Oil and the economic crisisCaspian oil not so long ago was being touted as 'a second Persian Gulf'. Azerbaijan was feted as the new Saudi Arabia. The Wall Street Journal gushed like a wildcat about the prospects, reporting reserves of up to 190bn barrels of oil. The U.S. Department of Energy said a few years ago that the potential recoverable oil reserves in the region are some 200 billion barrels. World annual consumption is currently around 70bn bbls. So a discovery that big, with inevitable later upward revisions in reserves, would fundamentally alter and improve the world's energy balance, and would temporarily save world capitalism from the fate of the Soviet Union, which used up its fabulous Samotlor and Urengoi fields in Siberia in just 20 years, and promptly collapsed (Russian oil production is now one-third of Soviet levels; Russia is expected to be a net oil importer this year or next).
The Caspian euphoria is already a thing of the past. Last summer the shine began to go off the Caspian oil boom. It wasn't just the slump in world oil prices nor the continuing wrangles about export routes, amid fears of regional instability (the Caspian is a sea ringed by Kurds, Turks, Iranians, Chechens and others who are constantly in a state of war). Just when British Foreign Secretary Robin Cook announced the Caspian region will supply a tenth of the world's oil within a decade, a remark that promised a huge petrodollar boom for this impoverished region, a more sober report by the International Institute for Strategic Studies in London said the Caspian region holds perhaps only 3 percent of world oil reserves, much lower than Cook's claim suggests.
Since then (July 1998) the Azeri boom has gone bust big time. Looks like even the IISS was being too optimistic. This week several big oil consortia said thet'd abandoned their offshore stakes after spending billions of dollars pumping salty water out of the Caspian seabed. The latest authoritative estimates are in line with those I posted last year on this list and LBO: Caspian reserves may total only 19bn bbls. That's about 4 months of world supply. Tha Caspian looks to be smaller than the N Sea and compares to Saudi like a pond to an ocean. Tricky fellows, those Soviet-trained Azeri bureacrats. They wined, dined and got bribed by the West and global oil majors for almost a decade, but now the jig is up.
So where will China get its oil from, now? The big plans for $100bn pipelines across the world's most inhospitable deserts and mountains, to send oil to China's energy-hungry cities, are already gathering dust. The bankers have stopped the junketting.
And what will happen when Persian Gulf production begins its inexorable, geologically-determined decline next decade, while N Sea dries up completely?
In this and later postings I will explore both the global impact of growing energy shortages, and the regional effects on the neighbouring mid-East/Caspian states most involved: Iran, Iraq, Turkey, Russia, Azerbaijan and Kazakstan.
Excellent posting from Mark Jones, partly from content, but also from the context of the 'oil-side' of capital.
It's a funny old market, as are those of many commodities that still involve an element of 'free trade'. The Rotterdam spot price has been plummeting lately. Had a level of US$9 per barrel been reached about 10-15 years ago, then the great discoveries of Alaska and the North Sea would have gone belly up - high capitalization and dwindling rate of profit. The Gulf War was a time for serious thinking among the 'Seven Sisters'. Had Saddam blown up the NE Saudi fields, then up would have gone the spot price - good for Saddam, but pretty good for Exxon, BP, Shell etc! Taking out Iraq and Kuwait, with the post-Lockerbie embargo on Libya, meant real activation of the 'New World Order' *and* maintained oil prices. The latest round of maintaining embargo on Iraqi exports (they are potentially biiig) was handy for keeping the price from falling even further.
The scent of huge reserves in the Caspian and China in the early 90s, potentially extractable under conditions of increased exploitation and supposedly assured security, drove the big guys out of the Gulf of Suez and a number of other fields that might have been advantageous for 2/3 World countries (albeit temporarily, and at a cost). Reduced prices and security problems (Eritrea-Ethiopia and Yemen in Southern Red Sea) mean that they will not easily go back.
USGS quoted petroleum reserves are bound to go up and down like a yo-yo because of this essentially contradictory (and enormously fragile) state of the market, amusingly at the mercy of the efforts of oil explorationists themselves, and even more so because of the general crisis of globalized capital. 20 years ago the sexy thing was oil sands and oil shales - truly enormous reserves of combustible hydrocarbons, but both low-grade and technologically difficult, which means ideally prone to the tendency for fall in the rate of profit. In one sense, thank goodness for the climate's sake, in another because it deepens capital's contradictions in a very big way indeed!
It would be great if someone did a proper analysis of the economic side of energy supplies to set against the global warming aspects. There are many states, like Nigeria and parts of Indonesia and South and Central America whose economies are dominated by petroleum production, and we should not be surprised to see price shifts reflected in mass movements. Is it any wonder that imperialism keeps the obscene Al Saud in power in Arabia? Simply by turning a few valves, the potential production of Saudi petroleum could crush many majors and probably all minor oil companies - the fields there are unique. They are not only vast, but they have very high flow rates and very small costs of production.
It may sound far-fetched to say it, and I wouldn't argue it too strongly, but I think there is a connection [between oil and impeachment]. Apres moi le deluge is only part of it. The real point about the impeachment process (which has been oddly undiscussed around here) is that it is a creeping coup against the Constitution and democracy generally, or what passes for democracy.
