats matters kind of in direct opposition to my views. I am really about renewable energies, and the report I am commenting on is about how to make oil and gas sectors sustainable. Have you ever tried to visualize yourself, kind of looking at yourself from outside? I mean just as a gentle mindfuck, nothing mystical in the lines of ‘astral journey’. Well, I did try, and I keep repeating the experience, and this is so funny! I can see that individual, selfish by necessity and altruistic by ambition, kind of lost in his thoughts in the middle of a wild stream of life, which the individual in question dreams about swimming but is afraid of hitting some rocks on the bottom. Same thing about ideas: it is really enriching an experience to see my ideas from the perspective of someone else’s ideas.

What Sebastiano Rwengabo seems to write about is a smart way of something called, in social sciences, the ‘resource curse’, which, in turn, is a special case of something even more broadly known as the ‘Dutch disease’. I am good at writing, and I am curious by nature, so I am doing a lot of science writing. If my mutually mirroring blogs start bringing me some money, in the future, I will have positive feedback on science writing, and so I am very likely to do even more science writing and even more intensely. I might be right, and I might be wrong, as well. As I will be doing science writing, I could miss an occasion to start a permaculture farm with one of my cousins, or to start a HORECA business with a friend etc. Can you see the point? When we have some resource, and this resource brings us pennies, we focus on having pennies out of it, and frequently put aside other opportunities, even if their opportunity cost is quite substantial. Meet Dutch disease, the ugly and narrow-minded twin brother of David Ricardo’s comparative advantage. When the resource this ugly brother is focusing on is a natural and exhaustible one, like natural oil and gas, but also gold, diamonds, or timber, we enter the world of the resource curse. Any project, alternative to exploiting those resources, seems just too complicated and too risky to start, and so we don’t start any such project. It all seems to go well until we discover that it does so because we have really a global market. A global market is bigger than us, by definition, because we, as a nation, are local. A global market makes us, the most frequently, price takers rather than price makers. Sometime later, we discover that we depend crucially on even slight a flinch in the global prices of what we are exporting. Global prices go up by 1%, and our government can build another railroad or another network of hospitals. The same prices go down by 1%, in the world, and we, as a nation, are scraping feverishly the bottom of the kettle just in order to survive. This is why professor Rwengabo starts the abstract of his report with the following statement: ‘Sustainable management of the oil and gas sector is one of the greatest yet elusive ideals facing petroleum-rich countries. Flattered by petro-dollars, many oil-rich economies have plundered their opportunities and wasted valuable time by relegating other equally important sectors and sometimes spending oil revenues unproductively’.

Ecuador and Uganda are perfect examples of the resource curse. Their challenge consists in overcoming the Dutch disease, calm down the fever, and possibly develop some antibodies. Now, I am doing something I love doing with the texts I am reviewing: I am peering through the kitchen door, i.e. I am looking at what is at the end. This is because I have that intuition in the lines of transformative grammar, namely that the main body of writing is a surface structure, which kinds of decorates a deep semantic structure. I am curious by nature, I have inside me that curious ape, and that happy bulldog, and they both like looking places when other people don’t. At the end of professor Rwengabo’s report, I mostly can find annexes. There are seven of them. Going up from the end towards the beginning of the story, I first discover annex VII, entitled ‘About the OGE&EE Project’. There is a project in the game, thus, and it seemed to need $1,2 billion but collected only $620 million so far. Logically, people involved in the OGE&EE project – which connects power plants using associated gas as their fuel, to the integrated oil industry electric grid, and then to the national electric grid, paving the way to optimising excess hydro-electric power during off-peak hours – are willing to raise the missing $600 million. Good reason to be interested in the thing.

Going upstream, I see annex VI, which summarizes the standpoint, from the part of the World Bank, about the flaring of associated gas. Associated gas is the natural gas that gets liberated on the occasion of mining something else, usually natural oil. As that something else is being mined, the associated gas is essentially a nuisance, so it is being flared, or burnt in situ, which is just stupid on the long run – this energy being wasted and a dire environmental threat – but kind of looks like a good idea at the moment. The technological challenge consists in stopping the flaring, and starting to do something sensible about this associated gas. Good, so I sniff my way up to annex V, which gives a short account of international arbitrage between Occidental Exploration and Production Company, and the Republic of Ecuador. As all such cases, this one raises, on the side of the government involved, the essential question in the lines of ‘Who the hell signed that stupid contract, 10 years ago?’. Once again, I can see a nice case of short-term opposed to its wiser brother, the long-term thinking. We are passing from business and technology to the institutional context. I pass to annex IV, and I can spot an even different facet of the situation: the Yasuni National Park in Ecuador. The place is one of the most biologically diverse ones on Earth, but has a tiny little problem: it hosts, underneath, some 800 million barrels of crude oil, which, in turn, makes 20% of Ecuador’s reserves. Embarrassing.

Annex III moves the geographical focus to Uganda, and lists the major institutional changes in the national petroleum sector, and it kind of broadens the view offered by annex II, where the reader can find and extract from the law, which phrases the legal restrictions on Gas Flaring in Uganda. This, in turn, is preceded by annex I, which gives a post-2006 timeline of major events in the oil & gas sector in Uganda. Thus, if I were to judge by the logical structure of the annexes to the report strictly spoken, I can see the following: broad view of the institutional context in Uganda, combined with a more casuistic approach to selected issues in Ecuador, kind of exemplary cases, and it all leads to studying a specific technological challenge, and a specific project that attempts to tackle the challenge. Logical. What’s the connexion with matters that I have been treating in my updates over the last weeks, those Bayesian things and that fundamental logic of the Bitcoin by Satoshi Nakamoto? Well, any of the events that professor Rwengabo refers to in his annexes, is like a ‘W’ ball thrown into the universe described as a Bayesian rectangle (Bayes, Price 1763[2]): it sets the stage for other developments. We have a big, fat oil & gas sector in the economy? Well, our world of probabilities will necessarily cluster around it. We have a beautiful, uniquely precious natural park with huge oil reserves underneath? This is another ball thrown into the Bayesian rectangle of reality, and it sets the stage for future contingencies. There is a lot of the Bitcoin logic in those issues, too: whatever we try to do, there is something dangerous catching up on us, from behind, like adverse legal action, egoistic corporate interests etc. Thus, the sensible thing to do is to define our spectrum of targeted states, assess the probability of achieving what we want to achieve, and to build a network of ‘honest nodes’, possibly impregnated against external abuse.

[1] Rwengabo, S., 2017, Efficiency, Sustainability, and Exit Strategy in the Oil and Gas Sector: Lessons from Ecuador for Uganda, ACODE Policy Research Series No.81, 2017, Kampala, ACODE, ISBN: 978-9970-567-01-0

[2] Mr. Bayes, and Mr Price. “An essay towards solving a problem in the doctrine of chances. by the late rev. mr. bayes, frs communicated by mr. price, in a letter to john canton, amfrs.” Philosophical Transactions (1683-1775) (1763): 370-418

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s