Penalties, corruption and legislation are failing to deter harmful gas flaring in Nigeria, study shows

Peer-Reviewed Publication

UNIVERSITY OF EXETER

Legislation is failing to end gas flaring in Nigeria which is harming the environment and people’s health, a new study warns.

Legal penalties for oil companies are ineffective and are not weighty enough to be a deterrent, making it cheaper and easier to pollute air and water.

An expert has warned legislative loopholes that give the government discretionary powers to grant gas flaring permits corruption and can be abused by the oil companies.

Nigeria currently contributes significantly to the total amount of greenhouse gases produced in Africa through emissions from its oil and gas industry in the Niger Delta.

The study, by Dr Urenmisan Afinotan from the University of Exeter Law School, shows how efforts to stop gas flaring in the Niger Delta from the 1960s till date have been superficial because they include weak penalties, convenient loopholes and the granting of wide discretion to the Minister of Petroleum and seem to be driven by economic gains and not climate change considerations.

Judicial attempts at combating climate change through the stopping of gas flaring have yielded better results. However, the judicial posture of the courts in Nigeria still seem to favour the economic interests of the government over climate change considerations.

Nigeria has legislative, regulatory and judicial measures in place to achieve its international commitments on combating and mitigating climate change. However, until very recently, there was no specific legal framework covering climate change in Nigeria. The recently enacted Nigeria Climate Change Act (December 2021) is still too nascent to assess its effectiveness in mitigating climate change in Nigeria. 

Gas flares are produced when the extra gases from crude oil drilling and production processes are burned off into the atmosphere. Nigeria is a significant contributor to approximately 65 per cent of the total amount of gas flared globally, flaring about 60 per cent of its associated gas, effectively placing it as the country with the worst record of gas flaring in the world.

There have been a few regulatory attempts to stop gas flaring in the Niger Delta communities since 1969. Most recently the Petroleum Industry Act (PIA), 2021) said oil companies with oil prospecting licences and leases should submit a viable feasibility study for associated gas utilization within five years of commencing operations. This failed to discourage gas flaring before the preparation of the feasibility study or impose penalties for gas flaring before and after submission of the study. This invariably meant that oil companies were free to flare gas, without any penalties, for five years.

The Associated Gas Re-Injection Act (AGRA) gives the Minister of Petroleum discretion to permit the flaring of gas where they believe re-injection or utilization of the gas is unfeasible. This left the door open for the oil companies to corruptly obtain gas flaring permits and licences.

The Associated Gas Re-Injection (Continued Flaring of Gas) Regulations (AGRA Regulations) permitted gas flaring under certain conditions and prescribed absurdly low fines that made it more economically viable for the oil companies to flare associated gas rather than re-injecting it or utilizing it. These conditions or exemptions automatically exempted about 86 out of a possible 155 oil fields owned by the multinational oil companies, from regulations or the penalties. The AGRA Regulations failed to have any impact in the cessation of gas flaring and utilization or re-injection of gas.

Even though it has been reported that the percentage of gas flared in Nigeria has reduced since 2002 and now stands at 10 percent as of 2018 there are reports of new gas flaring sites being constructed by oil companies like Shell, on oil fields in the Niger Delta since 2013.

Nigeria’s new National Gas Policy (NGP) aimed to end gas flaring by the year 2030. Associated regulation provides a legal framework for the protection of the Niger Delta communities and the broader Nigerian environment from the deleterious effects of gas flaring and climate change. It also has the potential to help derive social and economic benefits from associated gas which would normally be flared and wasted during oil production. The regulations empower the Federal Government to appropriate all flare gas held by oil producing companies that hold oil prospecting licences, leases and marginal fields.

Dr Afinotan said: “A new gas flaring commercialization scheme could drastically reduce gas flaring in the Niger Delta and generate gas revenues for the Federal Government.

“It is concerning that the discretionary power of the Minister to grant permits to oil companies to flare gas, as was present in the AGRA, has also been retained in the 2018 Flare Gas Regulations. Such discretionary powers are capable of being corrupted or exploited by the oil companies with their financial power and influence, into getting permits from the Minister using his discretionary powers.