Coups often look like entre-acte clownishness, first time around. Look at Hitler's beer-hall putsch. And who can take seriously the spectacle of the US senate right now? To British eyes, the US senators we see trolling across our screens look like a bunch of crud-heads, and as Barbara Ehrenreich says, they remind one of acne-sudded juniors who can't get over the way the girls throw themselves at the feet of the team captain, so they are getting their revenge the best way they can. They don't exactly look much like the patrician class of history's most powerful, richest etc empire, do they? Of course, one could construct Huntington-style models of religious fundamentalism and sectarian obscurantism grabbing hold of and redefining the context of historical civilisations; it's happening in the muslim world, they say, and now it's happening in the States where the Christian Fundamentalists, so obsessed with hatred and loathing of the Clintons (southern white trash unexpectedly crossing the tracks and making good) that they have abandoned all forms of political calculation, are ram-raiding the soggy centre of American mass consciousness head-on. They say it's the biggest act of political self-destruction since the South tried to secede. The Republicans will be destroyed at the polls next time around. They say.
Maybe. But reverting to the creeping-coup model, or rather, the idea that what we are witnessing is a dress-rehearsal for a planned, coldly-calculated assault on US democracy and on the popular basis of sovereignty, and bearing in mind that even crazed patrician classes are servants of blind historical forces, perhaps we should understand that behind the clowning on the Hill something really big, serious and historically unprecedented is going on.
I have 2 starting points; one is the growing schism at the heart of US society, which sooner or later is bound to produce violent political realignments, seismic changes reflecting the unprecedented polarisation of wealth and poverty and the third-worldisation of the US labour force. The other is the view that world-capitalism has long ago entered an era of declining resources and sees its horizons contracting as have other historicla empires, which tend to fold up during their final and most florid period of vulgar ostentation.
The American rich are retreating into their lagered communes, and the emerging Castells-type dystopia outside their pampered world has more in common with peripheral than metropolitan realities; once the next recession bites, and the shine is rubbed off the US economy, that dismal reality will become much plainer. The future-world is one where a global bourgeoisie lives in skeins and networks of sheltered retreats, islands of prosperity behind whose closed doors a whole new master-race will be elaborated within another 50-100 years. The rest of us will live on the diminishing supply of crumbs in a resource-poor, energy-poor, over-populated world. The rich are already imposing their own solution to the twin problem of global warming and potential energy-shortages, by plunging nine-tenths of humankind into an abyss of poverty in which mass-deaths will be, and already are, becoming commonplace (4,000 Russians *per day* die above the demographic trendline, in the biggest genocide for fifty years).
The reconstruction/remaking of constitutional forms that this tectonic process necessarily entails is bound to require a root-and-branch assault on the Enlightenment verities of citizens' rights and forms of popular sovereignty. The extraordinary and on the surface mindless arrogance of the American patrician class is actually a clue to what is by now, I suggest, a deeply and widely shared conviction in that class, that democracy has become an intolerable obstacle to the futureworld that beckons. Democracy inevitably yields Rooseveltian solutions to endemic social and economic decline: but the keynesian premise that redistribution is also macroeconomcially beneficial is what no-one believes any more, on the contrary: the ruling class consensus is that in conditions of modal decline, keynesian welfareism doesn't just produce inflation, it produce insupportable systemic shock: AND THAT FORM OF DECLINE IS ALREADY A REALITY, one clearly discernible behind the cloaking statistics which only superficially suggest boomtime for Americans (and which don't suggest even that for the rest of us).
It is boomtime for those born on the right side of the tracks. The savage gulf between pampered luxury enjoyed by a few and deepening anxiety, poverty and distress of the many, can only deepen. The great liberal optimistic vision of the early postwar years, of a bounteous capitalism enlarging and uplifting the lives of the masses, has gone down the tubes. Sooner or later these simple and huge truths are going to be reflected politically. It's not Monica, stupid. It's social security and jobs, that are STILL the real issue.
A more equalitarian, redistributional, Rooseveltian (or even Blairite, or even Clintonite) society can happen only when the fruits of technology can yield growing benefits for the masses. But today's world offers a different reality. The technology is all 'silver bullets' which offer fabulous new forms of power, luxury, longevity and self-realisation to a small, soon a vanishingly- small minority, instead of what the great public health initiatives of the last 150 years offered, and on which mass optimism was and still is truthfully based on: clean, cheap energy, food and water, effective and cheap vaccinations, that kind of stuff.
Given that the maldistribution of wealth, power and possibility will grow, and quicker too, it's obvious that something's gonna give, democracy-wise. This time the Reps didn't quite manage to face off the enormous weight of hostile public feeling. Give 'em credit for trying, though. The next opportunity they get (and as we see, they don't need much of one), they may win out. They need to be a little better organised. They need to be ready for that great hypothetical conjunction of events which is the subject of so much Pentagon wargaming: the mid-east war, the oil-shock to end all oil-shocks, the food-lines, cold and hunger, the terrorist anthtrax attacks, the breakdown of public order, the calls for (interim, emergency, short-term) measures like martial law in inner city areas...