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Friday, January 26, 2024

Oil, Natural Gas, and Capitalism

The great powers-- the leading players in the imperialist system-- have always required a source for the energy to drive their economic engines. They needed energy resources to build and empower their military might; they needed energy to grow their national economies and power their vessels of trade and transportation. Indeed, their socio-economic systems would have collapsed without ample and available energy sources.

At the dawn of the capitalist industrial era, that source came mainly from coal. Coal powered the machines that grew the productivity of labor to great new heights. It is reasonable to think that only those countries with easy access to coal could then become great capitalist powers.

Beginning at the turn of the last century, oil-- an abundant, efficient, and easily stored and transported energy source-- became essential for the exercise of economic and military might. As modes of transportation became dependent upon petroleum products, an intense rivalry was stoked for access to oil, often found in more remote areas of the world, far removed from the great urban centers of the great capitalist powers.

At the same time, the great capitalist powers accelerated their drive to dominate the entire world. Lenin and others saw this as a higher stage of capitalist development impelled by the dominance of monopoly capitalism, finance capital, and capital export.

Access and control of energy resources played an extremely large role in motivating this development, leading to conflict and colonization over the areas offering abundant oil production.

It could be said that “oil imperialism” was a critical factor in the course of the Second World War: Japan -- a country without adequate oil reserves-- needed to secure resources to pursue its imperialist mission; likewise, Germany’s eastward turn was prodded by its thirst for Soviet oil.

Constituting the leading imperialist power after WWII, the US had its own adequate petroleum resources, but sought to guarantee that global oil supplies would remain available to its clients in the crusade against Communism.

After the end of the Cold War, new technologies unleashed huge reservoirs of oil and natural gas in the US. A once-stable international market was consequently disrupted, allowing US producers to reshape, even dominate, the global distribution of oil and natural gas.

But in the decades to follow the end of the Cold War, those capitalist countries that were the most trusted anti-Communist allies were relying on long-established, existing sources of energy or had turned to convenient, adjacent, transit modes from the energy giant, the now-capitalist Russia.

Europe, for example, had grown increasingly reliant on Soviet oil and gas even before European socialism’s fall. And OPEC’s distribution network and quasi-planned marketing maintained a persistent global stability of price and availability.

From where would the US, undergoing a technological revolution with fracking, take its oil and gas bonanza?

I began to discuss the US shift toward what I called “US oil and gas imperialism” seven years ago (here, here, here, here and here). I wrote in July of 2019:

US oil and gas imperialism is another feature of the new economic nationalism. With US oil production matching or exceeding every other global producer, and with natural gas extraction growing dramatically, the economic nationalists foresee the US now competing successfully for markets. The conventional explanation of the US aggression against oil-producing states must now be retired. The US is no longer solely obsessed with commanding and dominating existing oil producers-- US intervention is not simply about the oil in the way it has been in the past. That is, it is not simply acquiring oil resources that motivates US aggression, but commanding oil markets as well.

Thus, the US is also out to wreck competing oil and gas producers by sanctions, disruptions, and destruction. The US corporations want the markets in order to peddle their own energy resources. The long trail of wrecked, dysfunctional, and economically strangled global oil producers attests to this new motivation and serves US energy corporations well.

I have been writing often of this shift of US imperial design for over two years. Nothing demonstrates the intent of the new energy imperialism as does the Department of Energy’s recent renaming of US natural gas as “Freedom Gas” and the product as “molecules of freedom.” This silly branding is part of the campaign to win Europe and other gas-dependent markets from Russia and Iran/Qatar. Even though US liquified “freedom gas” is 20% more expensive than Russian gas, the Trump administration bullied Germany’s Angela Merkel to agree to two new LNG terminals in Germany. Her admission that LNG from the US would not break even for at least a decade demonstrates the aggressive face of the new US energy imperialism.

US gas producers have stoked anti-Russia sentiment to draw Poland and the Baltic states into their LNG market nexus. US LNG annual exports to Portugal and Spain grew from a tiny base to nearly 20 and 30 billion cubic feet, respectively, between 2016 and 2017.

