THE PEOPLE
JUNE 1998
Vol. 108 No. 3
DIMINISHING OIL, INTERNATIONAL CONFLICT AND SOCIALISM
BY B.B.
A quarter century has passed since the so-called energy crisis
of 1973, and more than two decades have gone by since the
recurrence in the winter of 1976P1977. Both of these "energy
crises" created a global panic, and both were occasions for some
of the most outlandish political posturing of the century.
Politicians danced about the Maypole of energy conservation,
"talking heads" bobbed in solemn deliberation as oil companies
made windfall profits. It was the working class that bore the
brunt of those cartel-induced crises, of course, when rising
prices reduced the buying power of wages, led to long lines at
gas pumps and created shortages of heating oil for working-class
homes.
It was the impact that these "energy crises" had on the working
class that led the Socialist Labor Party to publish its pamphlet
WHY IS CAPITALISM RUNNING OUT OF GAS? That was in 1977, and the
pamphlet summarized the problem in these words:
"The feeble proposals in the Carter [administration's] energy
package are those of a system thoroughly locked into its
wasteful ways. That, after so much sound and fury, they are the
best the system could come up with leads to the unmistakable
conclusion: simply stated, CAPITALISM is the energy crisis."
Despite all that we hear about "cheap energy" these days, there
is mounting evidence that a truly devastating crisis in energy
may be looming just beyond the approaching horizon of the 21st
century. The intensified search for offshore oil near the
Spratly Islands in the South China Sea and off the coast of
Cuba--but particularly the rush to exploit the oil and gas
reserves of the Caspian Basin in Central Asia--may be so many
indications that such explorations are approaching the bottom of
the global oil barrel. None of these new oil fields can be
compared to the large pools discovered in the past; but they
may--to paraphrase Marx--signal that capitalism's history of
nestling everywhere, settling and establishing connections
everywhere, in search of the increasingly elusive "black gold,"
has just about run its course.
Given the current pace at which natural resources are being
plundered, global resources are bound to dwindle at alarming
rates--and catastrophically so in the case of oil. This
nonrenewable energy source--upon which capitalism has nurtured
its industrial base and fashioned a system seemingly designed to
squander nature's bounty--is being depleted.
The depletion of global oil reserves was the subject of a
special report in the March issue of SCIENTIFIC AMERICAN. "The
End of Cheap Oil," as the report was called, warns of an
impending energy crisis. Different from the "crises" of the
1970s, however, the focus now is on diminishing oil reserves and
development of alternative sources of energy. The report in
SCIENTIFIC AMERICAN assumes that capitalism is an immutable
given, and completely ignores that the capitalist system is at
the core of the emerging crisis. Nevertheless, "The End of Cheap
Oil" offers Socialists the basis for a prognosis of what to
expect in the next decade as capitalism careens into an
uncertain millennium.
The authors unquestionably are qualified to address the subject.
Colin H. Campbell and Jean H. Laherrre are both petroleum
geologists. Both have over 40 years of experience in the
industry, and both are regarded as authorities on worldwide
reserve capacities. Their report is a critique of past reserve
projections, an assessment of real reserves, and it includes
their recommendations for averting a calamity as they see it.
For the purposes of brevity, their findings may be summarized as
follows.
Past and current projections of 1,020 billion barrels of oil--or
enough to last for about 43 more years at the current rate of
consumption, which is about 23.6 billion barrels of oil a year--
are wrong.
Wrong because of distorted reserve estimates. Wrong because of
erroneous assumptions that production will remain constant. And
wrong because all the oil in a well cannot be pumped out at the
same speed as the first barrel.
Over 800 billion barrels of oil (Gbo) have thus far been removed
from the earth according to expert consensus. Estimating the
amount of oil in a field is educated guesswork. Geologists use
probability factors to estimate potential amounts of what might
be extracted economically as opposed to what might be left in
reserve. They tend to be conservative, assigning factors much
lower than are reported by companies and OPEC countries.
