Oil

Nicholas Siemensma nsiemensma at yahoo.com.au
Tue Aug 12 04:35:35 MDT 2003


David Schanoes wrote: 

> reserves are not a geological category but an
> economic one.

David counters the notion of oil depletion and
energy-limits by asserting that reserve estimates are
just a socially-mediated artefact ultimately
determined by the rate of profit and investment, a
kind of amorphous chameleon-like silly putty.  This is
peddling the darkest kind of pomo obscurantism.  

The social process of capital accumulation which
appropriates nature for its own ends is the form given
to an existent content.  Form cannot determine
content, which is rather the inevitable substrate
which modes of production evolve to work on and shape,
a datum prior to social relations.  This dynamic
interplay is based on the (historically and logically)
prior existence of all those processes and categories
of nature, fossilised and sedimented algal material
and vegetal remains, an original endowment which
capital appropriates in its quest to increase labour
productivity and create a self-sustaining world of
accumulation.

If certain realities of geophysics and geochemistry -
their questions, methodologies and conclusions - as
they relate to hydrocarbon reserves, are mediated by
social and economic realities of one kind or another,
this does not alter the fundamentals.  Mediation
cannot exist without immediacy, and the crude and
obvious facts of geology still serve as the basis of
all (even capitalist!) convention, performativity and
social fact.  To pretend otherwise is mere Judith
Butler-style "science is social relations" bullshit.  
  

Capitalism depends upon a resource of which production
always will be subject to finite physical limitations.
 Oil is, as well as totally indispensable and
irreplaceable, scarce.  David may suggest that he
believes all this, but that he nonetheless understands
the phenomenal forms-of-appearance of apparent
"scarcity" (suggested by the late Mark Jones, among
others) as, instead, outcomes of capitalism's immanent
tendency towards overproduction and a falling rate of
profit.  According to Schanoes, therefore, Mark forgot
that oil possessed all the qualities of the
commodity-form.  This is false: Mark merely emphasised
the unique specificities of oil as a strategic and
elemental commodity unlike any other, and tried to
model valorisation crises emerging from technological
failure to overcome energy deficits.

Placing the oil-nexus at the heart of politics by
analysing a long-run decline in world oil production
does not make one blind to the mundane problems of
infrastructure investment and extraction technologies.
 If anyone made the unwarranted leap of imagination
from oil under the Iraqi ground to free-flowing
petroleum, it was not Campbell, Laherrere, or any
member of this list.  When Fadhil Chalabi wrote his
"Iraq and the Future of World Oil", suggesting that
Iraq could reach 12m bls/day, Campbell and Laherrere
questioned his optimistic assessments.  Even if such
staggering reserves of oil were there, it would not be
easy to extract it or achieve the massive tempos of
investment and production required to even think about
it.

The debate about oil depletion thus only makes sense,
as David suggests, when inserted into the wider
constellation of determinate factors of accumulation
and imperialism.  Simultaneously, however, energy and
the energetics model is itself a fundamental instance
of the world system, and any analysis of the latter is
impoverished if we pretend that it has "nothing to do
with scarcity".  (Anyhow, David's version of Marxist
crisis theory and "overproduction" is problematic,
IMHO.)

> Oil went from $10/barrel to $30 a barrel in a
> year, based on what new
> information about scarcity?  The OPEC actions have
> nothing do with scarcity.

There's the whole internal logic of the oil industry
to consider, the movement from early wildcat days to
Rockefeller's cartelisation, then deregulation, etc. 
What lay behind the re-emergence of deregulation as a
policy theme in the 1980s, when the monopolies came
under pressure as the industry became mature and signs
of shortage appeared?  The combined efforts of the
great capitalist powers and rent-seeking states tried
to fragment the power of the big corporations, to
remove supply bottlenecks on one hand and to gain
leverage and maximise advantage on the other. 
Monopolies and rent-seeking were attacked as gripping
the industry with structural rigidities, and
deregulation took away national controls and brought
new countries into the market, changing the balance of
market power away from states.  In NOPEC states,
deregulation of oil and gas markets produced a wave of
investment and liberalisation.  Simultaneously, the
Soviet Union energetics base collapsed, with
production falling precipitously, and the
fragmentation of the former socialist bloc opened the
natural energy resource-base of the fSU.  The fall in
energy prices must be related to this whole collapse,
as well as the destabilisation of OPEC.  Deregulation
and privatisation were put forward, resulting in
reduced upstream investment, inability to recapitalise
the industry and a whole concatenation of feedbacks,
partly due to the inability of annual global
production to exceed more than 25-30bn bbls.

In any case, the wave of privatisation and
deregulation reproduced the instabilities of
unrestrained markets, producing alternate gluts and
famines.  The late 1990s saw a glut, but the
unworkability and collapse of deregulation itself
surely relates to the evolution of the oil industry
and the fundamental question of depletion.  It also
relates to the Wall St bubble and dollar seigniorage,
which in turn points back to the upheavals, shocks and
crises of the Seventies.  

One of the reasons why oil was very cheap c.1999 was
because Saudi and other Gulf producers announced large
planned increases and investments of over $100 bn to
supply world markets with an additional 10-15m barrels
per day over the next decade – because of the imminent
exponential decline in non-OPEC oil production. 
Refined extraction technologies such as nuclear
magnetic resonance drillhead scanners and horizontal
drilling are indeed important in improving recovery
and stimulating investment, but this doesn't mitigate
the dramatic, steep and accelerating decline of
non-OPEC (eg. North Sea, North America, Russia) oil
supplies.  As NOPEC peaked and declined, OPEC wrested
back strategic initiative.  David writes that the

> North Sea oil production peak was extended by 6-7
> years with half the oil
> still under the sea.  The end of the economic life
> of the North Sea is a
> product of profit, i.e. commodity production, not
> scarcity.

Where does this strict dualism come from?  Cost and
technical reasons mean that much known conventional
oil will remain underground forever, and this due to
accumulation crises, but also due to the required
energy input and net energy yield.  Tar sands and
shales, such as those suggested as "alternatives" by
David, are indeed available in copious amounts, but
require large amounts of energy.  Most
non-conventional oil will remain un-exploited due to
low net energy yields for each new barrel.  There will
always be oil in the ground; but this is not the
issue.  While no reservoir is ever fully depleted, a
point is reached when no more can be produced.  The
energy-famine leading to the collapse of the Soviet
Union is an interesting historical example, as is the
end of the coal age (which Jevons predicted!) with
significant coal reserves left underground.

As for North Sea production, it has experienced savage
depletion due to intensive deployment of extractive
technology which continues until production falls off
a cliff.  Energy supply is pushed to the maximum,
forced to its technical limits as supply falters. 
Dunno why else David mentions this, which finds its
most instructive parallel with the world fishing
industry which can manage to raise catches using
advanced technology, while overnight fisheries
collapse one-by-one.  This hardly disproves the notion
of bell-shaped production curves.  ("UK could reach a
new maximum with highest efforts in bringing all
fields into production.  But the result would be that
the reserves would be exhausted even faster and the
decline would become even steeper.  This would be the
worst of all possible options."
http://www.energiekrise.de/e/articles/Analysis_of_UK_oil_production.pdf)


Nick


http://search.yahoo.com.au - Yahoo! Search
- Looking for more? Try the new Yahoo! Search




More information about the Marxism mailing list