And US crude oil exports soared after the crisis in the Straits of Hormuz. US oil shipping nearly doubled in the aftermath of the mysterious “attacks” in the Persian Gulf. President Trump underscored the attractiveness of foregoing the Straits and buying from the US. Rather than taking the “dangerous journey,” Japan and PRChina should be reminded that “the US has just become (by far) the largest producer of energy in the world.” (my emphasis)

Writing in 2019, I was anticipating geopolitical events geared to shifting the natural gas market dramatically in favor of the US. I foresaw the “anti-Russia” push as targeting the natural gas market in Europe and “crisis” in the Middle East as disrupting shipments from traditional Middle East suppliers. 

Hostility and conflict would be the thumb-on-the-scales to offset the higher price (lower risk) of US liquified natural gas.

Unlike the Cold War era, where the US postured as a protective shield for safe, durable, and inexpensive energy channels, the post-Cold War US policy places US immediate economic interests above the supposed alliance obligations; without consultation, the US tossed aside its role among its allies as the guarantor of peace and security and is taking on the role of international energy huckster.

In 2022, the US secured a major victory in oil and gas imperialism with the war in Ukraine. As a result of a concerted campaign to destabilize Ukraine, separate it from Russia, and coax it into NATO’s anti-Putin alliance, the US drew Russia into a long, bloody war. The war proved to be a veritable gift for the US and its energy industry. Anti-Russia hysteria provoked the US’s European allies into breaking economic ties with Russia, including the big prize--cutting off Russia’s supplies of natural gas. Seduced by Cold War-like rhetoric and fear-mongering, European countries outdid each other with belligerence, culminating in refusing cheap Russian energy resources. To seal this self-defeating move on the part of US “allies,” the US organized the destruction of crucial Russian pipelines. Left with no alternative to Russian energy, Europe turned to their US “partner.”

US exports of oil to Europe more than doubled between 2021 and today. Likewise, disrupting natural gas distribution has paid off for the US with liquid natural gas (LNG) exports nearly doubling from 2018 to 2022. Quoting The Wall Street Journal:

Russia’s invasion of Ukraine kicked U.S. [LNG] exports into overdrive. Since March 2022, U.S. developers have signed 57 supply agreements representing about 73 million metric tons of LNG annually… more than four times the number of contracts they signed between 2020 and 2021.

Many of these contracts run for 20 years and underpin the construction of terminals that have yet to be built. LNG exports are expected to more than double [again!] from current levels by the end of this decade…

Thus, thanks to the war in Ukraine, US allies had the privilege of incurring the costs of liquefaction, shipping, and building LNG terminals to show their solidarity with the US-instigated war.

Foolishly, European leaders rushed to show their support for the war, even at tremendous cost to their own economies.

Likewise, the unfolding war in the Middle East plays into the hands of the US oil and natural gas imperialists. As the WSJ concedes:

In the longer term, the Red Sea situation could bring more business for U.S. LNG shippers, which are building out export capacity at Gulf Coast facilities and are vying for big contracts with big buyers in Europe, analysts said.

The percentage of LNG tankers set to pass through the Suez Canal has dropped to its lowest point in at least a decade.

But the LNG will be coming from the West, thanks to the beneficence of the US government anticipating the changing energy market!

Paul Hannon and William Boston put it well: “For the second time in three years, a conflict in Europe’s neighborhood is threatening to weaken a struggling economy, while a more robust U.S. is watching from a safe distance.”

It is indeed an odd ally that takes advantage of the sacrifices that it imposes upon its friends to make. While US capitalism has enjoyed strong growth, thanks to two wars in other lands, its European friends have endured inflation and stagnation. 

