So capitalism itself, utterly dependent on this single finite substance, is faced with a very real and very threatening energy crisis. Progressive (as in gradual) change is now producing an abrupt step-change. We may not perceive it as such yet, because U.S. capitalists are very adept at commodifying the mass-intellect, and making its assertions appear both upright and noble, as we can see in the ubiquitous display of American flags.
Every oil shock since 1973 has corresponded to or promptly followed a war. To understand why, we have to account for the concrete and current structure of the world capitalist system.
The U.S. is now unarguably hegemonic. U.S. armed forces control every major sea lane, and it has ringed the world with military bases8. U.S. forces are the international police of the Gulf States, where, by the way, imperialist oil corporations extract the oil and pay rents to client regimes.
Those rents have to be sufficient to keep domestic populations from becoming restive, and to continually restore their capital base. A barrel of oil costing between $25 and $30 is enough to keep the principal Organization of Petroleum Exporting Countries (OPEC) states calm (as this is written, however, there is a dollar devaluation in progress), even as it strains those non-OPEC states whose recovery costs are higher than, say, Saudi Arabia or pre-invasion Iraq.9
The U.S. pays below a market price for oil for at least three reasons. One is that the U.S. has offered F-16 fighter jets, Stinger missiles, and so on to those client regimes, as well as capitalizing their oil extraction. Two is that the U.S. has through a number of stratagems since the early-1970s convinced those states to invest their profits in U.S. financial instruments.10 If the Saudis attempted to take action against the U.S. economy, for example, they would ruin themselves, since they have invested the majority of their assets in U.S. securities. Three is that the U.S. controls the air, land, and sea lanes and is willing to deploy devastating military power into the region. So the U.S. is having its oil subsidized, in a sense, paying less than market value, as a form of imperial tribute.
It is because oil is denominated in dollars -- which I can now call "petrodollars" -- since the U.S. dropped the gold standard and all its associated fixed currency exchange rates in 1971,11 that the U.S. has been able to dominate not only the developing world, but its key capitalist competitors. Other nations must pay their energy bills in (petro)dollars, at a higher rate than the U.S., and those dollars come right back to the homeland (via Saudi Arabia, et al) to invest in T-Bills and real estate.
In 1973 the Nixon Administration devalued the dollar, by then firmly fixed as the currency of international trade by virtue of being the petrodollar, and cleared its own debts to its European and Asian capitalist competitors.
American petrodollars were then cycled through American banks, which lent them to Latin Americans and Africans, still reeling from the last oil shock, who then required petrodollar loans to pay their own energy bills. Economic growth has stagnated and fallen back in Africa and Latin America ever since. This is the method by which the U.S. was able to shift the burden of its own post-Vietnam accumulation crisis onto others, and to shift the maintenance model of its hegemony from semi-fascist client regimes to "structural adjustment" debt peonage under nominally "democratic" governing bodies.
American imperialism is in the last instance petrodollar imperialism. As Latin America, Africa, and now Asia, slide over the abyss, Americans have doubled their car ownership.12 The rest of the world is, in this way, directly bearing the burden of our high cost of living.
So if this system begins to unravel, as it has begun to, and the American people see their standard of living take a sudden downturn, the U.S. political regime will face a far graver political crisis than the crisis of legitimacy that was opportunistically transcended by spinning Sept. 11.
Capital understands very clearly what is at stake, and it must take great pains to ensure that we do not understand it.
But the ruling class fails to grasp the implications of "value-theory," that is, the very laws that give capitalism its character. The global monopolization that is taking place right now is an attempt to escape from those laws. The very fact of the current super-heated monopolization is an indication that the competitive process is exhausted. Recent revelations about the "creative accounting" scandals of major transnationals are evidence of attempts to escape those laws through massive bunko scams.
The strategic devaluation and inauguration of the neoliberal regime in the early 1970s was already a response to a generalized crisis of profits, a crisis related to the organic composition of capital, and even the petrodollar was a retrenchment. That retrenchment may now also be exhausted.
World oil consumption right now is about 75 million barrels per day. By 2010, that is expected to increase to 100 million barrels per day.13 This oil is produced by two major groups, let's say, for the purpose of analysis -- OPEC and non-OPEC (NOPEC). OPEC is largely concentrated in the Persian Gulf region. NOPEC is the North Atlantic, North America, Mexico, China, Nigeria, and so forth. That doesn't tell the whole story, though. Gulf states' oil does not peak in production until 2012, and half the world's remaining easily extractable oil is there.14 World production is peaking right now. But world production is an average. NOPEC peaked several years ago, now being in permanent decline.
So, OPEC is getting stronger, and NOPEC is getting weaker.
Saudi Arabia, an OPEC nation, is the biggest pool, with Iraq next and the Caspian Sea region a theoretical third (but this is very much in doubt15). The U.S. has for years been trying to ensure domination of OPEC, and they have accomplished that to some degree by ensuring the corrupt Saudis and others through those aforementioned investments. Given that OPEC production is still rising and NOPEC is in permanent irreversible decline, OPEC is regaining dominance in the overall oil market. The point at which OPEC regains definitive domination of world markets is called by some the "crossover event."16
Best predictions are that the "crossover event" will happen around 201117. This is certainly understood by the current Bush Administration, which is heavily populated by members of the petroleum oligarchy.
Cont ...