THE PEOPLE JUNE 1998 Vol. 108 No. 3 DIMINISHING OIL, INTERNATIONAL CONFLICT AND SOCIALISM BY B.B. A quarter century has passed since the so-called energy crisis of 1973, and more than two decades have gone by since the recurrence in the winter of 1976P1977. Both of these "energy crises" created a global panic, and both were occasions for some of the most outlandish political posturing of the century. Politicians danced about the Maypole of energy conservation, "talking heads" bobbed in solemn deliberation as oil companies made windfall profits. It was the working class that bore the brunt of those cartel-induced crises, of course, when rising prices reduced the buying power of wages, led to long lines at gas pumps and created shortages of heating oil for working-class homes. It was the impact that these "energy crises" had on the working class that led the Socialist Labor Party to publish its pamphlet WHY IS CAPITALISM RUNNING OUT OF GAS? That was in 1977, and the pamphlet summarized the problem in these words: "The feeble proposals in the Carter [administration's] energy package are those of a system thoroughly locked into its wasteful ways. That, after so much sound and fury, they are the best the system could come up with leads to the unmistakable conclusion: simply stated, CAPITALISM is the energy crisis." Despite all that we hear about "cheap energy" these days, there is mounting evidence that a truly devastating crisis in energy may be looming just beyond the approaching horizon of the 21st century. The intensified search for offshore oil near the Spratly Islands in the South China Sea and off the coast of Cuba--but particularly the rush to exploit the oil and gas reserves of the Caspian Basin in Central Asia--may be so many indications that such explorations are approaching the bottom of the global oil barrel. None of these new oil fields can be compared to the large pools discovered in the past; but they may--to paraphrase Marx--signal that capitalism's history of nestling everywhere, settling and establishing connections everywhere, in search of the increasingly elusive "black gold," has just about run its course. Given the current pace at which natural resources are being plundered, global resources are bound to dwindle at alarming rates--and catastrophically so in the case of oil. This nonrenewable energy source--upon which capitalism has nurtured its industrial base and fashioned a system seemingly designed to squander nature's bounty--is being depleted. The depletion of global oil reserves was the subject of a special report in the March issue of SCIENTIFIC AMERICAN. "The End of Cheap Oil," as the report was called, warns of an impending energy crisis. Different from the "crises" of the 1970s, however, the focus now is on diminishing oil reserves and development of alternative sources of energy. The report in SCIENTIFIC AMERICAN assumes that capitalism is an immutable given, and completely ignores that the capitalist system is at the core of the emerging crisis. Nevertheless, "The End of Cheap Oil" offers Socialists the basis for a prognosis of what to expect in the next decade as capitalism careens into an uncertain millennium. The authors unquestionably are qualified to address the subject. Colin H. Campbell and Jean H. Laherrre are both petroleum geologists. Both have over 40 years of experience in the industry, and both are regarded as authorities on worldwide reserve capacities. Their report is a critique of past reserve projections, an assessment of real reserves, and it includes their recommendations for averting a calamity as they see it. For the purposes of brevity, their findings may be summarized as follows. Past and current projections of 1,020 billion barrels of oil--or enough to last for about 43 more years at the current rate of consumption, which is about 23.6 billion barrels of oil a year-- are wrong. Wrong because of distorted reserve estimates. Wrong because of erroneous assumptions that production will remain constant. And wrong because all the oil in a well cannot be pumped out at the same speed as the first barrel. Over 800 billion barrels of oil (Gbo) have thus far been removed from the earth according to expert consensus. Estimating the amount of oil in a field is educated guesswork. Geologists use probability factors to estimate potential amounts of what might be extracted economically as opposed to what might be left in reserve. They tend to be conservative, assigning factors much lower than are reported by companies and OPEC countries. The material interests of capitalism enter into such predictions. Reserve estimates are greatly exaggerated so that oil company stocks fetch higher prices. Countries boost reports of their reserve capacities so they can pump and export more oil. According to the report, "There is good reason to suspect that when, during the late 1980s, six of the 11 OPEC nations increased their reserve figures by colossal amounts, ranging from 42 to 197 percent, they did so only to boost their export quotas." Real reserves, according to the report, can only be accurately assessed by using an average factor referred to as "proved and probable." This means that a field is as likely to produce a predicted volume of oil as not. After evaluating a 40-year accumulation of figures from 18,000 oil fields globally, Campbell and Laherrre concluded that "at the end of 1996 approximately 850 Gbo of conventional [extracted] oil" remained in the earth, which was considerably less than the 1,019 Gbo and 1,160 Gbo reported by two leading industry periodicals. "There is only so much crude oil in the world," the report noted, "and the industry has found about 90 percent of it." Campbell and Laherrre used several methods to predict the remaining conventionally recoverable oil. The most effective show that an oil field's consumption, when drawn as a graph, assumes a bell-shaped curve. Once the field's peak is reached a symmetrical projection of that curve shows the approximate year it will be exhausted. Their plot showed that, worldwide, the peak will be reached in 2005. In 2050 world consumption will dwindle to 1950s levels of around 5 billion barrels annually from a current annual consumption of 26 billion barrels. When this is compared to projected rising world demand of 40 billion barrels annually by 2020, exhaustion may be reached sooner, alternate