“Only time will tell, especially when the courts are called upon to interpret the provisions of the Regulation. Gas flaring is still a daily occurrence in the Niger Delta.”

The Petroleum Industry Act - passed into law in August 2021 after more than a decade of legislative stalling - does not unequivocally proscribe gas flaring but requires oil field operators to submit a ‘natural gas flare elimination and monetisation plan’ within 12 months of securing a license to operate. Gas flaring is still permitted albeit under certain conditions. This has been regarded as another half-hearted attempt to stop gas flaring in Nigeria.

The study analyses recent oil-related cases heard by the Nigerian judiciary which have prioritised the economic benefits and interests of the deleterious oil and gas industry over the negative effects the industry has on the environment and the lives of the inhabitants of the host communities.

 

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JOURNAL

Environmental Law Review

DOI

10.1177/14614529221137142 

METHOD OF RESEARCH

Meta-analysis

SUBJECT OF RESEARCH

Not applicable

ARTICLE TITLE

How serious is Nigeria about climate change mitigation through gas flaring regulation in the Niger Delta?

A seventeen-year landmark study finds that group meditation decreases US national stress

World Journal of Social Science publishes study showing that group practice of the TM and TM-Sidhi techniques by √1% of a population decreased multiple stress indicators in the U.S.. Scientists call for a group to create world peace.

Peer-Reviewed Publication

MAHARISHI INTERNATIONAL UNIVERSITY

 

IMAGE: SIZE OF THE MIU TM AND TM SIDHI GROUP (BLUELINE), EIGHT INDICES OF STRESS IN THE UNITED STATES REPRESENTED BY THE LINES IN DIFFERENT COLORS, AND THE US STRESS INDEX, THE MEAN OF ALL EIGHT VARIABLES INDICATED BY THE RED LINE. view more 

CREDIT: MAHARISHI INTERNATIONAL UNIVERSITY

Every year during 2000 to 2006 there were tens of thousands of stress-related tragedies in the U.S.. Official statistics from the FBI and Centers for Disease Control indicate that there were 15,440 murders, 93,438 rapes, and 86,348 child and adolescent deaths from accidents each year to give a few examples. The current study is the longest and most comprehensive of 50 studies to demonstrate what has been named the Maharishi Effect, in honor of Transcendental Meditation (TM) and Maharishi International University (MIU) founder Maharishi Mahesh Yogi.

The results can be seen in the chart below. The blue line indicates that during the Baseline period of 2000 to 2006 the size of the TM and TM-Sidhi group located at Maharishi International University in Fairfield, Iowa increased to reach the √1% of the U.S. population (1725 people) and stayed there for five years during the Demonstration period from 2007 to 2011. All stress indicators immediately started decreasing. In the Post period when the size of the group size began to decline the rate of decrease in stress slowed and then it reversed and began to increase.

(See Image 1) 

IMAGE 1: Size of the MIU TM and TM Sidhi group (blueline), eight indices of stress in the United States represented by the lines in different colors, and the US stress index, the mean of all eight variables indicated by the red line.

Lead author Dr. David Orme Johnson said: “What is unique about this study is that the results are so visually striking and on such a large scale. We see reduced stress on multiple indicators at the predicted time for the entire United States over a five-year period. And when the size of the group declined, national stress began increasing again. Clearly, the group was causing the effect.”

Co-author Dr. Kenneth Cavanaugh commented: “This study used state-of-the-art methods of time series regression analysis for eliminating potential alternative explanations due to intrinsic pre-existing trends and fluctuations in the data. We carefully studied potential alternative explanations in terms of changes in economic conditions, political leadership, population demographics, and policing strategies. None of these factors could account for the results.”

The fact that all variables started decreasing only after the square root of one percent of the U.S. was reached indicates a phase transition. Like when water does not turn to ice until 32◦ F is reached, national stress did not start decreasing until the U.S. √1% transition threshold was achieved.