Germany, led by Social Democrats and Greens, has met the US-led call to war with enthusiasm, militarism, and aggression unseen since the Second World War. Germany has materially supported Ukraine second only to the US and matched the US’s shuttering of economic relations. Where the US has shown healthy growth for 2023, Germany has fallen into recession, its industrial sector racked by high energy costs and supply shortages-- a steep price to pay for following US leadership. “‘The threat of deindustrialization is real,’ said Max Jankowsky, chief executive of GL Giesserei Lossnitz, a 175- year-old foundry in the eastern German state of Saxony.” German Chancellor Olaf Scholz’s popular satisfaction is the lowest for a chancellor since 1997. Germany-- the leading power in the European Union, an industrial giant, the world’s fourth largest economy-- has been brought to its knees by US oil and gas imperialism.

The people, and especially the left, need a constant reminder of the material interests behind global imperialism and the mechanism that powers it. 

Imperialism is not a consequence of bad leadership from Trump, Biden, Johnson, or Modi or their ilk; it is not the product of neoliberalism or any other ideology; it is not the result of a lust for power. In short, imperialism is not a matter of moral choice or competence. Instead, it is an imperative of capitalism in its modern form. It is an expression of the rivalries generated by capitalist competition for markets, resources, and most tellingly, profits. When that competition reaches its greatest intensity, war ensues.

Some would like to believe that we can break the link between capitalism, exploitation, inequality, poverty, environmental degradation, and war. They aver that a benign capitalism, regulated by enlightened governments, can escape the imperialist system. History shows no such eventuality. People are awakening to the impossibility of “fixing the system.”

The left overlooks this at its peril.

Greg Godels

Monday, January 15, 2024

The Willful Destruction of a People

The US corporate media has maintained a near unanimous support for the Israeli destruction of Gaza-- the home of 2.2 million Palestinians. While pundits engage in parlor games over what degree of violence is “justified” by the Hamas attack upon Israel, while public intellectuals fall in line with the gutless unconditional support of Israeli punitive actions, tens of thousands of Palestinian people-- largely men, women, and children going about their day-to-day lives-- have been killed, maimed, wounded, or terrorized. 

Corruption, racism, and cowardice come together to produce a rare near-total US ruling-class consensus behind the brutal action of the ultra-right, ultra-nationalist, and racist Israeli government. 

The enforcement of this consensus is unprecedented and a truly appalling sight to behold. 

The highly publicized clash over even an embarrassingly tepid pushback by elite administrators at elite universities over free speech-- a normally sacrosanct intellectual fallback-- underscores the complete, unconditional freedom-of-action that Israel enjoys with the rich and powerful in the US. 

While the machinations of donors and administrators at Harvard, Penn, and MIT should be of little more than entertainment value for most of us, the raw, public exercise of the power of wealth in shaping academic institutions should cause many to recoil. Those who naively believed in the independence and integrity of academia should be chastened accordingly. 

Black Harvard President Gay would learn that neither her own elite background nor the thin armor of the faddish liberal DEI mutation of anti-racism would protect her from the vulgar bullying of wild-eyed Zionist billionaires and rightwing witch hunters.

Christopher Rufo, puffed up with his own role in bringing down Harvard’s Gay, concedes that he couldn’t have done it without the collaboration of the center-left that accepted any excuse to enforce support for Israel. 

Despite the crude editorial endorsement of and overwhelming official enthusiasm for the Israeli slaughter of Palestinians, a different message has gotten through to the US populace. Whether it is the heart-rending pictures of death and destruction, the cracks in the carefully hedged and vetted news stories, or the alternative media, a bold, determined movement against Israel’s vicious assault on Gaza has emerged to challenge the ruling-class monolith. Risking economic reprisals, future status, and public shaming, hundreds of thousands-- overwhelmingly youth-- have stood and marched for life and a future for Gaza and Palestine. 

It is truly a remarkable moment of crass opportunism, slavish conformity, and viciousness confronted by high principle, self-sacrifice, and courage. It is this kind of moment that forces people to examine how their words and self-styled image coheres with reality. 

