[Marxism] Nader and Peak Oil

Joaquín Bustelo jbustelo at gmail.com
Thu Jun 5 16:10:13 MDT 2008

Ralph Nader has made the U.S. gasoline crisis a central axis of his
2008 presidential campaign.

In a counterpunch article at the end of May, he rails against "price
gouging" and "speculation" insisting that this is the fundamental
cause of the sky-high oil prices.

He quotes a variety of bourgeois sources, all of whom insist supplies
are adequate, even plentiful:

*  *  *

Over the time since early 2007, U.S. demand for petroleum has fallen
by 1 percent and world demand has risen by 1.3 percent. Supplies of
crude are so plentiful, according to the Wall Street Journal, "traders
of physical crude oil say their market is suffering from too much
supply, not too little."

Iran, for instance, is storing 25 million barrels of heavy, sour crude
oil because, in the words of Hossein Kazempour Ardebili, Iran's oil
governor, "there are simply no buyers because the market has more than
enough oil."

Mike Wittner, head of oil research at Societe Generale in London
agrees. "There's various signals out there saying for right now, the
markets are well supplied with crude."

*  *  *

However, statistics compiled by the U.S. Energy Information
Administration tell a very different story.

Here is the average daily world oil supply, in millions of barrels:

2003 - 79.62
2004 - 83.12
2005 - 84.63
2006 - 84.60
2007 - 84.59

As can be seen, production has been essentially flat for three years.
How can these numbers be reconciled with the claims that a) demand is
growing but b) supplies are adequate?

On the face of it, these two claims can't be reconciled except through
the traditional bourgeois mechanism of supply and demand. The price
has risen until "effective demand" has been REDUCED to the level of
supply. To return to what a few years ago was considered a "high"
price for crude --$30 a barrel, or its equivalent in euros at the
exchange rates of those days-- would require higher production of,
perhaps, something like 90 million barrels a day.

But there is more to the way the crisis is manifesting that just an
overall supply of crude.

Part of the explanation is that barrels of oil are not necessarily
interchangeable. The reference price we see quoted on TV is for light,
sweet crude, which is the easiest kind to refine. Refining "sour"
crude (with more sulphur) and heavier grades is more expensive and
can't necessarily be done in the same refinery, at least not without
significant adjustments, even retrofitting of additional equipment, or
taking more time in the refining process, adding to costs another way.

When you think about it, this is precisely the way one would expect
the approach of peak oil to manifest -- as a shortage of the "best"
kind of crude oil.

Another part of the explanation is that oil reference prices are
quoted in dollars, which have depreciated rapidly. This is really a
manifestation of war-induced inflation, as Bush's military adventures
abroad and the continuing expansion of the Pentagon budget are
financed by ever-increasing deficits. Since a large part of this U.S.
sovereign debt is being exported, the net result is a drastic loss in
the dollar's purchasing power in relation to other currencies --
inflation is showing up in the prices of imported goods, especially
from Europe and Japan.

Still another part of the explanation is a mismatch at the output end
of the refineries, similar in a sense to the mismatch at the input
(i.e., light sweet versus sour heavy crudes). The divergence in the
price of a gallon of diesel and one of gasoline that has emerged over
the past year is a clear indication that refineries should be
producing more diesel and less gasoline. However, the output mix isn't
so easy to adjust beyond a few percent, as this requires large
investments in additional equipment at existing refineries and/or new
refineries properly outfitted.

Realistically, we cannot know if this is "the" peak oil moment, or
merely the sort of temporary plateau one can logically expect as the
world strains and staggers to "the" peak oil moment. But it is already
enough to give us a taste of things to come.

One is the sudden obsolescence of huge installed productive capacity
as demand for gas guzzlers collapses. Gas at > $3/gallon was enough to
provoke this, and the pump price hasn't yet really caught up with the
price of crude (because of the differential between gasoline and
diesel) even at the current $4 a gallon. the GM plant closings and
layoffs are just the tip of the iceberg. Double the price of gasoline
again, as has happened over the last couple of years, and automobile
dealers won't even be able to move a Prius. The issue isn't going to
be getting a 30 MPG Civic or Fit, but moving to mass transit.

Another casualty already visible is the airline industry. Increase
prevailing fare levels and what happens? United and Continental have
been giving us answers the last couple of days. There is a sudden huge
excess of capacity, what might be called a "moral" depreciation of
exiting fixed capital stock that rapidly reduced the value of a
significant portion of the airplane fleet to what a scrap metal dealer
would pay. And we will soon hear the screams from Boeing and Airbus as
their order books get decimated.

Further knock-on effects will take time to become evident. One is a
downturn in world sourcing, of everything from food to manufactured
goods. As the price of fuel and therefore transportation increases,
effective accessible markets will shrink. High bulk/weight goods will
be the first to be affected, ultra-high-tech miniscule luxury items
like the iPod last. But local/regional sourcing will provide
increasing price advantages despite wage differentials.

Location, location, location has long been the cry of real-estate
hucksters as they seek to take advantage of ghettoization and then
gentrification of the formerly ghettoized neighborhoods. Already in
Atlanta I see house ads that boast of nearness to the previously
much-despised and therefore unmentionable MARTA rail lines. Despite
the real estate crisis, relatively high-density (for Atlanta)
construction projects, such as townhouses and condo conversions of
industrial/warehouse spaces are continuing within walking distance of
MARTA stations. Even if this isn't "the" peak oil crisis and gas
prices come down again, sooner or later, most likely sooner, there
will be THE "peak oil" crisis and then the collapse of the market for
suburban McMansions with no easy access to mass transit will become

*  *  *

I'd like to be able to say that one reason to support Nader or
McKinney or (why not?) both (after all, the bourgeoisie supports BOTH
its bourgeois candidates and it's not unusual to see PAC's and moneyed
individuals giving to BOTH campaigns in a race) is that they are
facing up squarely to what it really going on.