The chart shows that in 2013 when the size of the TM and TM-Sidhi group quickly dropped all stress indicators abruptly increased. Apparently, the rapid drop in national coherence shook the nation.

The scientists used regression analysis to estimate how many deaths and events were reduced by the meditator group. For example, image 2 shows the red dotted line representing the Baseline trend projected into the Demonstration and Post periods. During the Demonstration period drug-related deaths (the black line) fell to 14% below their Baseline trend and were another 15 % lower during the Post period, for a total of 79,941 fewer drug deaths. The chart also shows that in the absence of the coherence creating group drug deaths eventually returned to their Baseline level.

(See Image 2)

IMAGE 2. The red dotted line is the number of Drug Deaths forecasted from the Baseline trend. The black line is the actual number of Drug Deaths. Similar analyses were conducted for all variables and the results are displayed in the Table.

TABLE: RESULTS OF REGRESSION ANALYSES. The first column shows the number of events per year during the Baseline period (Intercept). The second column shows the change per year during the Baseline (Slope). The third, fourth, fifth, and sixth columns show the thousands of events averted during the Demonstration, during the Post periods, the total events averted, and percent change, respectively. The last column shows the estimated total events averted by each individual participant in the MIU TM and TM-Sidhi group.

(See Table)

The finding that the effect was holistic, causing all variables to move up and down together, supports the theory expressed by both Maharishi from the Vedic perspective and by quantum physicist and MIU president Dr. John Hagelin from quantum field theory that the TM and TM-Sidhi groups are creating coherence in collective consciousness from the unified field level of natural law. This is big. It is evidence of the existence of the unified field from a completely different approach than using particle accelerators and detecting gravity waves.

This discovery of the unified field is more than just an intellectual knowledge. It is arguably the most immediately highly practical technological discovery in the history of science. The invention of the wheel mobilized humanity. The printing press, radio, the telephone, the internet, and satellites increased our ability to communicate with each other across vast distances and time. The discovery of DNA opened our minds to the subtle mechanics of natural law underlying the evolution and growth of all life forms. These are among the greatest scientific discoveries of all time. But what discovery can reduce human suffering as comprehensively as group meditation?

The paper reviews the many concepts of collective consciousness as they have occurred throughout history in the sciences and humanities. None have practical applications as Maharishi’s does and none have been so empirically verified.

The paper discusses Maharishi’s theory, which holds that every individual automatically contributes to collective consciousness and reciprocally, collective consciousness influences every individual. This is universally true whatever the form of government—democracy, republic, monarchy, communism, or dictatorship.

It is essential for every individual to use evidence-based technologies to reduce their own stress and at the same time, the responsibility of every government to provide these technologies to everyone.

The paper summarizes the hundreds of studies showing that practice of TM increases coherence in the individual, as indicated by such measures as increased brain coherence, decreased anxiety, depression, and anger, increased creativity, increased IQ and emotional and social intelligence, and decreased PTSD symptoms, prison recidivism, drug and alcohol addictions, and sickness rates in all categories of disease. More coherent individuals form a more coherent society.

A grant for 75 million dollars from the Howard and Alice Settle Foundation provided stipends for participants to be in the group and provided funding to bring several hundred visiting TM-Sidhi experts from India to further augment the MIU group. Dr. Orme-Johnson commented: “This is a lot of money, but the savings from the 10% reduction in crimes would save over 200 billion dollars, not to mention all the other savings from reducing other sources of stress in the country.”

The paper concludes with a call to create a permanent √1% group for the whole world, 8,000 participants practicing the TM and TM-Sidhi program together in one place. And as an engineering safety factor, a √1% group on every continent is needed. The world is so interconnected, no one is safe until everyone is safe, all living in harmony. This is easily within reach of any government or the world's wealthiest citizens. The person who does it will be remembered as the greatest leader in history.

(See Image 3)

IMAGE 3: GROUP MEDITATION AT MAHARISHI INTERNATIONAL UNIVERSITY. Since 1979 twice daily group meditations have been held at MIU in Fairfield, Iowa for the purpose of creating coherence in the U.S. and world collective consciousness.