extraction technologies and inventive efficiencies notwithstanding. The social consequences of the end of oil-based industrial capitalism were only vaguely touched upon. The report noted, "The switch from growth to decline in oil production will almost certainly create economic and political tension. Unless alternatives to crude oil quickly prove themselves, the market share of the OPEC states in the Middle East will rise rapidly. Within two years, these nations' share of the global oil business will pass 30 percent, nearing the level reached during the oil-price shocks of the 1970s." They conclude noting: "What our society does face, and soon, is the end of the abundant and cheap oil in which all industrial nations depend." This amounts to a warning to the American capitalist class, and a wake-up call to the working class. At stake are the increased costs of fuel and the consequences it poses to profit margins. Such consequences involve more than a rise in the price of oil. Consider the profound effects of plentiful petroleum supplies on what have become deeply entrenched social patterns--particularly in the United States. American workers live in urban agglomerations of immense size. These have developed over the past 100 years as a result of the convergence of three factors: cheap oil, the internal combustion engine, and plentiful, inexpensive land. They have led to urban sprawl. They have entangled capitalist society in a potentially strangulating web of tenuous connections and long trips for the working majority. The trips to work, school, shopping, entertainment--indeed practically every aspect of contemporary American life is circumscribed by an automobile trip somewhere. When the trauma of soaring fuel prices "hits home," hits the pocket books of an already strapped-for-money working class, the economic and political tensions the SCIENTIFIC AMERICAN authors refer to will also soar. Every attempt will be made to resist wage increases as higher prices for fuel impact workers' living standards. In other words, as the millennium debuts, we can expect an intensification of the class struggle over the division of the wealth labor alone produces. The political state, acting on behalf of the ruling class, can be expected to intervene by attempting to unite the interests of capitalists and workers. As in the past, this will take the usual form of citing how "our" vital national interests are at stake. We saw this unfold in the Persian Gulf recently when the 7th Fleet made another appearance to reinforce U.S. capitalism's enormous interest in gulf oil. A similar scenario may soon unfold regarding Caspian Sea oil. The oil-yielding potential of the Caspian Sea may be less than originally thought. As Carlotta Gall of the FINANCIAL TIMES put it: "The heady predictions about the potential of the Caspian Basin are also forming into a more reasonable picture--this is no second gulf but something of a North Sea. That it is going to be a big producer in the next century there is no doubt now." However, unlike the North Sea oil, where Norway and the United Kingdom staked out the plunder for themselves, the contending antagonists in and around the Caspian Basin are numerous. From Azerbaijan and Georgia in Caucasia, they include the Central Asian states of Afghanistan, Iran, Turkmenistan, Kazakhstan, Kyrgyzstan and Uzbekistan, which either border or are close to the Caspian Sea. Add in Turkey, and the two tiny Caucasian states of Armenia and Chechnya--the latter of whose plains are, in the words of Ms. Gall, "awash in oil"--and we have a cast of contending material interests as unsavory as it is numerous. Stir in to this witches' brew the material interests of the United States, the European Union, Russia and China, and we have what Ahmed Rashid of the FAR EASTERN ECONOMIC REVIEW has called "a `new great game'--for fuel" in Central Asia. Rashid's comment was an allusion to the 19th-century imperialist struggle between Britain and czarist Russia, and he went on to note that: "The American Business Center in Uzbekistan's capital, Tashkent, estimates more than 60 U.S. companies will invest a total of $3 billion by the end of 1997." While Russia has declared its opposition to the expansion of NATO into Central Asia, the United States has busied itself with aligning ruling classes in the region in support of its commercial inroads. A struggle for control is clearly under way. As noted by Mr. Rashid: "There are already the makings of two major coalitions emerging in the region. The U.S. is lining up with Uzbekistan and Turkmenistan and encouraging its traditional allies, Israel, Turkey and Pakistan--to invest there, while Russia is in coalition with Kazakhstan, Kyrgyzstan, Tajikistan and Iran." Natural gas and uranium are two other resources that are found in great abundance in Central Asia. If the technology for converting natural gas into liquid fuel becomes competitive with oil, and as oil prices increase, control of that resource will become imperative. That prospect may explain why Exxon, other energy giants and pipeline manufacturers are exploring the possibility of constructing natural gas pipelines from Turkmenistan to China's Pacific Coast, 6,000 kilometers to the east. Dissension over where to build a pipeline for delivering Caspian oil for Western consumption should end this autumn when a decision is supposed to be reached, though it is reported that opinion among those who will build and benefit most from it is "heavily weighted towards a route south from Baku through Georgia to the Turkish terminal of Ceyhan on the Mediterranean Coast." There are those who profess that technology will be society's salvation, and who advise us "not to worry" because other sources of fuel--such as tar sands, coal conversion and oil shale--will be found to take oil's place. Anticipating such arguments, Campbell and Laherrre's response to tapping unconventional oil resources was this: "There is no question that resources are ample: the Orinoco oil belt in Venezuela has been assessed to contain a staggering 1.2 trillion barrels of the sludge known as heavy oil. Tar sands and shale deposits in Canada and the former Soviet Union may contain the equivalent of more than 300 billion barrels of oil. Theoretically, these unconventional oil reserves could quench the world's thirst for liquid fuels as conventional oil passes its