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Some Oil Producing Nations Agree to Cut Production 10%

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Some Oil Producing Nations Agree to Cut Production 10%
The Baytown Exxon gas refinery, Baytown, Texas is one of the largest oil-producing facilities in the U.S. Benjamin Lowy / Reportage by Getty Images

Oil-producing nations led by Russia, the U.S. and Saudi Arabia reached an unprecedented agreement on Sunday to cut oil production by 9.7 million barrels per day, or nearly 10 percent of what is currently produced, as The New York Times reported.


Since the COVID-19 pandemic has triggered lockdowns around the world, the demand for oil has plummeted nearly 35 percent, causing huge surpluses in oil supply and deep drops in the price of crude oil, which fell to 18-year lows. The new agreement to slash oil production starting in May is twice the size of the cuts agreed to during the global financial crisis 12 years ago and signals a truce in a growing price war between Russia and OPEC's de facto leader, Saudi Arabia, according to The Guardian.

The alliance, called OPEC+, includes OPEC members as well as non-members like Russia and Mexico, but not the U.S. The deal was struck after marathon negotiations and concessions made to Mexico, which held up the deal. Mexico opposed the amount it was being asked to cut, but finally agreed to cut 100,000 barrels per day, instead of its initial allocation of 400,000 barrels per day, according to NBC News.

The deal means oil producers will drop their production in May and June and then steadily increase it again until the deal expires in two years. That also means that most Americans will actually see the price of gasoline go up, leaving some to wonder why a U.S. president would broker a deal that will make Americans pay more at the pump, according to POLITICO. It seems Trump was spurred by the U.S. shale oil industry, which asked for help after oil prices dropped to an 18-year low. The industry has been amongst his most loyal supporters.

"Does it save shale? Not necessarily," said Randolph Bell, director of the Atlantic Council's Global Energy Center, as POLITICO reported. "But it's a really good thing for his politics domestically."

"Unprecedented measures for unprecedented times," Ed Morse, Citi's global head of commodities, wrote in a note to clients on Sunday, as NBC News reported. Morse added in his note that the cut will have a significant impact in the second half of the year and influence prices up to the mid-$40s by year-end.

The price hike seems counterintuitive for Trump who tweeted that on March 9 it was good for consumers that gasoline prices were going down. Three days later, he told reporters, "Frankly that's like a big tax cut, not a little tax cut for the consumer. So there's something about that that I like," as Bloomberg reported. On March 30, he reversed course, telling Fox news, "I never thought I would be saying this: Maybe we have to have an oil increase," as Axios reported.

On Twitter, Nobel Prize-winning economist Paul Krugman questioned why Trump would help the oil industry but not postal workers. Krugman speculates that it is because the oil and gas industry gave 88 percent of its contributions to Republicans while the postal service only gave 12 percent to Republicans. Furthermore, Krugman noted that Trump has shown affinity for the autocrats who run Russia and Saudi Arabia.

On Friday, the world's 20 largest economies held a separate G-20 virtual meeting to discuss the world's oil markets, raising speculation that even more cuts to production may be on the horizon. That meeting, which included countries like Canada, which produce oil but are not in OPEC+, ended without any new commitments, as NPR reported.

OPEC+ has asked non-member nations like Brazil, Canada, Norway and the U.S. to join the deal. If that happens, it could mean a cut in 20 million barrels of oil per day, according to The Guardian.

One caveat to the deal is there is not actually an international enforcement agency that regulates oil production. Even though a deal has been reached, cheating on oil production limits is common, according to The New York Times.

Many analysts were underwhelmed by the deal.

"The OPEC+ deal, although well-meaning in intent, wholeheartedly fail[s] to address the supply/demand basis confronting the world," said Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, as CNN reported. "It can at best only put a floor under oil prices at their March lows."

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In early October, Britain's Prince William teamed up with conservationist David Attenborough to launch the Earthshot Prize, a new award for environmentalist innovation. The Earthshot brands itself the "most prestigious global environment prize in history."

The world-famous wildlife broadcaster and his royal sidekick appear to have played an active role in the prize's inception, and media coverage has focused largely on them as the faces of the campaign.

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With more and more global attention on the climate crisis, celebrity endorsement of environmental causes has become more common. But why do environmental causes recruit famous faces for their campaigns? And what difference can it make?

'Count Me In'

"We need celebrities to reach those people who we cannot reach ourselves," says Sarah Marchildon from the United Nations Climate Change secretariat (UNFCCC) in Bonn, Germany.

