Oil is the capitalist rulers’ most vital industrial and military commodity. Since World War I and the breakup of the Ottoman Empire, it has kept tanks moving, planes bombing, and factories exploiting workers’ labor. Time and again, the bosses have gone to war for control over oil in the Middle East, from the Suez Crisis to the Persian Gulf and Iraq wars. So it’s no surprise that the recent crash in oil prices has aggravated tensions among competing imperialist powers, moving them that much closer to all-out global war.
Capitalist overproduction, geared for the capitalists’ never-ending dogfight for maximum profit, is fundamentally irrational and chaotic. Even when oil demand dropped off a cliff with the Covid-19 pandemic, companies still had to keep pumping the commodity out of the ground. In April, with buyers scarce and global storage facilities near capacity, a barrel of oil briefly had a negative price—producers had to pay buyers to take it off their hands! As of mid-May, crude oil prices were still at a 20-year low.
In the communist, borderless future that members and friends of Progressive Labor Party (PLP) fight every day to secure, energy production will be centered around the needs and safety of workers. Decisions about when and where and how much to produce will be based not on profit or imperialist competition, but on what’s best for the international working class.
Split in the fascist U.S. ruling class
The economic misery enveloping the world, deepened by the crash in oil prices, has sharpened a split within the U.S. ruling class. The Small Fascists, who support and fund President Donald Trump, are aligned with domestic energy companies at mortal risk from plummeting demand. Two of these companies, Whiting Petroleum and Chesapeake Energy, have already filed for bankruptcy, and hundreds more may follow (Quartz, 4/3). Many of them produce oil by the costly “fracking” of shale deposits, and were already drowning in debt. From 2006 to 2014, 16 publicly traded shale oil companies outspent what they produced by more than $80 billion (New York Times, 4/20). “At current prices, not one of the 100 largest fracking operations in the country can turn a profit” (Quartz, 4/3).
The bosses of these companies are mobilizing Trump’s racist “Make America Great Again” (MAGA) base in a desperate attempt to save their profits. The American Legislative Exchange Council (backed by the Small Fascist Koch family) and the Michigan Freedom Fund (linked to the Small Fascist DeVos family) have organized gun-toting protests at state capitols. They’re demanding an immediate reopening of local economies, even as thousands of people are infecting one another and dying of Covid-19 every day.
While the heavily armed white demonstrators with swastikas, nooses, and Confederate flags are repulsive, the other side in this fight is no friend of the working class. The liberal Big Fascists, who trace their origin to John D. Rockefeller and his Standard Oil monopoly, are spearheaded by multinational oil and finance capital companies. To protect their long-term profits, they are pushing for a slower emergence from the pandemic lockdown. Since deep-pocketed giants like ExxonMobil are better equipped to wait out a price squeeze than smaller domestic companies (Motley Fool, 4/27), they can pretend to care about workers’ health while they watch their competition wither and die.
In fact, the Big Fascists and their liberal politician puppets are planning for even deadlier, wider-scale wars with global rivals China and possibly Russia. Let us not be fooled. None of the bosses or their stooges—from Trump to Joe Biden and Barack Obama—care about workers’ lives. They simply have different strategies for how we should be sacrificed on the altar of capitalist profits.
Oil crash roils geopolitics
While the historic, pandemic-driven reduction in energy demand lies at the root of the oil price crisis, the virus is not solely to blame. In early March, when the global economy was still up and running, Saudi Arabia and Russia launched a price war that flooded the market with millions of additional barrels of oil. Republican Senator Ted Cruz suggested that Saudi Arabia, a once-reliable U.S. partner, was intentionally driving U.S. shale oil producers out of business (CNBC, 3/31).
Accelerated by the isolationist and incompetent Trump, the U.S. rulers’ loss of influence in the Middle East, even with so-called allies like Saudi Arabia and Israel, is a clear sign of their decline as the world’s number-one power. As China and Russia seek to fill the void, the region is becoming even more unstable. The twin crises of overproduction and the falling rate of profit, which Karl Marx showed to be inherent properties of capitalism, are intensifying imperialist competition. For the bosses, there is one sure-fire way to resolve their contradiction: a war that demolishes much of the world’s productive capacity. In other words, the bosses will gladly sacrifice the lives of millions of workers to “reset” their crisis-riddled system and start fresh.
Communists understand that capitalism can’t ever be reformed to meet the needs of our class. The profit system must be completely destroyed and replaced with one that’s run by and for the working class—a system that CAN meet our needs.
Main rivals on the rise
The two main challengers to U.S. dominance could emerge from this crisis stronger than before. U.S. sanctions against Russian oil forced Russia to diversify its economy, leaving it “in very good shape to cope with lower [oil] prices” (Bloomberg, 3/6). China, a net importer of oil, generally fares better when prices are low. Further, the Chinese government willingly supports its national oil companies to keep them solvent.
Combined with the economic disaster of the pandemic, the latest conflict over oil could accelerate the U.S. bosses’ decline and make them all the more eager to enlist U.S. workers for World War III. On April 28, the U.S. sent the guided-missile destroyer USS Barry to sail near the Paracel Islands, a disputed archipelago in the contested South China Sea. Two days later, the U.S. flew two Air Force B-1B bombers over the South China Sea in a provocative show of force.
Oil greases the wheels of global capitalism. As long as they remain in power, the bosses will continue to send millions of workers to fight and die to protect the rulers’ profits. They will keep on burning oil and other carbon-based fuels, the source of catastrophic climate change. For the workers of the world, there is only one alternative: communist revolution. Only when we have wiped the capitalists and their murderous system from the face of the planet will we be safe from their plunder, pandemics, depressions, and oil wars. Join PLP and help make revolution a reality!
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The Petrostates crash
The crash in oil prices is devastating the less powerful “petrostates,” nations that rely on petroleum revenue to run their economies. In Iraq, oil revenues—which make up 90 percent of budgetary income—plunged by nearly half for March, even before Covid-19 fully crushed demand. “This fiscal collapse has dire implications for the country’s struggle to stave off ISIS, for Iraq’s ability to stand up to interference by its neighbors…” (Bloomberg, 4/29). After sinking trillions of dollars and murdering hundreds of thousands of Iraqi workers in the genocidal Iraq War, the U.S. may have no more control over the region than it did before its invasion in 2003.
In fact, according to the International Monetary Fund, every country in the Middle East except Qatar requires oil to sell at a minimum of $60 per barrel. Over the past month, the average price of Brent Crude has been a hair above $20 (Bloomberg, 4/29).