The facts are effective in awakening people to the brutal fate of Palestinians as a people. Because the Israeli government is so blatantly indifferent to international outrage, The Wall Street Journal is embarrassed to report the truth-on-the-ground in Gaza. Whether reluctantly or not, a recent front-page news story-- Gaza’s Destruction Stands Out In Modern History (softened in the online edition to: The Ruined Landscape of Gaza After Nearly Three Months of Bombing) -- describes an almost unimaginable living hell. Its lead is worth quoting in full:

The war in the Gaza Strip is generating destruction comparable in scale to the most devastating urban warfare in the modern record.

By mid-December, Israel had dropped 29,000 bombs, munitions and shells on the strip. Nearly 70% of Gaza’s 439,000 homes and about half of its buildings have been damaged or destroyed. The bombing has damaged Byzantine churches and ancient mosques, factories and apartment buildings, shopping malls and luxury hotels, theaters and schools. Much of the water, electrical, communications and healthcare infrastructure that made Gaza function is beyond repair. 

Most of the strip’s 36 hospitals are shut down, and only eight are accepting patients. Citrus trees, olive groves and greenhouses have been obliterated. More than two-thirds of its schools are damaged.

While most media mention the 22,000 or more deaths or the over 80,000 total Palestinian casualties, they dutifully treat the facts as allegations and with vastly more than warranted skepticism. Nonetheless, the numbers have shocked millions around the world.

But the WSJ article goes further, offering comfortable, secure readers a taste of what life is like for those not physically harmed by Israeli bombs:

In the south, where more than a million displaced residents have fled, Gazans sleep in the street and burn garbage to cook. Some 85% of the strip’s 2.2 million people have fled their homes and are confined by Israeli evacuation orders to less than one-third of the strip, according to the United Nations…

According to analysis of satellite data by remote-sensing experts at the City University of New York and Oregon State University, as many as 80% of the buildings in northern Gaza, where the bombing has been most severe, are damaged or destroyed, a higher percentage than in Dresden [the site of murderous firebombing in WWII].

The WSJ presents a set of facts and expert observations that are nothing if not damning of the Israeli tactics:

・Robert Pape, political scientist at the University of Chicago: “What you are seeing in Gaza is in the top 25% of the most intense punishment campaigns in history.”

・” Some 85% of the strip’s 2.2 million people have fled their homes and are confined by Israeli evacuation orders to less than one-third of the strip, according to the United Nations.”

・” He Yin, an assistant professor of geography at Kent State University in Ohio, estimated that 20% of Gaza’s agricultural land has been damaged or destroyed. Winter wheat that should be sprouting around now isn’t visible, he said, suggesting it wasn’t planted.”

・” A World Bank analysis concluded that by Dec. 12, the war had damaged or destroyed 77% of health facilities, 72% of municipal services such as parks, courts and libraries, 68% of telecommunications infrastructure, and 76% of commercial sites, including the almost complete destruction of the industrial zone in the north. More than half of all roads, the World Bank found, have been damaged or destroyed. Some 342 schools have been damaged, according to the U.N., including 70 of its own schools.”

・Where the US dropped 3,678 munitions on the entire nation of Iraq in seven years, Israel has dropped 29,000 on tiny Gaza in a little over two months.

・On Gaza city: “‘It’s not a livable city anymore,’ said Eyal Weizman, an Israeli-British architect who studies Israel’s approach to the built environment in the Palestinian territories. Any reconstruction, he said, will require ‘a whole system of underground infrastructure, because when you attack the subsoil, everything that runs through the ground—the water, the gas, the sewage—is torn.’”

・” The level of damage in Gaza is almost double what it was during a 2014 conflict, which lasted 50 days, with five times as many completely destroyed buildings, according to the Shelter Cluster. In the current conflict, as of mid-December, more than 800,000 people had no home left to return to, the World Bank found.” 

To those seduced by a gutless media and a bought-and-sold political establishment, this picture constructed by one of the US’s most conservative papers should bring Israel’s crimes against Gaza into sharper relief; It should be painful to even imagine living under such conditions; it should remove the Gaza question from the realm of political debate to the basic issue of human dignity and survival.

Is there any humane answer beyond: Cease Fire Now!?

Greg Godels