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JOURNAL

World Journal of Social Science

DOI

10.5430/wjss.v9n1p1 

METHOD OF RESEARCH

Data/statistical analysis

SUBJECT OF RESEARCH

People

ARTICLE TITLE

Field-Effects of Consciousness: A Seventeen-Year Study of the Effects of Group Practice of the Transcendental Meditation and TM-Sidhi Programs on Reducing National Stress in the United States

The world's largest turbulence simulation unmasks the flow of energy in astrophysical plasmas

Peer-Reviewed Publication

DOE/PRINCETON PLASMA PHYSICS LABORATORY

 

IMAGE: HALO-LIKE SOLAR CORONA. view more 

CREDIT: NASA

Researchers have uncovered a previously hidden heating process that helps explain how the atmosphere that surrounds the Sun called the “solar corona” can be vastly hotter than the solar surface that emits it.

The discovery at the U.S. Department of Energy’s (DOE) Princeton Plasma Physics Laboratory (PPPL) could improve tackling a range of astrophysical puzzles such as star formation, the origin of large-scale magnetic fields in the universe, and the ability to predict eruptive space weather events that can disrupt cell phone service and black out power grids on Earth. Understanding the heating process also has implications for fusion research.

Breakthrough

“Our direct numerical simulation is the first to provide clear identification of this heating mechanism in 3D space,” said Chuanfei Dong, a physicist at PPPL and Princeton University who unmasked the process by conducting 200 million hours of computer time for the world’s largest simulation of its kind. “Current telescope and spacecraft instruments may not have high enough resolution to identify the process occurring at small scales,” said Dong, who details the breakthrough in the journal Science Advances.

The hidden ingredient is a process called magnetic reconnection that separates and violently reconnects magnetic fields in plasma, the soup of electrons and atomic nuclei that forms the solar atmosphere. Dong’s simulation revealed how rapid reconnection of the magnetic field lines turns the large-scale turbulent energy into small-sale internal energy. As a consequence the turbulent energy is efficiently converted to thermal energy at small scales, thus superheating the corona.

“Think of putting cream in coffee,” Dong said. “The drops of cream soon become whorls and slender curls. Similarly, magnetic fields form thin sheets of electric current that break up due to magnetic reconnection. This process facilitates the energy cascade from large-scale to small-scale, making the process more efficient in the turbulent solar corona than previously thought.”

When the reconnection process is slow while the turbulent cascade is fast, reconnection cannot affect the transfer of energy across scales, he said. But when the reconnection rate becomes fast enough to exceed the traditional cascade rate, reconnection can move the cascade toward small scales more efficiently.

It does this by breaking and rejoining the magnetic field lines to generate chains of small twisted lines called plasmoids. This changes the understanding of the turbulent energy cascade that has been widely accepted for more than half a century, the paper says. The new finding ties the energy transfer rate to how fast the plasmoids grow, enhancing the transfer of energy from large to small scales and strongly heating the corona at these scales.

The new discovery demonstrates a regime with an unprecedentedly large magnetic Reynolds number as in the solar corona. The large number characterizes the new high energy transfer rate of the turbulent cascade. “The higher the magnetic Reynolds number is, the more efficient the reconnection-driven energy transfer is,” said Dong, who is moving to Boston University to take up a faculty position.

200 million hours

“Chuanfei has carried out the world’s largest turbulence simulation of its kind that has taken over 200 million computer CPUs [central processing units] at the NASA Advanced Supercomputing (NAS) facility,” said PPPL physicist Amitava Bhattacharjee, a Princeton professor of astrophysical sciences who supervised the research. “This numerical experiment has produced undisputed evidence for the first time of a theoretically predicted mechanism for a previously undiscovered range of turbulent energy cascade controlled by the growth of the plasmoids.

“His paper in the high-impact journal Science Advances completes the computational program he began with his earlier 2D results published in Physical Review Letters. These papers form a coda to the impressive work that Chuanfei has done as a member of the Princeton Center for Heliophysics,” a joint Princeton and PPPL facility. “We are grateful for a PPPL LDRD [Laboratory Directed Research & Development] grant that facilitated this work, and to the NASA High-End Computing (HEC) program for its generous allocation of computer time.”  