The material interests of capitalism enter into such
predictions. Reserve estimates are greatly exaggerated so that
oil company stocks fetch higher prices. Countries boost reports
of their reserve capacities so they can pump and export more
oil. According to the report, "There is good reason to suspect
that when, during the late 1980s, six of the 11 OPEC nations
increased their reserve figures by colossal amounts, ranging
from 42 to 197 percent, they did so only to boost their export
quotas."
Real reserves, according to the report, can only be accurately
assessed by using an average factor referred to as "proved and
probable." This means that a field is as likely to produce a
predicted volume of oil as not. After evaluating a 40-year
accumulation of figures from 18,000 oil fields globally,
Campbell and Laherrre concluded that "at the end of 1996
approximately 850 Gbo of conventional [extracted] oil" remained
in the earth, which was considerably less than the 1,019 Gbo and
1,160 Gbo reported by two leading industry periodicals. "There
is only so much crude oil in the world," the report noted, "and
the industry has found about 90 percent of it."
Campbell and Laherrre used several methods to predict the
remaining conventionally recoverable oil. The most effective
show that an oil field's consumption, when drawn as a graph,
assumes a bell-shaped curve. Once the field's peak is reached a
symmetrical projection of that curve shows the approximate year
it will be exhausted. Their plot showed that, worldwide, the
peak will be reached in 2005. In 2050 world consumption will
dwindle to 1950s levels of around 5 billion barrels annually
from a current annual consumption of 26 billion barrels. When
this is compared to projected rising world demand of 40 billion
barrels annually by 2020, exhaustion may be reached sooner,
alternate extraction technologies and inventive efficiencies
notwithstanding.
The social consequences of the end of oil-based industrial
capitalism were only vaguely touched upon. The report noted,
"The switch from growth to decline in oil production will almost
certainly create economic and political tension. Unless
alternatives to crude oil quickly prove themselves, the market
share of the OPEC states in the Middle East will rise rapidly.
Within two years, these nations' share of the global oil
business will pass 30 percent, nearing the level reached during
the oil-price shocks of the 1970s." They conclude noting: "What
our society does face, and soon, is the end of the abundant and
cheap oil in which all industrial nations depend." This amounts
to a warning to the American capitalist class, and a wake-up
call to the working class. At stake are the increased costs of
fuel and the consequences it poses to profit margins.
Such consequences involve more than a rise in the price of oil.
Consider the profound effects of plentiful petroleum supplies on
what have become deeply entrenched social patterns--particularly
in the United States. American workers live in urban
agglomerations of immense size. These have developed over the
past 100 years as a result of the convergence of three factors:
cheap oil, the internal combustion engine, and plentiful,
inexpensive land. They have led to urban sprawl. They have
entangled capitalist society in a potentially strangulating web
of tenuous connections and long trips for the working majority.
The trips to work, school, shopping, entertainment--indeed
practically every aspect of contemporary American life is
circumscribed by an automobile trip somewhere.
When the trauma of soaring fuel prices "hits home," hits the
pocket books of an already strapped-for-money working class, the
economic and political tensions the SCIENTIFIC AMERICAN authors
refer to will also soar.
Every attempt will be made to resist wage increases as higher
prices for fuel impact workers' living standards. In other
words, as the millennium debuts, we can expect an
intensification of the class struggle over the division of the
wealth labor alone produces.
The political state, acting on behalf of the ruling class, can
be expected to intervene by attempting to unite the interests of
capitalists and workers. As in the past, this will take the
usual form of citing how "our" vital national interests are at
stake. We saw this unfold in the Persian Gulf recently when the
7th Fleet made another appearance to reinforce U.S. capitalism's
enormous interest in gulf oil. A similar scenario may soon
unfold regarding Caspian Sea oil.
The oil-yielding potential of the Caspian Sea may be less than
originally thought. As Carlotta Gall of the FINANCIAL TIMES put
it: "The heady predictions about the potential of the Caspian
Basin are also forming into a more reasonable picture--this is
no second gulf but something of a North Sea. That it is going to
be a big producer in the next century there is no doubt now."
