RE: Yet another take on Hubbert's peak

["Mark Jones" <jones118@xxxxxxxxxxx>]

 Ian Murray cited:

>According to Kenneth Deffeyes, a geologist with extensive
> personal experience in the oil industry...
>[w]orld oil production is peaking and will start to fall for
> good sometime during this decade....new
> exploration and production technologies can't save us. While long-term
> solutions exist in the form of conservation and alternative energy
> sources, they probably cannot--and almost certainly will not--be
> enacted in time to evade short-term catastrophe.

What form will thsi catastrophe take and what kind of working-class politics
is appropriate to meet it?

If the economists suffer from over-optimism, the geologists also are not
clear about the historical implications of the global Hubbert-peak. How does
capitalism react and adapt to energy shortage and growing entropy?

This is first of all and above all, an accumulation crisis, not a resource
crisis. The oil will never run out, and most of even known,
easily-accessible conventional oil reserves will probably stay underground
forever and never be pumped. As for non-conventional resources like
tar-sands--let alone hydrogen--they will remain mere fantasy. In the wake of
a sever slow-down, neither capital--nor, crucially, effective demand-- will
exist capable of bringing the alternatives onstream. World capitalism can
slip into a post-crash equilibrium state which can endure for decades or
longer, amid unprecedented social stress and immiseration. To say this is
not (obviously) to seek it or to welcome it; but only by resolutely
analysing historical processes, and not by hiding from them, can we hope to
positively influence outcomes.

It may seem odd to argue on the one hand that fossil fuels are running out
but on the other that even known, easily-accessible reserves may never be
used. But there are plenty of examples of this happening in history. The age
of coal and steam ended with most of the coal still underground. More to the
point, economies can collapse because of an energy-famine even though there
is still plenty of reserve left. That happened in the USSR.

The USSR was a very energy-intensive economy. The main reason for its
collapse was not because it was bankrupted by Reagan's Star Wars, or because
"planning doesn't work" or even because of Gorbachev's treason. These were
factors, but the main underlying reason was the failure of the Soviet energy
system.

But there is still plenty of oil left in the former Soviet Union. In fact
fSU reserves-to-production ratios have consistently risen for the past 15
years. Russian reserves are higher now than in Soviet times. Isn't
availability of reserves all that matters? Economists constantly repeat the
mantra that 'world reserves are rising' when they seek to refute the known
facts that world oil production is at or near its Hubbert-peak.

But this kind of information, which the panglossians depend on, is highly
misleading. What went wrong in the USSR is a paradigm example of just how
misleading the argument about reserves can be: and how crises can bite with
unexpected and devastating suddenness.

Soviet oil production peaked in 1987 and swiftly (within 5 years) fell by
half. This brought about the complete collapse not only of the Soviet energy
industry, but the whole Soviet economy. 15 years later, there are few real
signs of economic revival. Without the kind of effective demand which the
Soviet economy provided, and without the kind of social and technical
infrastructure and political stability which the Soviet economy also
provided, there is no material basis to recreate such a colossal oil
industry in the fSU. Therefore, the fSU is unlikely to ever be more than a
raw materials and above all, energy-supply appendage of the capitalist
world-system.

What happened to the Soviet oil industry exactly mirrors what is happening
in the West today: in the face of faltering supplies, the energy supply
system is being pressured to the maximum. Exactly as N Sea and Mexican
production is just now being forced to its technical limits, so big Soviet
resources such as Samotlor were intensively exploited until production
collapsed almost overnight. The result was an immediate technical crisis of
production from which the Soviet oil industry never recovered. Worse, it
brought down the whole economy in its wake. The crisis in oil production
triggered positive feedbacks in the wider economy which produced an
uncontrollable, runaway collapse. What had been a stable economy running in
equilibrium entered a period of chaotic turbulence before flipping into a
quite different steady-state. *The same thing is happening now in the
Western oil industry*. Exactly as in the West, oil and gas was internally
priced so low that it was impossible to recapitalise the industry. North Sea
oil (its huge infrastructure having been financially and energetically
amortized many years ago) was producing at maximum capacity even when oil
prices fell to $10/bbl in the late 1990s. Now, a savage depletion in UK
North Sea production has set in. Prices are temporarily higher, but fear of
a new slump is a deterrent to new investment in what is anyway a declining
reserve.