The impact of this finding in astrophysical systems across a range of scales can be explored with current and future spacecraft and telescopes. Unpacking the energy transfer process across scales will be crucial to solving key cosmic mysteries, the paper said.

Funding for the paper comes from the DOE Office of Science (FES) and NASA, with computer resources provided by the NASA HEC together with the National Energy Research Scientific Computing Center, a DOE Office of Science user facility, and the NSF-sponsored Computational and Information Systems Laboratory. Co-authors of the paper were researchers at PPPL, Princeton and Columbia Universities, and the NASA Ames Research Center.

PPPL, on Princeton University's Forrestal Campus in Plainsboro, N.J., is devoted to creating new knowledge about the physics of plasmas — ultra-hot, charged gases — and to developing practical solutions for the creation of fusion energy. The Laboratory is managed by the University for the U.S. Department of Energy’s Office of Science, which is the single largest supporter of basic research in the physical sciences in the United States and is working to address some of the most pressing challenges of our time. For more information, visit energy.gov/science.

---

JOURNAL

Science Advances

DOI

10.1126/sciadv.abn7627 

METHOD OF RESEARCH

Computational simulation/modeling

SUBJECT OF RESEARCH

Not applicable

ARTICLE TITLE

Reconnection-driven energy cascade in magnetohydrodynamic turbulence

Winter storm strands Canadian family in RV in Texas

PublishedShare

IMAGE SOURCE,ANNICK RUEDI

Image caption,

Annick Ruedi and her daughter, Émeline, enjoying more pleasant US weather before this week's winter storm descended on their RV.

By Kayla Epstein

BBC News, New York

Annick Ruedi and her young daughter headed south this year in the hopes of experiencing a more pleasant winter.

"The goal always was to spend Christmas in gorgeous southern Texas," said the Ottawa resident. "To finally escape the heaps of snow and freezing cold temperatures we have every year in Canada."

But mother nature had other plans. Like tens of millions of other people, they have been swept up in a historic winter storm that has brought brutally cold temperatures to much of North America.

The storm has wreaked havoc on highways, dumped multiple feet of snow on unsuspecting regions, and cancelled thousands of flights amid the chaos of holiday travel season.

• Deadly storm knocks out power for 1.5 million

Now, Ms Ruedi, 47, and Émeline, 9, are sheltering inside their rented RV trailer on Texas' Mustang Island State Park. The small spit of land, which sits on the Gulf of Mexico not far from the city of Corpus Christi, saw temperatures on Friday afternoon drop below freezing with a biting wind chill on top.

IMAGE SOURCE,ANNICK RUEDI

Image caption,

Annick Ruedi's RV trailer parked near an overcast and windy Mustang Island beach.

Outside their recreational vehicle, enormous waves crashed and palm trees bowed from the wind.

Ms Ruedi, a marketing specialist who works remotely, had rented the RV so her daughter could experience the wonders of the US. The two had embarked on their American adventure in October, making their way through the states of Pennsylvania, North Carolina and Florida before arriving in Texas this month.

When they first got to South Padre Island in Texas this week, they hoped to take advantage of the pleasant weather that's typical for this time of year. Instead, they encountered gale-force winds and temperatures that froze their faces the moment they stepped outside.

"In one night I used a whole tank of propane," Ms Ruedi told the BBC. "It's so cold you really go through the propane very easily. In a camper it's not very well insulated."

At first, she tried to find a hotel room or Airbnb, but her search was in vain. Ms Reudi then decided to drive to Mustang Island on Thursday in the hopes of finding better conditions.

They did not.

IMAGE SOURCE,ANNICK RUEDI

Image caption,

Annick and Émeline Ruedi don Santa hats to fight the chill on Texas' Mustang Island beach.

