Exploring Hydrocarbon Depletion
Page added on January 1, 2017
Oil has fueled a bully bromance between Donald Trump and Vladimir Putin. Although this revolutionary union possesses a terrifying petro logic, it promises to be as volatile and tragic as any shotgun marriage. The relationship is, as Trump might well tweet, “unpresidented.”
How, after all, can a president-elect openly admire a foreign leader whose shadowy intelligence apparatus played a significant role in undermining the U.S. election by hacking into the files of the Democratic National Committee?
This dysfunctional story is about oil and carbon. The master resource and its climate destabilizing emissions have arranged the ballroom where Trump and Putin now waltz.
The only treason that matters to these oddly paired grandees is any attempt to stop or wind down the frenzied march of petroleum — an industrial composition now 170 years old.
The basic facts are self-evident: the world still runs on fossil fuels (86 per cent of our energy consumption) and Russia now tops the list of petroleum’s three main global players with production of 10 million barrels a day. Next comes Saudi Arabia, followed by the United States at nine million barrels — a short-term feat largely engineered by the brute force of hydraulic fracturing. (The U.S. still must import 52 per cent of what it consumes — largely from Canada, Mexico and Saudi Arabia.)
As a consequence, the energy intensity of American and Russian oil extraction help to explain why these two nations now account for more than one-quarter of the world’s greenhouse gas emissions. The global energy industry contributes more than 75 per cent of global greenhouse gas emissions. These emissions keep growing because it takes more and more energy to extract expensive and low-grade products such as bitumen, shale oil and offshore Arctic oil. Energy, not capital, drives the global economy and that economy is now shrinking because shale oil, bitumen and Arctic oil provide lower returns, more volatility and more dangerous debt loads than conventional oil.
Their exploitation is not a solution, but a trap that will lead to the collapse of institutions — and societies — built on the assumption that cheap energy would last forever. Meanwhile the aging oil business leaks toxic carbons and liabilities as carelessly as North America’s 50-year-old pipelines. Researchers now calculate that approximately two-thirds (63 per cent) of the industrial carbon pollution poured into the atmosphere since 1854 can be directly traced to the carbon mined from the Earth by just 90 enterprises, including 83 producers of coal, oil and natural gas and seven cement makers. Incredibly, seven companies account for almost one-fifth of all industrial carbon spewed into the atmosphere since the industrial revolution.
They include the U.S. corporate giant, ExxonMobil, and Russia’s mega-methane firm, Gazprom. Almost everyone, except for much of the media, acknowledges that Russia behaves like a classic petro state. Lindsey Graham, the Republican senator from South Carolina, once described the Russian Federation as “an oil and gas company masquerading as a country.” Putin’s government, for example, gets half its revenue from oil and gas sales to Europe, Asia and the Middle East. Oil accounts for almost 60 per cent of Russia’s exports and a third of its capital investments.
The global 2014 oil price crash severely undermined the country’s economy and lowered living standards for ordinary Russians. As a consequence Putin’s oil locomotive is now stagnating and needs foreign investment and higher oil prices. Unlike most Canadian politicians, Putin has studied the politics of oil. He can even talk about theDutch disease and other resource curses.
As a young intelligence officer he watched a global oil price collapse in the early 1990s unhinge the Soviet Union and does not want to see that experience repeated. Beginning more than a decade ago, Putin removed the country’s most powerful oligarchs from Russia’s oil and gas companies and nationalized the industry to consolidate his power. He then let in a few western players such as ExxonMobil to help revitalize Russia’s oil patch. As oil prices rose between 2000 and 2014 Putin used the flow of petro rubles to restore some dignity to the federation in an effort to make Russia great again. When oil prices languished at $25 a barrel in 2000, Putin remained a friend of the U.S. But as soon as oil prices escalated in 2007, Putin began to rattle sabres and take aim at the Ukraine. When oil prices hit historic highs in 2014, Putin rejected any form of co-operation with the United States.
Now that they have nosedived, and Russian hackers have successfully intervened in the U.S. election to help Trump, Putin says he’s ready for peace and love — and a waltz with his U.S. admirer. In the Washington Post, Russia observer Maria Snegovaya explained the Jekyll and Hyde petro dynamics lucidly: “High oil revenues lower leaders’ domestic political accountability and responsibility for policy decisions while increasing risks of international adventurism.” The U.S., of course, is the world’s original petro state.
Although oil doesn’t dominate the economy the same way it does in Russia, its revenues have contaminated the country’s politics. ExxonMobil, one of the world’s largest corporations, funded climate change-denying lawmakers and lobbyists for decades and remains one of the largest donors to the Republican Party.
Blue states tend to consume energy and vote Democrat, while red states extract oil or gas. Most supported Trump. In recent years two right-wing U.S. oligarchs, the Koch brothers, have changed America’s political landscape. Using billions made by processing Canada’s cheap raw bitumen into value-added fuels at their refineries, the Koch brothers conducted a concerted campaign to undermine U.S. democracy by weaponizing philanthropy. In the process they disguised corporate self-interest as a populist revolt against government political elites. As documented by Jane Mayer in her excellent book Dark Money, the Koch brothers used charities and think tanks to champion unfettered oil production, mock climate change and sow doubt about the role of government. All echoed their libertarian grievances against the state.
Years of Koch propaganda convinced Americans having trouble buying a meal, let alone securing a reliable job, that action on climate change would take away their freedom and more importantly, their guns. Ultimately what Mayer calls the “single most effective special interest group in the country” helped elect the demagogue Donald Trump by promoting a climate of fear, hate, doubt and distrust. Elite billionaires preyed on the weak to elect another elite billionaire.