prime. But the industry will be hard-pressed for the time and money needed to ramp up production of the unconventional oil quickly enough." They also point to the "high environmental price" of extracting oil from these sources, and they predict no more than 700 billion barrels from such deposits over the next 60 years. Words and phrases such as "theoretically" and "time and money" are euphemisms that, in this context, cryptically describe capitalism's inability to function for the benefit of society. The authors don't say that straight out, but sensitivity toward profitability, capitalism's holy of holies, lurks in their words. Other theoretical efforts constrained by time and money are the much-studied, talked of and argued renewable sources of energy. There is quite an array of these. They range from photovoltaic experiments, wind power, wave power, hydroelectric power, solar, geothermal, biomass--and now even chicken litter, with all due respect to the poultry you have dined on tonight. Many of these have foundered on the treacherous shoals of inadequate profit. In a special supplement to the FINANCIAL TIMES (April 16) on the whole spectrum of energy, Michael Peel gives an update on "renewables," as they are termed, mostly on the European continent where interest is much higher than in the Americas. His report offers little encouragement. First, less than 6 percent of European energy consumption comes from renewables. Although the European parliament targeted doubling the amount of renewables by 2010, "There is no sign that Europe's energy companies are taking particular interest in the plan." What it comes down to, as usual, according to Mr. Peel is "the pressing need to the energy cost of renewable energy generation." Summing up his frustration on the same issue, Hjalmar Arnason of the Icelandic parliament stated, "Many beautiful words have been spoken [referring to renewables] but we always come to the same conclusion--we must do something. But what has that come to?" The illusive "something" that must be done goes far beyond promotion of renewable sources of energy under the banner of profitability and the capitalist system. As the SLP explained in its pamphlet on the "energy crises" of the 1970s, the energy industry as a whole has "enormous capital investments, a high rate of surplus value and a huge MASS of profits, but a low return on total capital investment, i.e., a relatively low RATE of profit. "From this starting point, it would be both difficult and unprofitable for the energy industry to embark on a new and even greater program of capital expansion, and it is this characteristically capitalist dilemma that is crippling energy development in the U.S. today." The crux of the problem is the way capitalism operates. Capitalist stockholders and their boards of directors deal in commodities. The laws of capitalist production govern energy production as much as they govern the production of any other commodity. Commodities are useful objects, but from the standpoint of the capitalist class they are useful only as sources of profit. Energy cannot be produced unless it can be produced profitably, and the energy capitalists are not likely to divert huge quantities of capital to create the technology for developing new sources of energy until they are forced to do so by the depletion of proven oil reserves and other fossil fuels. Thus, the nascent energy crisis is likely to deepen on a worldwide scale with its attendant environmental degradation, domestic turmoil, increasing working-class poverty and international armed conflict. SCIENTIFIC AMERICAN'S special report, although not intended as such, is a formula for environmental and human disaster. An economic and social system based on production for profit and private ownership of industry cannot avoid producing such by- products as the insatiable greed of our ruling class, the anarchistic pillaging of our planet, the compulsion for global control of resources, the imperialist domination and war that have characterized capitalism throughout its history. Given those inherent characteristics, disaster looms ahead, even if new technologies and the wherewithal to fund them become available. No doubt the energy crises foretold by Campbell and Laherrre will elicit a response from the energy industry that will seek to reassure the readers of SCIENTIFIC AMERICAN that their forecasts are too pessimistic. Perhaps they are. Yet, no sensible person can doubt that the Earth's supplies of nonrenewable resources are being depleted, and that they will be depleted in time. When that time comes, whether it comes within the time foretold by Campbell and Laherrre or a few decades further on, the eventuality is a certainty. The question is whether that eventuality can be forestalled, and whether new technologies and new sources of energy can be developed that can both serve society's needs and preserve the natural environment necessary to our survival as a species. In this sense, there can be no resolution of the energy crisis that does not resolve itself into a complete revolutionary transformation of society itself. If capitalism is the energy crisis, socialism is the cure. Why? Because socialism is inherently conservationist. It is conceived and structurally premised to serve society's needs--including its need for a clean and healthful environment in which to live--rather than those of ruling classes and private masters. In this sense it is worth noting that the demand for the development of renewable sources of energy--the only reasonable energy policy embodying posterity's perspective--can only be a demand for socialism. It can only be a demand for production for use, which is precisely what socialism means. Socialism means democratic ownership of the productive forces of the land by society through an industrial union government based on industry, and not a despotic dictatorship of economic life as under capitalism. It means a society that plans for the present and for posterity. Socialism means planning and cooperation on a global scale. With all of this in mind, Socialists call upon all members of the working class to heed the moral imperative of the age: organize yourselves for the abolition of poverty, the abolition of all social crises, the abolition of exploitation and wage slavery. In short, organize yourselves for the abolition of capitalism.