Saturday, January 20. 2007
Whenever I read Michael Klare I'm reminded of a scene I witnessed at a leftist academic conference back in the '70s. Martin Jay had published a book on the Frankfurt School (Adorno, Horkheimer, etc.) based on his research there. Andrew Arato fielded a question with a deft, effortlessly offhand comment that it was Jay who had done the research in that area, but unfortunately he didn't understand it. That in a nutshell is the problem with Klare: nobody has spent more time researching the intersection of oil and imperial politics, but he hasn't managed to understand the most basic aspects of the problem. For example, in his "Is Energo-fascism in Your Future?" piece at TomDispatch he writes:
First problem here is that demand and supply are reversed. Oil is a peculiar combination of pure commodity and monopoly rent. It is a commodity because it's all pretty much the same, at least once it's been refined, e.g. to gasoline. Even there, it's not that we actually care about it per se: it's just a means to do something else that we want, like to drive a car, or to mow a lawn. To the extent that those examples could be done by some other energy source, like a battery, oil isn't even differentiated from other energy sources. So its price should be pulled down to a small percentage above its cost, but in fact oil prices have always been way above marginal costs. Part of this is due to the need to amortize high startup costs, but mostly it's due to monopoly rents. No matter how many oil producers there are, the fact that the pools are finite and local has kept prices from collapse, especially when producers could fix prices through cartels. The result is that anyone fortune enough to own oil wells could in effect print their own money. The only things that might slow them down were lack of demand and running out of supply -- the two great anxieties of the industry.
Oil ownership is a matter of law, and as such of politics. The US got into the oil business early, trusting it to private owners, who had every incentive to find and pump all the oil they could as fast as possible. The main results have been: the US is by far the nation that depends most heavily on oil; the US was the first major oil producer to exhaust more than half of its oil reserves, yet has thus far been able to avoid the consequences by imports and debt; and the rentier class of oil owners have exerted extraordinary influence on US politics. The latter subject is what Klare studies in his rather backward way, but first let's go back to supply and demand. It's important to understand that the oil industry has, thus far, always been oversupplied -- it's just too tempting in a short-sighted world to keep the wells pumping and the money flowing. Accordingly, much of the industry's political clout has been used to stimulate demand to soak up all that production. The gas guzzling auto has been helpful in that regard, as has their biggest customer: the Defense Department.
It's easy to be seduced by the importance of cheap energy in the making of our lifestyle: the petroleum era is marked by explosive growth in human population, industry, science, technology, culture, and comfort. It's also reasonable to fear what might happen as the supply of cheap energy runs out. Worldwide oil production is very close to its peak right now -- maybe it's already happened, maybe there will be another year or two that slightly top the present before the decline sets in. One thing is certain about the passing of the "peak oil" point: life on the downslope will be different than life on the upslope was. Ergo, extrapolating from the past tells us nothing useful about the future. (Of course, there is another tipping point to consider: the effect of pumping all that carbon into the atmosphere. Again, this is a topic where the past tells us little of use for the future.)
But before humanity loses the benefits of cheap oil, the oil men themselves face a graver -- to them, anyhow -- prospect of loss: the very system that has made them so powerful is one that is leading us to crisis. What marked that system most of all was its effiency in spending our natural resources. They argue that we need that same effiency to find more, but it's too late; and failing that, they posit a zero-sum war against the world to try to hang on to a share inflated by their waste, which really only makes us all the more unworthy. Back on the upslope, it always looked like there would be more, so it was easy not to give any thought to limits. The view on the downslope is different: now that we can see the end, the need to push it out by conserving should finally be evident. But in this new world it's hard to think of anything more useless or dangerous than the old oil oligarchy.
Klare senses this, and has come up with a typically misleading name for them: the energo-fascists. Then he proceeds to attack Vladimir Putin for reversing the privatization of Russia's gas industry because it imposes political oversight over business's eagerness to exhaust Russia's resources. There's no doubt that political choke points can and will disrupt economies. However, the conclusion that one should draw from all this is that we need to work to bridge those political differences. Klare has done some useful work on those who think they can force these differences in their own favor. But without understanding the issues better, he repeatedly trips himself up, confusing us.
This has been a difficult post to write. Klare's misunderstandings and gaffes emerge in ways that are slightly off base rather than flat out wrong. We are running out of oil, and this will be significant, but the industry's political machinations -- what Klare studies -- are neither representative of the real problems or their solutions. A few months ago, I read two books on peak oil -- Kenneth Defeyes' Beyond Oil and Richard Heinberg's The Party's Over -- then followed them up with Klare's Blood and Oil: The Dangers and Consequences of America's Growing Dependency on Imported Petroleum. I marked quotes from all three, but Klare's were more likely because he struck me as wrong. For instance, this one's similar to the one above (p. 79):
Again, Klare starts with demand projections to create a crisis. It's worth recalling that OPEC reserves were inflated wildly during the 1980s, when oil prices dropped and suppliers tried to make up for lost revenues by pumping more. (How much an OPEC member could pump depended on how much they had in reserve.) This just reminds us that if the Persian Gulf nations have the oil, they won't have to be cajoled or coerced by anything more than cash.
Speaking of coercion (pp. 98-99):
There's a lot of mirror-gazing in this quote. Nuclear diplomacy was something the Soviet Union accused the US of practicing when it was the sole possesor of atom bombs. After the Soviet Union joined the club, blackmail became impossible and gave way to deterrence. There is sufficient stigma attached to using nuclear weapons that no nation -- excepting the US, and then mostly rhetorically -- has threatened offensive use. Maybe Saddam Hussein might not have grasped that point -- Cheney doesn't seem to have gotten it, nor Klare. The idea that ownership of 10% of the world's oil reserves confers great power is, again, only an idea that an oil mogul could love. I don't doubt that it has a lot to do with why Cheney was so gung-ho after Iraq and Iran.
Some inadvertent humor on hydrogen cars (pp. 198-199):
Ultimately Klare's confusion cancels itself out, but he gets a lot of things wrong along the way. Hydrogen does exist in nature: it's something like 75% of all the matter in the universe, but it's very rare on earth because it's so light our gravity can't hold it. Hydrogen cannot be extracted from coal, which is pure carbon -- or not so pure, but pure hydrogen is not an exception. The cheapest source of hydrogen is natural gas. I don't know whether that's more efficient than just burning the natural gas, but in either case carbon dioxide is a waste product. Making hydrogen from water is a sure loss: the conversions are equivalent, but in practice you lose efficiency going both ways. Fuel cells are not experimental. They're just not economical. Hydrogen is best viewed as a way of storing and transporting energy, like a battery, not as a source.
In view of this, here's another hydrogen quote (p. 196):
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