"The Gulf of Mexico was rocking last night!" the National Weather Service's Corpus Christie station tweeted on Friday. Their buoys recorded waves as high as 16 feet, and winds as high as 45 miles per hour. The city of Corpus Christi planned to open multiple warming centres, and warned residents that the wind chill could send temperatures into the single digits Fahrenheit.

Mustang Island's official website shows two happy beachgoers in their swimsuits. Instead, Ms Ruedi and her daughter donned multiple layers while inside their camper and closed the curtains on their windows shut to trap heat.

"I was clever enough, I packed our winter gear from Canada just to be on the safe side," Ms Ruedi said. She added that they'd got enough supplies and had found a sense of community among other travellers at the park.

With their winter getaway not going as planned, young Émeline was disappointed - not that it was cold, but that it wasn't cold enough.

"No!" she declared, when the BBC asked if she wanted the storm to end. "We want the cold because I like the snow!"

Hockey Canada paid out $2.9 million in settlements this fiscal year, using player registration fees

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Hockey Canada didn't reveal a reserve fund that an auditor said should be on the books

Ashley Burke · CBC News · Posted: Dec 22, 2022 

Hockey Canada CEO Scott Smith, second from right, and the entire board of directors announced they would resign after a former judge's review of the organization's shaky leadership recommended they do so. Newly released audited financial statements reveal Smith was terminated without cause. (Sean Kilpatrick/The Canadian Press)

Hockey Canada used players' registration fees to pay for $2.9 million in settlements this fiscal year — including one related to a high-profile sexual assault allegation against members of the 2018 World Juniors team — according to newly released financial records.

The new financial statements confirm that the controversial National Equity Fund was used to pay out all of the settlements this fiscal year.

The only money going into the fund comes from players' registration fees, the records show.

"During the past year, the Organization has come under extreme public and media scrutiny with regards to its management and governance of litigation settlements and the use of player registration fees," wrote BDO Canada, the company conducting the audit.

"... The organization is susceptible to lawsuits from various sources. As a result of this risk, the Organization has obtained insurance coverage which is supplemental by holding funds in reserve to cover uninsured claims."

• CBC EXPLAINS
  Crisis on ice: What you need to know about the Hockey Canada scandal

Hockey Canada has been embroiled in controversy since May, when it reached a settlement with a young woman who filed a $3.5 million lawsuit alleging a group of eight Canadian Hockey League players sexually assaulted her in 2018 in a hotel room in London, Ontario.

Hockey parents were outraged to learn that their registration fees were going into the National Equity Fund without their knowledge — and that the reserve fund was used to pay out millions of dollars in sexual abuse claims over the years.

Hockey Canada told MPs that it used the National Equity Fund to settle the London case, the board of directors "approved the maximum amount of the settlement, and the settlement offer was made and accepted."

The new audited financial statements suggest the settlement in that case was less than $3.5 million.

CBC News asked Hockey Canada how many settlements it paid out over the fiscal year. Hockey Canada didn't say. A spokesperson said that $2.9 million is an "aggregate figure for the legal settlements reached during the fiscal year."

CEO Scott Smith terminated 'without cause'

The financial records also reveal Hockey Canada's CEO Scott Smith was "terminated without cause."

Smith and the entire board of directors announced they were stepping down after a report commissioned by the organization found serious problems with accountability and transparency.

The financial statements show that, for the first time, Hockey Canada has had to include a previously undisclosed fund — the Participants Legacy Trust Fund — in its audited financial report, which showed its balance was $7.5 million as of June.

Hockey Canada's auditors stated on the front page of the financial statement that the fund "was not disclosed in the prior year."

The Legacy Trust Fund only came to light in the fall when the Globe and Mail learned of its existence through court documents. The newspaper revealed the fund was created in 1999 and the hockey organization was using player registration fees to build another large financial reserve which could be used to pay out for sexual abuse allegations and other claims.