Trump has now assembled a well-heeled cabinet that will likely fulfill the Koch brothers’ political wish list: halt action on climate change, permit uranium mining, deregulate mountaintop removal for coal mining and gut environmental regulations. In an effort to make America great again, Trump promises to wipe out climate change action and allow drilling and fracking everywhere in attempt to make the U.S. “energy independent.” Trump has assembled a cabinet that serves oil and its powerful masters first and foremost. Many come from oil exporting states such as Oklahoma and Texas. Trump’s choice to head the Environmental Protection Agency, Scott Pruitt, a Republican Oklahoma attorney general, flatly denies climate change and even let oil company lawyers draft letters that Pruitt then signed and sent to federal regulators. Rex Tillerson, the CEO of ExxonMobil and fervent pusher of hydraulic fracturing, has been nominated for secretary of state. Rick Perry, the former governor of oil-soaked Texas, is Trump’s pick to head the energy department. Perry is another climate change denier. “
The idea that we would put Americans’ economy at jeopardy based on scientific theory that’s not settled yet to me is just nonsense,” he has said. So petroleum now has a Darth Vader voice in Washington as ruthless and powerful as Putin’s in the Kremlin. Although Trump and Putin come from dissimilar backgrounds, the world’s oil czars share a number of traits that makes them ideal dancing partners. Both men, for example, prefer “managed democracies” where a supreme leader permits citizens to play the role of eternal apprentices. (Fading empires are like trapped animals: they select the most bully-minded leaders to restore what cannot be restored.)
As expert communicators both men appreciate the power of political lies and show no reluctance to employ them. They dislike an accountable media and prefer to speak through their own state or social media channels. Neither oligarch likes Muslims. Putin conducted a scorched earth campaign against Muslims in Chechnya and Trump proposed barring Muslims from the U.S. during his campaign. (It is no accident Muslims or “radical Islam” just happen to occupy a region that is the world’s number one source of conventional oil.) Not surprisingly, both leaders have the backing of Christian extremists and right-wing nationalists.
U.S. white supremacists have even identified Putin as “leader of the free world.” Many U.S. religious conservatives openly admire Putin because his government champions “traditional values” and “Christian civilization” while attacking gays. Last but not least, both men nurse a calculated disdain for the evidence on climate change. Putin once quipped that climate change wasn’t a bad thing because in a warming world Russians would just spend less on fur coats and grow more grain.
Although Putin has recently paid lip service to the significance of climate change, the Russian government, as a whole, has expressed little concern about fossil-fuel induced weather chaos. The prominent Russian ecologist Alexey Yablokov attributes the indifference to petroleum’s unholy grip on the national pysche:
“That’s our ideology, that’s why we only think about drilling for more and more oil and selling it to the West. Who’s thinking about ecology? Who cares that 10 per cent of oil will spill or leak out while being transported to the West? No one does…. That’s not important, what’s important is getting the money, building a new house and buying new cars.”
Both Trump and Putin, in short, derive their political power from a resource whose future depends on denying climate change and ignoring the environmental costs of extracting ever more risky and energy intensive reserves. ExxonMobil, the world’s eighth largest company based on revenue, has a limited future without access to Arctic oil, just as the Russian state has a limited future without higher prices for its hydrocarbons.
And herein lies the core of their authoritarian attraction. Both men know that responsible action on climate change to limit global temperature increases to a still punishing two degrees means that $2 trillion worth of fossil fuels must be kept in the ground. Most of those extreme fuels consist of higher cost U.S. shale oil, Canadian oilsands, Russian conventional oil and Arctic reserves. They know that groups such as the independent financial think tank Carbon Tracker have said the onus to cut production will fall heaviest on nations producing the ugliest and costliest hydrocarbons.
And any move to keep these resources in the ground would spell the end of ExxonMobil, Russian energy giant Gazprom, the Koch brothers and Putin himself. It could also bring down many of the world’s financial institutions that have unwisely let the oil and gas sector accrue historic debt loads to exploit uneconomic resources. Alex Steffen, a U.S. futurist and sustainability expert, has set out the steps the petroleum industry and its allies would have to take to preserve the status quo
. “You’d dispute climate science, making scientists’ predictions seem less certain in the public mind, and work to gut the capacity of scientists to continue their work,” he writes. “You’d attack global climate agreements…. You’d attack low-carbon competitors politically.”
“You would ally with extremists and other sources of anti-democratic power, in order to be able to fight democratic efforts to cut emissions,” he adds. Michael Mann, the Pennsylvania State University geoscience professor who famously illustrated the threat of climate change with a hockey-stick graph showing warming temperatures, confessed to Jane Mayer in Dark Money that climate change scientists completely underestimated the power of Big Oil. Environmentalists, politicians and the media did the same.
They thought evidence and reason would rule the day, but that’s not how wealthy czars or bloody cartels behave. Power is not something they surrender like some piece of cake. “What we didn’t take into account was the ferociousness of the moneyed interests and the politicians doing their bidding,” admitted Mann.
“We are talking about a direct challenge to the most powerful industry that has ever existed on the face of the earth. There’s no depth to which they’re unwilling to sink to challenge anything threatening their interests.” Years ago the great U.S. political scientist Terry Lynn Karl warned that the rise of petro states had global implications. Petroleum busts and booms created pipelines for poverty, inequality and political crises, she wrote, and these crises “subsequently produce new oil shocks that may have profound and unforeseen consequences… because they reverberate powerfully through world markets and even threaten global peace.”
And that is the waltz Trump and Putin now dance.