Oil and overproduction

Charles Brown BrownBingb at aol.com
Wed Jan 22 07:26:12 MST 2003



Date: Tue, 21 Jan 2003 08:32:51 -0500
From: "David Schanoes" <dmsch at attglobal.net>
Subject: Re: Oil and overproduction




Regarding MJ and the ABCs of Marxism:  MJ says they, the ABCs don't apply to
oil.  He says it's not important or at least not as important as the studies
of oil that showing its looming disappearance. MJ says the ABCDEFs don't
apply because overproduction is not the issue.

&&&&&

CB: On this (somebody might have mentioned it already) , doesn't
"overproduction" in the ABC''s usually refer to the whole economy , not just
one industry.  Do Marxist's talk about a crisis of overproduction in the auto
industry ?

&&&&

I say this conflict with Iraq is not about depleted resources.  Actually
it's not about "oil" as oil.  To say that is to fetishize the commodity even
more. It's about the price of oil, it's about the costs of production, it's
about the overproduction of oil interfering with the reproduction of
capital, or to say it in the ABC form, it's about the falling rate of profit
in the oil production industry.

&&&&&

CB: I'm trying to remember from the ABC;s. Is it Marx's thesis that
capitalists resolve the problem of falling rates of profit by ...what ? war
like this ? I thought they resolved the crises of overproduction by slashing
production, idling means of production, laying people off, slashing variable
capital, creative destruction. Well, I know war is sort of the ultimate
creative destruction like in WWI , but the American capitalists don't expect
to beget much destruction on their own stuff by this war , do they ?

&&&&&


Others equally versed in the ABCs have entered the discussion with
assertions that oil is the ultimate capitalist commodity given its essential
role in all other commodity production.  However, somehow this ultimate
commodity doesn't conform to the analysis Marx developed of commodity
production.  The categories of "Value, Price, and Profit" can't be applied
I'm told.  (Aside to LP, if VP&P can't be applied to oil or to private
agriculture in Cuba, just where do they apply?).

&&&&&

CB: I think you are correct that the classic capitalist dynamics are at work,
but also, since oil is so strategic in the technological regime, couldn't
there be also at work the dynamic that the capitalists want more privileged
physical access to the natural resource in Iraq ? This would be a little
different point than anything about depletion. But it is not a economic , but
physical argument ( it's still materialist , in terms of ABC)

&&&&


I believe I provided certain numbers on price, rates of return, levels of
investment to buttress my assertions.  Those are my credentials and I have
yet to see an alternative provided by my honorable critics.

&&&&

CB: Yea, sorry about all the credentials stuff. Actually , I don't have many
( any ?) Nor many stats.   Are you saying the war on Iraq will raise the rate
of profit back up by reducing the supply and raising pricdes , because the
war will reduce the supply coming from Iraq ? Or will taking the oil allow
the American capitalists to raise their rate of profit back up ? How does the
war fit into your logic of solving a crisis of  overproduction ?

&&&&

I have also provided a negative example so to speak, in the scrapping of a
multibillion dollar plan to extract more oil from Canadian oil sands.

So let me close by adding a comment by two  oil production professionals ,
one of a company  working in Iraq, one not, one quoted in The Guardian
(11/22) one in the WSJ (1/16 I believe):

1. (Guardian) This oil { from Iraq} could cost  as little as 97 cents a
barrel.  "Ninety cents a barrel for oil that sells for $30-- that's the kind
of business anyone would want to be in." John Teeling  head of Petrel
Resources.

2. "If we go to war it's not about oil.  But the day the war ends it has
everything to do with oil."  L. Goldstein, Pres. Petroleum Industry Research
Foundation.

Couldn't have said it any better myself.

ABC, easy as 123.

&&&&

CB: Well, yea that adds up,  whether there was a crisis of overproduction or
a boom going on.






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