However, unlike the North Sea oil, where Norway and the United
Kingdom staked out the plunder for themselves, the contending
antagonists in and around the Caspian Basin are numerous. From
Azerbaijan and Georgia in Caucasia, they include the Central
Asian states of Afghanistan, Iran, Turkmenistan, Kazakhstan,
Kyrgyzstan and Uzbekistan, which either border or are close to
the Caspian Sea. Add in Turkey, and the two tiny Caucasian
states of Armenia and Chechnya--the latter of whose plains are,
in the words of Ms. Gall, "awash in oil"--and we have a cast of
contending material interests as unsavory as it is numerous.
Stir in to this witches' brew the material interests of the
United States, the European Union, Russia and China, and we have
what Ahmed Rashid of the FAR EASTERN ECONOMIC REVIEW has called
"a `new great game'--for fuel" in Central Asia. Rashid's comment
was an allusion to the 19th-century imperialist struggle between
Britain and czarist Russia, and he went on to note that: "The
American Business Center in Uzbekistan's capital, Tashkent,
estimates more than 60 U.S. companies will invest a total of $3
billion by the end of 1997." While Russia has declared its
opposition to the expansion of NATO into Central Asia, the
United States has busied itself with aligning ruling classes in
the region in support of its commercial inroads. A struggle for
control is clearly under way. As noted by Mr. Rashid:
"There are already the makings of two major coalitions emerging
in the region. The U.S. is lining up with Uzbekistan and
Turkmenistan and encouraging its traditional allies, Israel,
Turkey and Pakistan--to invest there, while Russia is in
coalition with Kazakhstan, Kyrgyzstan, Tajikistan and Iran."
Natural gas and uranium are two other resources that are found
in great abundance in Central Asia. If the technology for
converting natural gas into liquid fuel becomes competitive with
oil, and as oil prices increase, control of that resource will
become imperative. That prospect may explain why Exxon, other
energy giants and pipeline manufacturers are exploring the
possibility of constructing natural gas pipelines from
Turkmenistan to China's Pacific Coast, 6,000 kilometers to the
east.
Dissension over where to build a pipeline for delivering Caspian
oil for Western consumption should end this autumn when a
decision is supposed to be reached, though it is reported that
opinion among those who will build and benefit most from it is
"heavily weighted towards a route south from Baku through
Georgia to the Turkish terminal of Ceyhan on the Mediterranean
Coast."
There are those who profess that technology will be society's
salvation, and who advise us "not to worry" because other
sources of fuel--such as tar sands, coal conversion and oil
shale--will be found to take oil's place. Anticipating such
arguments, Campbell and Laherrre's response to tapping
unconventional oil resources was this:
"There is no question that resources are ample: the Orinoco oil
belt in Venezuela has been assessed to contain a staggering 1.2
trillion barrels of the sludge known as heavy oil. Tar sands and
shale deposits in Canada and the former Soviet Union may contain
the equivalent of more than 300 billion barrels of oil.
Theoretically, these unconventional oil reserves could quench
the world's thirst for liquid fuels as conventional oil passes
its prime. But the industry will be hard-pressed for the time
and money needed to ramp up production of the unconventional oil
quickly enough."
They also point to the "high environmental price" of extracting
oil from these sources, and they predict no more than 700
billion barrels from such deposits over the next 60 years.
Words and phrases such as "theoretically" and "time and money"
are euphemisms that, in this context, cryptically describe
capitalism's inability to function for the benefit of society.
The authors don't say that straight out, but sensitivity toward
profitability, capitalism's holy of holies, lurks in their
words.
Other theoretical efforts constrained by time and money are the
much-studied, talked of and argued renewable sources of energy.
There is quite an array of these. They range from photovoltaic
experiments, wind power, wave power, hydroelectric power, solar,
geothermal, biomass--and now even chicken litter, with all due
respect to the poultry you have dined on tonight. Many of these
have foundered on the treacherous shoals of inadequate profit.
In a special supplement to the FINANCIAL TIMES (April 16) on the
whole spectrum of energy, Michael Peel gives an update on
"renewables," as they are termed, mostly on the European
continent where interest is much higher than in the Americas.
