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Capitalism—a system rigged for oil

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Multinational bosses plan to keep pumping out more oil and gas—despite climate catastrophe. Sarah Bates looks at why we have to keep fossil fuels in the ground and why the industry is so central to how capitalism operates
Issue 2691
Fighting for a greener version of capitalism doesn’t confront the social, economic and political forces behind it.
Fighting for a greener version of capitalism doesn’t confront the social, economic and political forces behind it.

There’s hardly a resource more critical to modern capitalism than oil—the whole system is powered by it. From petrol-guzzling vehicles and plastics to wars that ravage the Middle East, oil has been big business for over 100 years.

Now the spotlight is on how fossil fuels drive the rapidly escalating climate crisis.

The root cause of climate change is 150 years of the industrial-scale burning of oil, coal and gas. This has heated up the global atmosphere by 1.5 degrees—and how much hotter it’s going to get, nobody knows yet.

The discovery of oil in 1859 was a key turning point in capitalist development. At first oil didn’t have many uses, but soon a handful of corporations had monopolised production and ruthlessly grew the industry.

They fueled the growth of the car, chemicals and other industries reliant on oil.

From the 1930s to 1950s, US bosses actively worked to sabotage alternatives. A cartel of oil and automobile companies bought up public transport in cities across the US, ripped up tram lines and replaced them with buses.

Transport remains the biggest consumer of oil—in Britain, for instance, 75 percent of oil goes on road and air transport.

But oil underpins a range of other sectors and commodities, including many we use in our everyday lives. They now include fertilisers and pesticides, detergents, paints and medicines, debit cards, shampoos and stationary.

As the oil industry fought for new markets for petrol, spin-off industries did the same for their products. Since the 1930s chemical industry bosses invested in coming up with a vast range of new plastics—and 99 percent of them derive from oil and gas production.

Not only are fossil fuels central to capitalism, they are a key driver of climate catastrophe.

Scientists have said for at least three decades that dramatically reducing their use is key for tackling global warming. As far back as the 1992 UN summit in Rio de Janeiro, they accepted that fossil fuels were behind the crisis that blew a hole in Earth’s ozone layer.


But instead of cutting back, the industry is pouring billions of pounds into new oil rigs and power planets.

Oil firms claim that they’re responding to the climate emergency by investing in initiatives such as solar energy or electric cars. But their efforts to finance wind, tidal and solar power are completely outmatched by the huge amounts of money they’re pouring into traditional, dirty energy expansion.

In 2018, the world’s top 24 oil firms invested £2.6 billion in low carbon energy technology. To put that into context, the International Energy Agency says the oil industry generates more than £552 billion of investible cash each year.

Few tram lines are left in US cities. A cartel of oil and automobile companies bought up public transport in cities across the US, ripped up tram lines and replaced them with buses

Few tram lines are left in US cities. A cartel of oil and automobile companies bought up public transport in cities across the US, ripped up tram lines and replaced them with buses (Picture: World Wide Gifts/Flickr)

The solution to the climate crisis will require international cooperation, decarbonisation of the economy and unprecedented infrastructure projects among other radical changes.

But in some ways, the solution is incredibly simple.

Carbon dioxide is the biggest greenhouse gas, and it’s caused by burning fossil fuels.

To try and slow down global warming, it is necessary to stop burning all fossil fuels. And to do that, it would require the rich minority at the top of society to take a long-term view on the climate crisis.

But capitalism is driven forward by competition among rival corporations. If bosses didn’t try to maximise profits, they would be driven out of business and replaced by another company.

This means the short-term drive for profits comes ahead of planet and people. So the problem is not just the fat cats who sit in the boardrooms or the politicians who protect their wealth and power.

It’s the entire system that to blame—and the oil and fossil production are central to it.

Fighting for a greener version of capitalism doesn’t confront the social, economic and political forces behind it.

It’s not eating hamburgers or flying abroad for a holiday that powers the utter devastation seen by the floods in Jakarta, cyclone Idai in southern Africa or the bushfires in Australia. These events are a result of a climate catastrophe powered by a system built in the interests of the billionaires.

Time is running out to take meaningful action for the future of the planet. Before capitalism ruins it, we should burn down the system and create a new socialist society from the ashes.

