Re: Oil

["dms" <dmschanoes@xxxxxxxxxxxxx>]

This will be fun.....

By the numbers....
----- Original Message -----
From: "Nicholas Siemensma"

NS:
> 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.
________________________________

 No, it is not pomo obscurantism whatever that is, it is the way the
industry determines proven reserves. It is an economic determination,
subject to fluctuation based on the categories of technology, cost, time,
profit.  See British Petroleum's revaluation of proven estimates in Russia/
_________________________________
NS

> 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.
__________________________________________

Speaking of bullshit, the above  weighs in at about a metric tonne, since it
presumes what needs, from its own viewpoint, to be proven... that the
estimates of reserves today is the true, accurate, scientific,
supra-economic estimate.

This isn't science we are talking about its economics and the economics of
commodity production.

Everyone agrees it's finite.  But the actual dimensions are unknown.  You, I
guess, are claiming that the dimensions are absolutely known and are driving
the actions of capitalism.   Kiss Marx goodbye on your way to the "true"
science of estimating oil reserves.
_____________________________
NS:
>  Oil is, as well as totally indispensable and
> irreplaceable, scarce.  David may suggest that he
> believes all this,
____________________________________________
No, I do not believe oil is SCARCE.  No more scarce today after the invasion
of Iraq and the price at $32 barrel than it was in 1998 at $10 a barrel.  No
more scarce than in 1981, when proven reserves were less than they are
estimated to be today but the price of oil tripled because of OPEC's
maneuver.  That maneuver coincides with a decline in profitability in the
oil industry as does the first OPEC maneuver in 1973.

I would recommend that the real make up of the oil industry, its real
determinants as a capitalist industry be studied to determine why prices are
fluctuating.
___________________________________________
NS
.  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.
__________________________


No, I don't think Mark "forgot" that oil was a commodity. I think he
rejected that commodity production applied to the determinants of oil price
and oil market fluctuations.  He said that he was not sure that
overproduction, commodity production, even applied to oil.
_____________________________________
NS:
> 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.

____________________________

Exactly where is this long-run decline in WORLD oil production?  It's
coming?  According to various Hubbertists it's been coming a long time, long
enough to have been seriously delayed.  Hubbert himself predicted the mid
80s, then the 90s.  Then his followers predicted a 3 in 1 Y2K, then 2003....

Moreover, how is this looming shortage driving the markets and the industry?
Price?  Again I would refer you to rates of profitability in the industry
before attributing a price movement like this on so contentious a theory as
disappearance.
_____________________________________

NS
>  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.
______________________________

This "list" as such had no uniform view about the coming upsurge or lack
thereof in Iraqi production.  Charles Jannuzi argued, correctly, that cheap
oil wasn't the issue and neither was looming scarcity.  He argued that the
war was partially motivated by the opposite-- to keep oil prices high, to
keep Iraqi oil off the market, especially since the oil industry had been
bellyaching ever since 1998 ($10/barrel that year) about Iraqi production
depressing prices.

Comrade Jones, who unfortunately passed away before he could assess these
events argued that Bush was just bluffing and would not dare attack Iraq.

And as for 12 million barrels a day, nobody believed that given the current
rates of profit, prices, levels of investment etc.

But I tell you what everyone was counting on, and that is 2 million barrels
a day, and that hasn't happened-- did all that oil disappear?  It's still
there,  there is still some infrastructure that the US did not destroy.  The
expertise is available, and production is nowhere near the pre-war figure.
___________________________________
DS> > 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.
>
NS 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.
_________________________

If we are going to consider the internal logic of the oil industry, which is
exactly what I am trying to get people to do, then we have to consider the
fundamental relationship at the core of all such logic, and that is
commodity production and profit.  Why not consider that, rather than some
highly speculative material about monopolies and rent seeking?

Moreover your data is just flat out wrong.  What shortages became apparent
in the 1980s that weren't apparent in 1973 when the first OPEC crisis had
everyone jumping through hoops, OK almost everyone, about shortage,
depletion. and the need for the industry to raise capital to offset
declining reserves?

What shortages in the 1980s, when the 80s, a period of slower growth
worldwide, was a period of tremendous overproduction of oil, breaking the
OPECprice rises and leading to tremendous economic difficulties for capital?

You don't use supertankers as warehouses for oil when there are shortages,
unless you are TRYING to CREATE a shortage and jack-up the price.

The internal logic of the oil industry is commodity production, that's what
must be considered.
_______________________________
NS:

  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.
_______________________________________

All of the above is description and not analysis.  First, the collapse of
Soviet oil production was not due to any decline in reserves, but due to the
inability to maintain the productive apparatus and the social infrastructure
of the whole society.

The declining years of the USSR are marked by literally running the
productive apparatus into the ground in an attempt to garner more hard
currency, more of the world's socially available surplus to keep the country
afloat financially.
______________________________________
NS

> 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.
 _____________________________

This argument is an evasion of the previous assertion that we must look at
the internal logic of the industry.  Instead we get the reverse twist on the
bourgeoisie's claim that it's all the government's fault with its
regulations by claiming now it's all the deregulations fault, it's Wall
Street's fault, it's speculation, etc. etc.

No it's the internal logic of commodity production, of profit, and of
overproduction.  Those are the components of the internal logic-- everything
else is a refraction, a manifestation of those forces.
_______________________________
NC
> 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.
______________________________________

Not at all, the immediate price of oil does not collapse nor soar based on
announcements of planned investments.  I believe it takes something like 6
years (if anyone has the exact number I'd appreciate it) to bring new
production on line.

You are saying that prices went down because producers announced plans to
attempt the offset of the looming disappearance of Gulf Oil.  Essentially
you are saying that the markets reacted to a capital spending plan rather
than the real approaching shortage.  That doesn't make sense, not that the
markets have to make sense, but that also isn't what took place.  The cost
of production had declined below historic levels, production met the
requirements (if you look at the history of oil production-consumption, the
two are so evenly balanced you might wonder how the price ever changes,
until you jettison the supply-demand theory and look at profits.) and the
price collapsed.  Enter OPEC in 1999.
_______________________________
NS

> end of the coal age (which Jevons predicted!) with
> significant coal reserves left underground.
_________________________________

I think it's amazing that we you can bring this up about coal and ignore
it's implications for your own arguments.  Coal reserves left underground
and the decline in production of coal have nothing to do with the
"geological reserves"  the pre-existing supply.  It has everything to do
with the internal logic of capitalist production. A more profitable, cheaper
source, in production and use, was found, oil

That's economics, social logic.  Not science.

best to all,
dms


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