Fueling oil scarcity: produced scarcity and the sociopolitical fate of renewable energy.

• Author: Winter, Lea
• Position: Andrew Wellington Cordier Essay

Oil anxieties usually stem from fears about running out of oil, but the true oil scourge of the past is overabundance. Oilmen conceal their oil in order to maintain profits and manipulate their monopoly on oil so that they may wield political power. To keep the price of oil high enough to sustain the industry, oil authorities have developed methods of producing scarcity. The results of making oil scarce have been harmful to society economically, politically, and socioculturally. Since current forms of alternative energy are naturally scarce, this article evaluates whether the effects of the oil curse arise from scarcity itself or from the production of scarcity. The destructive experiences with produced oil scarcity inform prospects for a future with alternative energy, including how these energy forms can be developed in ways that avoid the associated effects of the "oil curse."

Produced Scarcity

The oil industry's primary challenge for the majority of the twentieth century was the "organization of scarcity and the prevention of abundance." (1) Experiences of perceived scarcity--especially in the 1970s--and the current looming threat of peak oil derive not from geological limits but rather from strategic methods of producing scarcity. The factors dictating oil scarcity lie "above-ground"--resource availability is often determined by the ways in which societies and economies are internally organized. (2) In the case of oil, scarcity arises from within the organization of the industry itself. (3) Academic analysis of the petroleum industry has revealed that geologically limited peak oil is not a real imminent threat, evident from the lack of consensus among oil corporations about whether peak oil is a threat at all. Some corporations add the peak oil theory to their repertoire of "strategic imaginaries" used for producing scarcity and controlling prices. (4)

Mechanisms of Scarcity Production

The methods by which scarcity is produced may shed light on whether the resulting problems derive from the methods themselves rather than being inherent to oil. The peak oil claim can be used to "naturalize a situation whose origins are political and economic," transmitting the source of the perceived scarcity into the natural realm and thereby obscuring Big Oil's position of culpability. (5) Theories of resource scarcity include unequal resource distribution as one of three factors in producing environmental scarcity, where natural scarcity and population growth constitute the other two components. (6)

The material properties of oil enhance the ability to control its accessibility. Crude oil extracted upstream must undergo various transformations that "involve establishing connections and building alliances," translating forms of political power along the pipeline as the hydrocarbons are transformed. (7) Political agency arises through opportunities to slow, disrupt, or cut off the supply of oil at various nodes of oil transformation and transportation. Oil companies may introduce small delays, interruptions, and controls in order to enhance their power by limiting the "flow of energy;" they can raise prices by "restricting output" to engineer a shortage. (8) This "capitalism of inefficiency" has been exploited as oil companies insert controls over the conduits of oil production--"bottlenecks" through which oil must flow.

When oil sources are controlled by the state, the government imposes political limits in order to control production. The story of wildcatter Columbus "Dad" Joiner provides a telling example: When Joiner discovered the single largest oil field in the history of the United States, the government eventually declared martial law in the East Texas oil fields and 4,000 troops were deployed to enforce the field's "allowable" production levels. (9) During the 1930s, when price instability was fueling an oil crisis, President Franklin D. Roosevelt assigned Secretary of the Interior Harold Ickes to handle the crisis. Ickes set a precedent for a prominent federal role in stabilizing the oil industry. He implemented a "scalar fix," an institutional mixture involving national, state, and local control. State entities as well as corporate oilmen can thus exercise control at critical points along the production line--running the gamut from influencing perceptions about geology to levying tax--in order to produce the appearance of scarcity.

Economic Effects of Scarcity

The methods used to produce scarcity tend to undermine the normal balance of supply and demand, merging economics with the political and corporate aspects of oil. Scarcity is rarely felt as a physical limit, but rather is experienced via price; scarcity is often constructed through prices in order to advance commercial and geostrategic interests. (10) Economics provides a means by which to regulate the availability of oil. Economics is also transformed by value distortion in the context of the landed nature of oil, and the logic of classical economics becomes corrupted through the power possessed by oil companies and cartels.

Oil companies promote narratives that frame oil extraction as onerous and costly, legitimizing the high prices experienced by consumers despite the natural abundance of oil. The companies also capitalize on peak oil claims to legitimize exploitation of non-conventional sources so that they can tap into an increasing proportion of available fossil fuels. These sources, such as tar sands and natural gas, enhance the investment portfolios of international energy companies, transferring control over energy sources to profit-driven oil companies. (11)

Political control over supply and demand via oil power can transform oil into an economic weapon. When capitalist production is analyzed as a "social process that engages people and nature in mutual transformation," the price of production and market prices merge. (12) Classically, prices of production represent the actual costs of production and can be explained by theories of value; they are separate from market prices, which reflect the actual exchange price of commodities in response to fluctuation in supply and demand. Neoclassical thought does not distinguish between these two origins of prices, though; it recognizes only a market price produced by the "subjective preferences of economic agents" through the market. (13) In this context--the "blinding light" of the market--value is rendered "invisible." (14)

Oil cartels may take advantage of this concept of obscured value. For example, it had been commonly accepted that profits would...