Oil demand grows even though the planet burns

If oil extraction continues at the same pace, the results will be disastrous. If it increases, the consequences are unfathomable.

Yet demand for oil is rising and the development of renewable energy doesn’t come anywhere close to matching capitalism’s need for petrol.

Global demand for oil will continue to grow until 2030, according to the International Energy Agency.

That’s the year the Intergovernmental Panel on Climate Change (IPCC) said was the last opportunity to prevent the worst-case scenario for the planet.

The IPCC said that oil and gas production needs to fall by about 20 percent by 2030 and by about 55 percent by 2050 to stop the critical above 1.5 degree level.

But the US was pumping 17.8 million barrels a day in November 2019—up from an average of 15.5 million the previous year. ExxonMobil is planning to pump 25 percent more oil and gas in 2025 than in 2017. Rising anger over climate change is pushing the fossil fuel firms to appear as though they are changing.

At a shareholders meeting in May 2019, over 99 percent of BP shareholders voted in a favour of a resolution by the Climate Action 100+ group. It called on the firm to make greater disclosures on its emissions and show how investments agree with the Paris climate agreements.

But bosses were quick to point out that any changes wouldn’t be hurting their bottom line.

BP chairman Helge Lund said, “My mission is to see BP advancing the transition while remaining an attractive investment proposition.”

Firms are also grabbing new opportunities to build fracking or tar sands operations.

Tar sands is extracted through “strip mining”, where everything on the surface is removed to get to the oil. It releases even more emissions than other types of mining.

Oil firms dependent on the states

The bosses that sit in oil and gas boardrooms are some of the most powerful people in the world.

Their power and influence guides prime ministers, presidents and kings.

With one of the largest reserves of oil in the world, the Middle East is a critical prize for Western imperialist powers. They bomb, invade and try to control states in order to maintain control of the oil fields.

Century-old dodgy deals cooked up a by Western governments, oil barons and local rulers still shape the region today.

In the wake of the First World War oil consortiums made agreements with British and French government to secure access to oil-rich territories. This was important because oil in the Middle East was cheaper to extract than in the US.

And it was also beneficial for imperialist powers looking for allies to back up domination of the region.

A line in the sand: The great carve-up of the Middle East
A line in the sand: The great carve-up of the Middle East
  Read More

After the Second World War, the US doubled down on its attempts to control the Middle East.

It backed Arab rulers it could count on to clamp down on political ferment. From the 1970s free market policies were imposed by US-backed governments and wealth generated from oil was grabbed by Arab ruling class and multinational corporations.

Energy companies don’t directly fight wars to maintain control of their interests—but back up states that can guarantee the profits keep rolling in.

Western governments cloak these manoeuvres in the language of “liberation” and “freedom”.

Its vast oil reserves—and how central it is to capitalism—means the Middle East is a battleground for imperial rivalries. Securing control of the region is important for solidifying their military, political and economic dominance within the global economy.

Each company and each state is locked into an eternal competition with their rivals to gain a bigger slice of the pie. They’re all fighting not get swallowed up or driven out of business.

So it’s capitalism—and specifically the competition inherent in it—that drives these conflicts.

Oil isn’t just careering us towards climate catastrophe. At every stage of its extraction, production and combustion, the industry symbolises not only capitalism’s disregard for the planet, but for the people who live on it.

Sisters at war

A cabal of dominant oil firms dubbed the “Seven Sisters” had a stranglehold on the oil industry for three decades from the 1940s.

The dominance of these multinational corporations has been undermined by state?owned oil companies.

The Seven Sisters controlled around 85 percent of oil output until a crisis in 1973.

That’s when states in the Opec oil cartel, then largely based in the Middle East, stopped exporting oil to Western countries to increase the price.

Oil prices plummeted in the 1990s. Bosses pushed through mergers and buyouts to increase production and cut overhead costs.

Just last week BP bought out the BHP firm for £8 billion—in a move set to boost its oil and gas production by almost a fifth.

But the global picture is different today.

Western oil firms still have vast revenue and profits.

But unlike the Seven Sisters, they control about 6 percent of global oil and gas reserves.

State-owned companies such as the Saudi Arabian Aramco and Chinese Sinopec now control some 90 percent of known oil and gas reserves.

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