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.
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.
As 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 a belligerence 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
https://zzs-blg.blogspot.com/2024/01/oil-natural-gas-and-capitalism.html
