The global market system is good at making Gordian knots out of simple problems. Take the replacement of fossil fuels by renewables, which ought to be a no-brainer. The International Energy Authority thinks oil demand will peak by 2030 (tinyurl.com/4jymwhdm). Demand is expected to halve by 2050, though governments would have to cut their greenhouse gas emissions three times faster than they are doing in order to achieve climate targets (tinyurl.com/44db4wdv). 90 percent of coal and 60 percent of oil and gas needs to stay in the ground for an evens chance of sticking to Paris Agreement limits (tinyurl.com/2vsfr6rw). As if to underline the urgency, 2023 is reckoned to be the hottest year on record, just like almost every year for the past decade (tinyurl.com/bddxxmve).
But check the business news and you soon discover that the oil supermajors are paying no attention to such namby-pamby nonsense. This is capitalism, not Kumbaya. Instead, they’re looking at the numbers. They project huge new markets among the growing affluent classes of developing countries, and that means cheap fossil energy. And that means staying one step ahead of the competition. Since drilling for new oil is in general a money sink, the cash-rich supermajors are busily engaged in ‘inorganic growth’, ie, buying up other oil companies using the mega-profits they’ve gleaned from sky-high oil prices thanks to lucrative wars in Ukraine and the Middle East.
Mike Wirth, CEO of supermajor Chevron, puts it bluntly: ‘You can build scenarios, but we live in the real world and have to allocate capital to meet real-world demands’ (ie, make real-world profits). Chevron have just bought Hess, the biggest player in the Permian oil basin spanning Texas and New Mexico, for $53bn, while ExxonMobil has bought Pioneer Natural Resources, one developer of the giant new Guyana oil field, for $60bn. As the Financial Times puts it, this is a game of ‘last man standing’, and nothing else matters, not the fury of climate groups, nor of the EU, nor even of US President Joe Biden himself, who lashed out recently that ‘Exxon have made more money than God’. The supermajors don’t listen to God, or to any other imaginary or state authority, they listen to their shareholders, and their shareholders want what shareholders always want, a return on their investment. Now, other oil majors will be forced to step up the pace to compete as oil demand climbs inexorably. UK-based Shell and BP may even have to merge, just to stay in the game (tinyurl.com/f8x6bcrh).
Oil companies are also massively expanding their trading arms to profit from volatile market spikes due to geopolitical tensions that are increasingly becoming the norm. Translated, this means there are big bucks to be made as the world becomes steadily more dangerous. The Ukraine conflict has disrupted everything. Global energy has been weaponised.
Russia, banned from selling to Europe, is selling to Turkey, but Turkey is threatening an invasion of north-eastern Syria, partly to crush the Kurds but possibly also to plunder Syria’s north-eastern gas fields now that Assad can’t count on Russian support. Russia’s biggest customer is China, whose sole domestic oil supply is in the Uighur province of Xinjiang, where through no coincidence the locals have been brutally oppressed and herded into concentration camps. China has expansion in mind, and this year enraged its neighbours with a new map redrawing national boundaries to ‘claim’ Indian, Filipino and Russian territory as Chinese, prompting one Indian lawmaker to threaten ‘surgical strikes’ (tinyurl.com/suyurbsr). US-backed chip-makers like TSMC are meanwhile scrambling to get out of Taiwan before China invades it, for fear that a Chinese takeover of their world-beating chip industry will scupper western capitalism. China is also funnelling populations and investment into the undeveloped mineral-rich Russian Far East, and could decide to grab (back) the disputed formerly Chinese region of Outer Manchuria, including Russia’s vital land corridor for transporting weapons to Ukraine from its biggest arms supplier, North Korea. Keen to avoid reliance on Russian energy, China has been striking deals all over the Gulf states, including Iran (tinyurl.com/mr2pu3bn). This in turn may explain why the US is backing Israel in the current Gaza conflict, to keep its foothold in a region increasingly falling under Russian and Chinese influence.
Back in the UK, the cultural guerrillas of Just Stop Oil continue to get big headlines by, among other things, attacking famous paintings in galleries, but they seem less interested in big pictures. Where is their answer to the real-world realities of people like Mike Wirth, or the geopolitical manoeuvrings of superpowers? The Green lobby in general wants to hand-wave a renewable world into being with emotive talk of climate ‘justice’, but without considering how capitalist profits dictate what’s going to happen and what isn’t. For example, the UK Tories have just defied their own NIMBY supporters by (slightly) rowing back their regulations obstructing new on-shore wind turbines, but investors are finding better profits abroad so no turbines are being built (tinyurl.com/yma2c3by). And the grid infrastructure isn’t there anyway. ‘In Britain, Italy and Spain more than 150-gigawatts’-worth of wind and solar power, equivalent to 83% of the three countries’ total existing renewables capacity, cannot come online because their grids cannot handle it’ (tinyurl.com/3pahtcan).
Today’s world is a web of clear and opaque connections. Pull on one strand, and a whole lot of others come up, all impossible to disentangle and address separately. What binds it all together is the capitalist system, built on private ownership and private control of resources, in which production is driven by the grow-or-die imperative to be ‘last man standing’ with no regard for any physical, natural, ethical or even market limitations. Instead of delivering steady benefits to humanity, capitalism convulses through destructive cycles of hyperactivity and collapse, and is quite unable to change this behaviour, or indulge the luxury of being humane, ‘just’, peaceful or environmentally sustainable. Reformers need to stop wasting their time with non-solutions. We have to end it.
Paddy Shannon
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