His report offers little encouragement.
First, less than 6 percent of European energy consumption comes
from renewables. Although the European parliament targeted
doubling the amount of renewables by 2010, "There is no sign
that Europe's energy companies are taking particular interest in
the plan." What it comes down to, as usual, according to Mr.
Peel is "the pressing need to the energy cost of renewable
energy generation." Summing up his frustration on the same
issue, Hjalmar Arnason of the Icelandic parliament stated, "Many
beautiful words have been spoken [referring to renewables] but
we always come to the same conclusion--we must do something. But
what has that come to?"
The illusive "something" that must be done goes far beyond
promotion of renewable sources of energy under the banner of
profitability and the capitalist system. As the SLP explained in
its pamphlet on the "energy crises" of the 1970s, the energy
industry as a whole has "enormous capital investments, a high
rate of surplus value and a huge MASS of profits, but a low
return on total capital investment, i.e., a relatively low RATE
of profit.
"From this starting point, it would be both difficult and
unprofitable for the energy industry to embark on a new and even
greater program of capital expansion, and it is this
characteristically capitalist dilemma that is crippling energy
development in the U.S. today."
The crux of the problem is the way capitalism operates.
Capitalist stockholders and their boards of directors deal in
commodities. The laws of capitalist production govern energy
production as much as they govern the production of any other
commodity. Commodities are useful objects, but from the
standpoint of the capitalist class they are useful only as
sources of profit. Energy cannot be produced unless it can be
produced profitably, and the energy capitalists are not likely
to divert huge quantities of capital to create the technology
for developing new sources of energy until they are forced to do
so by the depletion of proven oil reserves and other fossil
fuels. Thus, the nascent energy crisis is likely to deepen on a
worldwide scale with its attendant environmental degradation,
domestic turmoil, increasing working-class poverty and
international armed conflict.
SCIENTIFIC AMERICAN'S special report, although not intended as
such, is a formula for environmental and human disaster. An
economic and social system based on production for profit and
private ownership of industry cannot avoid producing such by-
products as the insatiable greed of our ruling class, the
anarchistic pillaging of our planet, the compulsion for global
control of resources, the imperialist domination and war that
have characterized capitalism throughout its history. Given
those inherent characteristics, disaster looms ahead, even if
new technologies and the wherewithal to fund them become
available.
No doubt the energy crises foretold by Campbell and Laherrre
will elicit a response from the energy industry that will seek
to reassure the readers of SCIENTIFIC AMERICAN that their
forecasts are too pessimistic. Perhaps they are. Yet, no
sensible person can doubt that the Earth's supplies of
nonrenewable resources are being depleted, and that they will be
depleted in time. When that time comes, whether it comes within
the time foretold by Campbell and Laherrre or a few decades
further on, the eventuality is a certainty. The question is
whether that eventuality can be forestalled, and whether new
technologies and new sources of energy can be developed that can
both serve society's needs and preserve the natural environment
necessary to our survival as a species.
In this sense, there can be no resolution of the energy crisis
that does not resolve itself into a complete revolutionary
transformation of society itself. If capitalism is the energy
crisis, socialism is the cure. Why? Because socialism is
inherently conservationist. It is conceived and structurally
premised to serve society's needs--including its need for a
clean and healthful environment in which to live--rather than
those of ruling classes and private masters. In this sense it is
worth noting that the demand for the development of renewable
sources of energy--the only reasonable energy policy embodying
posterity's perspective--can only be a demand for socialism. It
can only be a demand for production for use, which is precisely
what socialism means.
Socialism means democratic ownership of the productive forces of
the land by society through an industrial union government based
on industry, and not a despotic dictatorship of economic life as
under capitalism. It means a society that plans for the present
and for posterity. Socialism means planning and cooperation on a
global scale.
With all of this in mind, Socialists call upon all members of
the working class to heed the moral imperative of the age:
organize yourselves for the abolition of poverty, the abolition
of all social crises, the abolition of exploitation and wage
slavery. In short, organize yourselves for the abolition of
capitalism.
(
geocities.com/CapitolHill)