Andrea Skinner, interim chair of the Board of Directors at Hockey Canada, told MPs in October that the Legacy Trust fund "is not a Hockey Canada asset" and that's why "it doesn't show up in Hockey Canada's financials." (Sean Kilpatrick/The Canadian Press)

During a Commons committee appearance in October, Hockey Canada's now former board chair Andrea Skinner told MPs that the Legacy Trust Fund had been "fundamentally mis-described in the media" and was not used to settle claims. Skinner said the fund "is not a Hockey Canada asset" and that's why "it doesn't show up on Hockey Canada's financials."

But once the organization made the auditor aware of the fund this year, the auditor determined it should be on the books because Hockey Canada controls it.

"The Trustees of the Legacy Trust are appointed and terminated by the Organization," wrote BDO Canada.

The fund is meant to respond to claims dated prior to September 1995 associated with some of Hockey Canada's member branches and the Canadian Hockey League, in the event the National Equity Fund doesn't have enough money, the financial statements said.

'It sets the record straight'

Kate Bahen, managing director of Charity Intelligence Canada, reviewed the latest audited financial statements and past statements dating back to 2008.

Bahen said Hockey Canada's audited financial statements during those years never disclosed the Legacy Trust Fund. 

"It goes to show the previous management wasn't forthcoming with information," said Bahen.

"It sets the record straight. Hockey Canada's previous management stated it was not part of its books and the auditors said yes, it is part of your books by virtue of control."

Hockey Canada's move to open up its books comes after a review the organization commissioned from retired Supreme Court justice Thomas Cromwell recommended the organization do so.

Before that, Hockey Canada did not post its audited financial statements online. The only way to obtain them was by filing requests under the Access to Information Act.

Bahen continues to call on the federal government to require not-for-profits like Hockey Canada that receive millions in federal funding and tax breaks to post their audited financial statements online.

Leaked internal documents show Amazon will likely continue to slow growth next year amidst cost-cutting and anticipation of a severe economic downturn


Amazon's executives are preparing for an uncertain economy by cutting costs and increasing profit margins

.Eduardo Munoz Avarez/AP

Eugene Kim
Thu, December 22, 2022 at 10:55 AM MST·2 min read


Amazon's economists expect the company's growth to slow as cost cuts continue.


They said Amazon's growth and profitability have historically been "negatively correlated."


The forecast was part of an internal 12-page macroeconomic analysis created in November.

Amazon is cutting costs across the board in anticipation of a severe economic downturn.

SELF FULFILLING PROPHECY; AUSTERITY CREATES THE DOWNTURN

That likely means Amazon's revenue growth will also slow down, according to an internal macroeconomic report obtained by Insider.

The report, put together by Amazon's economic, finance, and science teams, is part of the company's internal research into the broader macroeconomic landscape. The 12-page study touched on topics of a recession possibility, inflation forecast, and their impact on Amazon's overall business, as Insider previously reported.

The November report indicated the company is now cutting costs to focus on profitability and sales will grow at a slower pace than before.

"Acceleration in business growth is associated with profit margin deceleration, and vice versa. There is a clear tradeoff between the interplay of profit seeking and growth, rendering it difficult to achieve both objectives simultaneously," the report said.

"As our pendulum swerves to cut costs in pursuit of higher profit margins, this may undermine our ability to grow at a faster pace in the near — or mid-term," it added.

The report also showed Amazon's economists put the odds of the US economy going into a recession in the next six months at 30%, far lower than other estimates that all but guaranteed a recession next year.

In an email to Insider, Amazon's spokesperson said the company's leadership team disagreed with its own economists.

"The document in question does not reflect the company's position on the economy and where it's headed. Our CFO Brian Olsavsky shared our thinking on our most recent earnings call, and our CEO shared his thoughts in a Dec. 6 interview at the Dealbook event. This document simply reflects the thoughts of some of our economists," the spokesperson said.

During Amazon's most recent earnings call in October, CFO Brian Olsavsky painted a more dire picture and said the company is tightening its belt and pausing hiring due to the "uncertain economy."

"The continuing impacts of broad-scale inflation, heightened fuel prices and rising energy costs have impacted our sales growth as consumers assess their purchasing power and organizations of all sizes evaluate their technology and advertising spend," Olsavsky added during the call.