For more detail on the North Sea example, see:

http://www.energiekrise.de/e/articles/Analysis_of_UK_oil_production.pdf

>>Since October 1999 the production declined by about 17 percent. In total,
the decline of 2000 was about 7 percent with respect to 1999. The newly
developed fields in 2000 could not compensate for the decline of older
fields. UK has passed its peak production. Theoretically, of course, 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. <<

The USSR was a semi-autarkic enclave within world capitalism, so what
happened to the Soviet economy when its energy base collapsed does provide
an illustration of what can happen to the capitalist world-system as a
whole. The important difference is that the Soviet oil industry passed
through its Hubbert-peak in less than a decade; the Soviet Hubbert-peak was
an inverted-V. Because the global energy base is larger and more diverse,
and because the global capitalist economy is less energy-intense
(aggregating cores with peripheries and semi-peripheries) than the Soviet
economy was, the global Hubbert-peak is more like a plateau. This does not
however mean that the far side of a plateau cannot end in a cliff. A
Soviet-type energy and economy collapse must be a high probability, as
Deffeyes and others have argued. The capitalist world-system requires an
energy-base which is flexible, highly capitalised rich with human and
technical skills, and easily adaptable to demand. But it is already not like
that: human resources, especially upstream, are increasingly scarce, the
industry has lost its skills-base, and the ferocious round of mergers and
concentration of the past decade are evidence of an industry in historic
retreat and lacking the kind of capital necessary for a quantum shift to a
wholly new scale of activity. Faced with the crisis of another 1973-style
oil shock, could the capitalist oil industry respond today as it did then,
by swiftly mobilising huge resources of capital, technique and manpower to
bring on stream huge new offshore Non-OPEC reserves? Or will a shrinking
economy, forced into slump by an energy-shock, drag the whole energy sector
with it, Soviet-style, into an irretrievable and fatal nosedive? To judge
from the evident pessimism of many oil-patch insiders, the answer is that
this time there will be no reprieve. The people, the money and the machines
are no longer there, and, more to the point, the oil isn't there any more,
either. These weight of technical argument from the geologists, of anecdote
from industry insiders, and of evidence about the true state of global
reserves, is overwhelming, and compares with what looks like fatuous and
delusional optimism from some at least of the economists. So we are looking
not at *whether* a crash will happen, but only at *when* and at how its
dynamics might play out. At some point in looking at the odds, you also have
to consider the geopolitics of the last two great reserves: the Persian Gulf
and the Caspian. The future of capitalism is already written in the sands of
the desert states.

The global Hubbert-peak is already happening. World per capita commercial
energy consumption already peaked several decades ago. This is the real
reason why development became de-development, why more than 2bn people live
on less than $2/day, and why their fate is certain to continue to worsen.
The global Hubbert Peak is already happening. Energy shortages interact with
capitalist accumulation to produce a long plateau rather than a sharp peak
and decline. Life on this plateau is an attritive, and basically losing
struggle, against chronic and growing energy shortage, a struggle conducted
by the imperialist ruling classes on many different fronts simultaneously,
from the recomposition of the working class, the reconstruction of the
capitalist labour process, the inflection of accumulation dynamics, to the
reconstruction and of the architecture of imperialist hegemony, the
reconstitution of subalternity between and within subject national cultures
and states, the preparation for war and the final closure of civil society
and its replacement by surrogates based on the surveillance state, and more.
The ruling class, contemptuous of its social enemies which it defeated
conclusively in the 20th century, is not afraid to conspire openly against
the day when an avalanche of change is no longer avoidable. It is bracing
itself for a battle which it does not intend to lose. Since it does not face
any real organised opposition and enjoys near-total ideo-hegemony, the only
thing imperialism does fear is the possibility that the cascade of change
will become completely uncontrollable. Its greatest threat is precisely the
US working class, because North American civilisation has become completely
hostage to unparalleled energy profligacy. American per capita energy
consumption is two-thirds higher than German or Japanese. This gross
over-dependency on depleting fossil energy has created a built environment,
a mode and method of production, and an industrialised food-supply, which is
highly inadaptable to change in the short-term without wrenching social
upheaval and mass distress on a scale hitherto unknown in capitalist North
America. Energy-entropy, a characteristic of technical prowess, is most
advanced, most malignant, precisely in the most advanced capitalist state,
the US.

Since 1973, US imperialism has successfully externalised the overheads of
this chronic crisis, and the result has been the growth in mass
immiseration, both relatively and absolutely, of the working class and its
social allies in peripheral and semi-peripheral states. There is a limit to
how far this process can continue; whole regions have already slid off the
economic map, and the destabilising effects of the huge deflationary wave
which followed the energy shocks of the 1970s continue to produce
devastating aftershocks in Africa, South Asia, Eastern Europe and elsewhere.
While the policy of making the poor pay (socialism for the rich, neoliberal
globalisation for the poor) will continue and even intensify, the huge and
fundamental imbalances in the social geography, economy and class structure
of the USA also continue to intensify without limit. Capitalism defeated the
working class, and was able therefore to grow without any social limits. The
political problem we have is to try to make people understand, not what
*might* happen, but what is already actually happening: at the still largely
invisible, stealthy but irreversible processes of decay which make a
historical step-change inevitable. The question is, what kind of
step-change? Do we permit the imperialist ruling classes to drive us over
the abyss of war? It was never as materially true as today, that the
alternative is either socialism or barbarism.

Mark Jones