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Tuesday, Feb 9th 2010

FT Energy Source | Did oil cause the latest recession? IEA weighs into the debate

Author: donagh of Dublin Opinion

Published: November 9th, 2009

Section: Best of the Web

Discussion: 5 comments ↓

FT Energy Source | Did oil cause the latest recession? IEA weighs into the debate

Though it’s universally viewed as a crisis of the financial sector’s making, several voices (notably James Hamilton) have argued the recession that began last year had a lot to do with the sharp rise in oil prices over the preceding months and years.

Discussion

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  1. Comment by: Pope Epopt

    Nov 11th 2009 at 10:11

    We’re well over the peak of oil production and sliding down the other side. That’s why, financial instability aside, no recovery of growth can be sustained, despite the asset bubble de jour. The first sign of a real ‘recovery’ will be a sharp rise in oil prices.

    It’s also, incidentally, why the reformist left is barking up the wrong tree in trying to restart growth in order to ameliorate social conflict. That is a strategy of the past, and the sooner we abandon the growth fetish and concentrate on the redistribution of power and resources, the better.

    The IEA has been cooking the books on fossil fuel reserves and the cost of extraction almost since it was set up.

    The decline in fossil fuels could be seen as a huge opportunity for a lightly populated country with plenty of renewables, but instead we’ve got NAMA and na Glasraí in a government who will borrow to bail out a bankrupt financial system, rather than reflating by spending what’s needed on a renewables infrastructure.

    Tragic.

  2. Comment by: Donagh

    Nov 11th 2009 at 11:11

    Thanks for that Pope. I think though you have to look to what sort of growth is suggested. As David Harvey has pointed out:

    “A healthy capitalism has to grow at 3 percent per year; the problem is to find where you can achieve that 3 percent growth.cThere are various blockages. For instance, if capital is confronting labour problems, then it is hard for it to find an outlet and over-accumulation occurs. If it faces problems in the market, the same issue arises. Over-accumulation is any situation in which the surplus that capitalists have available to them cannot find an outlet, whether through labour constraints, market constraints, resource constraints, technology constraints or whatever.

    It is far too simplistic to say that the left is trying to “restart growth in order to ameliorate social conflict”. What is social conflict if not the class dynamics behind this crisis. The situation must be rectified by dealing directly with the way that class and power are at heart of the conflict and that can only be done, as you say, by some form of redistribution.

    I too would see the decline in fossil fuels as an opportunity to boost sustainable alternatives, but we also have to acknowledge that given the propensity of financial capital to invest in bubbles, it seems that any news of scarcity might also spur on price speculation. However, rather than investing in biofuel from Brasil, another boon for the speculators no doubt, we should concentrate on the resources we have.

  3. Comment by: Pope Epopt

    Nov 12th 2009 at 10:11

    Agreed on bubbles, and of course we’re not talking about biofuels from Brazil, or biofuels in general for that matter.

    Energy sources should be ranked by their EROI (Energy Return on Investment) i.e energy extracted divided by the total energy to produce, to assess their viability.

    The ranking by the way, goes 1. hydro (by a big margin), 2. onshore wind, 3. offshore wind and then 4. nuclear fission (although uranium supplies available and energy costs of extraction are highly disputed). All the fossil fuels have a declining EROI (ignoring their greenhouse gas emissions) and biofuels (with the exception of low-energy-input forestry) are right down the bottom of this league. Google the work of Charles Hall and his collaborators for more on this.

    My point is that we are suffering two types of systemic crises - intrinsic and extrinsic. Perhaps the crisis intrinsic to capitalism is one of over-accumulation. But it strikes me as a non-expert that attributing the intrinsic crisis to a single contradiction may arise from a doctrinaire desire to make the facts fit the texts. I’m probably caricaturing much more nuanced positions, but I can’t help thinking that were Marx alive today his analysis would be significantly different from that in the canonical texts.

    What the neo-Marxist left fails to realise is that the extrinsic crisis of fossil energy scarcity and the decline in the societal EROI is at least as serious as the intrinsic crisis, and applies whatever the relations of production. There is an interplay between the intrinsic crisis and the external crises of peak fossil fuels and climate change. Unless the two types of crisis are addressed simultaneously and given equal weight (as some eco-socialists are attempting to do) we’re being dishonest about the world.

    The neo-liberal greenery espoused by the Greens in government has been so counter-productive for progressives in this country because, through their policies, citizens are coming to associate action on energy use and production with the savage class war being conducted by the elite against the rest of us. Carbon taxes are going to be seen as attacks on the poorest and progressive proposals like Feasta’s Cap and Share, are being ignored.

  4. Comment by: Pope Epopt

    Nov 12th 2009 at 10:11

    More on the IEA shenanigans

  5. Comment by: Donagh

    Nov 13th 2009 at 12:11

    Thanks for the great comment Pope. I saw that Guardian report in the Print edition. I almost entirely agree with you here and there is much I’d like to comment on and will when I have the time. On the Feasta Cap and Share scheme see a similiar idea proposed in the early days of ILR by Damian O’Broin.

    http://www.irishleftreview.org/2008/06/11/left-climate-change-green-red/

    Also, wasn’t that being examined by an Oireachtas committee last year? They seemed enthusiastic about it. How come its not in the program for government?

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