Marchildon is a proponent of the use of celebrities to raise awareness of environmental causes. In addition to promoting a selection of climate ambassadors who represent the UN on sustainability issues, Marchildon's team has produced videos with well-known narrators from the entertainment world: among them, Morgan Freeman and Mark Ruffalo.

"We choose celebrities who have a lifestyle where they are already talking about these issues," Marchildon explains.

"Sometimes they reach out to us themselves, as David Attenborough did recently. And then they can promote the videos on their own social channels which reach more people than we do — for example, if they have 20 million followers and we have 750,000."

Environmental groups focused on their own domestic markets are also taking this approach. One Germany-based organization that uses celebrities in campaigns is the German Zero NGO. Set up in 2019, it advocates for a climate-neutral Germany by 2035.

German Zero produced a video in March 2020 introducing the campaign with "66 celebrities" that supported the campaign, among them Deutschland 83 actor Jonas Nay and former professional footballer Andre Schürrle. They solicit support as well as financial contributions from viewers.

"Count me in," they say, pointing toward the camera. "You too?"

"We are incredibly grateful for the VIPs in our videos," says German Zero spokeswoman Eva-Maria McCormack.

Assessing Success Is Complex

But quantifying the effectiveness of celebrity endorsement of campaigns is not a straightforward process.

"In order to measure effectiveness, first of all you need to define what is meant by success," says Alegria Olmedo, a researcher at the Zoology Department at the University of Oxford.

Olmedo is the author of a study looking at a range of campaigns concerning pangolin consumption, fronted by local and Western celebrities, in Vietnam and China. But she says her biggest stumbling block was knowing how to measure a campaign's success.

"You need a clear theory of change," explains Olmedo. "Have the celebrities actually helped in achieving the campaign's goals? And how do you quantify these goals? Maybe it is increased donations or higher engagement with a cause."

A popular campaign in China in recent years saw famous chefs Zhao Danian and Shu Yi pledge to abstain from cooking endangered wildlife. While the pledge achieved widespread recognition, both Olmedo and Marchildon say it's difficult to know whether it made any difference to people's actions.

"In life we see a thousand messages every day, and it is very hard to pinpoint whether one campaign has actually made a difference in people's behavior," she explains.

Awareness Is Not Enough

Many campaigns that feature celebrities focus on raising awareness rather than on concrete action — which, for researcher Olmedo, raises a further problem in identifying effectiveness.

"Reach should never be a success outcome," she says. "Many campaigns say they reached a certain number of people on social media. But there has been a lot of research that shows that simply giving people information does not mean they are actually going to remember it or act upon it."

But anecdotal evidence from campaigns may suggest reach can make an active difference.

"Our VIP video is by far the most watched on our social media channels," McCormack from German Zero says. "People respond to it very directly. A lot of volunteers of all ages heard about us through that video."

However, some marketing studies have shown that celebrity endorsement of a cause or product can distract from the issue itself, as people only remember the person, not the content of what they were saying.

Choosing the Right Celebrity

Celebrity choice is also very important. Campaigns that use famous faces are often aiming to appeal to members of the public who do not necessarily follow green issues.

For certain campaigns with clear target audiences, choosing a climate scientist or well-known environmentalist rather than a celebrity could be more appealing — Attenborough is a classic example. For others, images and videos involving cute animals may be more likely to get a message heard than attaching a famous face.

"We choose celebrities who have a lifestyle where they are already talking about these issues," says Marchildon from the UN. "You need figures with credibility."

McCormack cites the example of Katharine Hayhoe, an environmental scientist who is also an evangelical Christian. In the southern United States, Hayhoe has become a celebrity in her own right, appealing to an audience that might not normally be interested in the messages of climate scientists.

But as soon as you get a celebrity involved, campaigns also put themselves at risk of the whims of that celebrity. Prince William and younger members of the royal family have come under fire in recent years for alleged hypocrisy for their backing of environmental campaigns while simultaneously using private jets to fly around the world.

But Does It Really Work?

While environmental campaigns hope that endorsement from well-known figures can boost a campaign, there is little research to back this up.

"The biggest finding [from my study] was that we were unable to produce any evidence that shows that celebrity endorsement of environmental causes makes any difference," says Olmedo.

This will come as a blow to many campaigns that have invested time and effort into relationships with celebrity ambassadors. But for many, the personal message that many celebrities offer in videos like that produced by German Zero and campaigns like the Earthshot Prize are what counts.

The research may not prove this conclusively — but if the public believes a person they respect deeply personally cares about an important issue, they are perhaps more likely to care too.

"I personally believe in the power this can have," says Marchildon. "And if having a celebrity involved can get a single 16-year-old future leader thinking about environmentalist issues — that is enough."

Reposted with permission from DW.

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