Frankly, although he is completely vague about it, and I have little
doubt his concrete measures (if any!) will defend and benefit
bourgeois interests, Obama is much, much closer to the mark when he
HONESTLY tells people there is no real solution to the gasoline crisis
except for developing alternative energy sources and breaking "our"
(the United States's) "petroleum addiction."

I think this is but one aspect of a broader crisis facing the left, or
the few miserable remnants of it in the United States, and reflected
in  thoughtless slogans like "money for" jobs, education, health care,
free dope, mass transit, bigger baseball stadiums or whatever "not for
war." This neatly overlooks the reality that the U.S. has so many
resources precisely because of "war," the super-exploitation of the
Third World, and saying "no money for war" is also saying no to the
fruits of war, imperialist super-profits.

The strategic aim of the Iraq adventure was precisely to re-enforce
U.S. imperialist control and cheap access to a large portion of the
world's remaining easily-accessible petroleum resources. It is now
clearer than ever that this U.S. War, because it could not succeed,
had the OPPOSITE effect of loosening U.S. control, not only and
perhaps not even mainly in the Middle East, but halfway across the
world, in Latin America.

Lest we forget, one reason crude oil sold for as little as $10 a
barrel ten years ago was Venezuelan scabbing on OPEC quotas. As soon
as comrade Chavez occupied the Miraflores Palace as president of
Venezuela, that scabbing came to a screeching halt, and Third World
countries began getting a fairer price for their hydrocarbon
resources. It was, in retrospect, the very first, and a very telling
sign of the direction he was heading, something that was noticed by
very few on the left at the time (notable exceptions being some Latin
American revolutionaries, like the Cubans and the Argentine National
Left). But if the Bolivarian Revolution has been able to advance as
far as it has, this has been in large part bought by the blood of
Iraqi and Afghani patriots, whatever their ideological conceptions,
who have bogged down American imperialism into another Vietnam-style

And, listening to some of the more prominent expressions of what Left
we have left in this country, it seems what we are offering is only
capitalist consumerism on steroids. Down with the greedy oil
monopolies that keep us from consuming, no the current 20 million
barrels a day, but 25 or 30 million barrels.

At some point we have to recognize the implications of what now is
often said by many leftists, but with no real understanding or
conviction: the consumerist life style of the "advanced" imperialist
countries --and first and foremost by a mile and a half, the United
States-- is unsustainable, it is a crime against humanity, it is
genocide and worse, ecocide.

Much of the leftists in the United States trace their REAL roots, not
so much to the Communist Manifesto and labor movement of the 19th and
early 20th Century, but to the worldwide youth radicalization and
rebellion of the 1960's. Stung and demoralized by the failure of our
naive dreams of those years, some of us turned to the "old left" of
"class politics," but many more to a confused radical liberalism in
spaces like the left wing of the democratic party, the Quakers, the
Unitarians and so on.

I do not know how to turn back the clock, how to undo the divergence
between sectors that I believe share fundamentally similar outlooks
and values, whatever ideological superstructures we've now imposed on

But if it can be overcome to some degree, at this time, in the U.S.
political space as it now exists, I think the fundamental axis of left
politics has to go beyond anti-corporate muckraking and denunciations,
and squarely face up to the consequences of saying no money for war,
of saying the U.S. life style is unsustainable.

The heart of that message, I believe, needs to be a promise not of
freedom from want, but of freedom from wanting. Freedom from want, in
this country, with its current resources, is an almost trivial
promise. Take a few percent from the top, give a few percent to the
bottom, couple it with a couple of reforms like a living wage and
national health care, and after a few years you're done. Unless, of
course, you're in a society PERMEATED by bourgeois propaganda that
says if you've only got a Honda Fit instead of an SRV, or a corolla
instead of a prius, or anything but a hummer, then you're a worthless
piece of shit. Which is PRECISELY the society we live in. The one that
tells you what a miserable failure you are because your McMansion
doesn't have his-and-her exercise rooms even though you're uncoupled
and live alone. That says what a shit you are that you didn't get your
18-year-old daughter a NEW car for her graduation present. And so on.
THEN you're never done.

In other words, I believe the battle the U.S. left needs to wage today
is a battle of ideas and fundamentally about *values.* This is, to be
brutally frank, NOT NOT NOT a "class" message as that is traditionally
understood on the left, but first and foremost a message addressed to
the intelligentsia, and most especially the youth. I believe it is a
message that will also be accepted and understood, in time, by the
lower layers of the working class and especially the oppressed
nationalities as people lose their illusions that they, too, can have
a McMansion and a hummer. I ALSO believe it will have little-to-no
resonance, and on the contrary be met with extreme hostility, by those
sections of the working people wedded to the privileges they have a
males, or as white people, or simply as residents of a country like
the U.S.

>From what little I've seen of the Nader campaign (and even less of
McKinney's), I don't believe either one is on message in the sense I
mean. And I can see myself just as easily or more easily starting a
useful discussion from Obama's vague statements about oil addiction
than from Nader's (frankly) demagogic anti-corporate muckraking. The
problem is not just that corporate interests are in control, but what
they DO with that control, and not mostly in terms of the marginal
immediate material well-being of people in the U.S., but in terms of
the fundamental sustainability of human civilization as a whole.


More information about the Marxism mailing list