flaring off

[dmschanoes]

A short while ago, Michael asked for clarification, or prediction, as to the movement of the US economy.  He received little enough response, which is really too bad. Unless we have all already grasped that what Marx really has done away with, has superceded, in his work is not philosophy so much as it is "economics," political economics.Comprehension, thought, is replaced by the appropriation of the material world through the labor process,  by definition a social activity, creating a real history where the economic categories are unmasked as relations of production, and the analysis moves necessarily to the mode of expropriation and its immanent critique, which is the conflict between the means and relations of production, the class struggle.  You might say then there are no economic questions, but only the defense of private property and the prospects for its overthrow. It is clear that since 1970, the significant shifts and movement in that struggle, that"economy" have been marked by changes in oil prices.  1973 brought OPEC 1, and the overthrow of Allende.  1979-1981 brought OPEC2, the proxy war against theUSSR in Afghanistan, the financial arson against industrial fixed assets in the US, the Reagan-Volcker double dip strikebreakers recession, and dramatic assault on living standards in North and Latin America.  The OPEC price break in 1986 served to put the USSR between a rockier rock and a harder hard place, and triggered the S&L collapse in the US, leading to the 1989-1990 recession, Gulf War 1 and...., praise the lord, oil briefly at $40/bl. The overproduction that produced the decline in the rate of profit in 1997, leadingto the Asian currency crises, also produced the collapse of oil prices to $10/bl in 1998.  After that we got war against Yugoslavia, increased attacks on Iraq, OPEC 3, the hyper-activity of 2000 leading to the hard-landing in 2001.  When the price ofoil started to slide back down in 2002-2003, we got the current edition of War Without End Amen.   Yet in a perverse resuscitation of political economy, the painful social meaning of oil price rises is ignored in favor of speculative, and apocalyptic, depletion/scarcity theories positing   past "peaks" of discovery and extraction and predicting a steadily declining future where there is no coal, no natural gas, and no oil, which definitely limits vacation prospects.   So a great hydrocarbon debate replaces an analylsis of capital, the declining rate of return and the overproduction of both product and capacity.  The facts, historical facts, are clear.  There is absolutely no shortage of coal reserves, no shortage of natural gas reserves.  For example, Nigeria's natural gas reserves are currently estimated at 160 trillion cubic feet, enough to supply the entire world requirement for several years.  However, this (under) estimate is based solely on the natural gas encountered in the oil fields of Nigeria and does not include separate gas only fields, as no exploration has been done for natural gas.  And what does Nigeria do with its natural gas?  It flares it off from the oil fields as production, transportation, and storage facilities do not exist..    Mexico, despite extensive reserves, is a net importer of natural gas from the US and flares its gas also and for the same reason.  And Nigeria and Mexico aren't the countries with the greatest reserves-- Russia and Iran are.   So the focus becomes the supply of oil.  And oil is definitely the aqua regia of capitalism, at least of capitalist transport, fueling almost 100% of commercial transportation requirements.   Some argued that the US invasion of  Iraq was an attempt to lower the price of oil, which doesn't quite make sense when you look at recent HISTORY, 1998, when oil producers were blaming Iraqi production for bringing the price to the $10 barrel.  Another argument is that the US invasion was designed to provide an alternate supply to Saudi reserves, except that doesn't make much sense when you look at HISTORY and examine the benefits US petroleum companies have gained from their marketing and  services contracts with Saudi Aramco.    And there is the argument that international reserves discovery and production volumes have peaked, and its all downhill after 1997, I mean 2000, no 2003, could be 2004, 2007 at the latest, but maybe 2063.  Clearly, capitalism does not organize itself around surpluses or shortages predicted 10 or 50 years in the future.  If it could, there would never be any overproduction. Profit does not have a 60 year horizon, and while the bourgeoisie go to great lengths to preserve their personal wealth through generations,  productive apparatus, capacity, and resources exist to be scrapped, as scrap.   Development of petroleum reserves has outpaced oil consumption for the past ten years.  New fields scheduled for production through 2007 exceed the fall off from existing fields by an estimated 10%.  In 2002 reserves to production ratios (r/p) for petroleum liquids and gas were 43 and 68 years respectively.   So without hedging, here it is....   Today, with spot prices near $35/barrel and production more than 80 million barrels a day, overproduction is barely adequate as a description.  As new production is brought online, the price of oil will break,  and fall below the $10 price of 1998.  This, however, will occur only after the price has exceed the $40 level of the past.  The impact of this price collapse will make the collapse of  Texas oil industry after the overproduction of the late 1920s look like a minor correction.  The global deflation will make Japan's ten year stagnation a fond memory.   dms