The Electrostate Revolution Part 3 - A New Cold War or Carbon's Last Stand?
As positive as the emergence of renewable energy and electrotech has been, they haven't been happening in a vacuum or without the involvement of societies, corporations, and institutions who benefit from the continued use of fossil fuels. From the perspective of the world of carbon, every advance by solar and wind power is an irrecoverable loss for fossil fuels. This is because our current economic order has been centered around some form of carbon energy or another ever since Watt’s steam engine hit the factory floor. As a consequence, these industries have operated under the assumption that they will extract all known fossil fuel reserves, refine, and sell them. Accomplishing this requires maintaining a market capable of profitably absorbing and using all these energy resources. An energy source truly capable of dethroning King Carbon and his court was never treated as a real possibility, not even when nuclear energy was the all the rage before Three Mile Island and Chernobyl, and so the industry has operated based on that seemingly unchanging fact.
We now may see the long-term consequences of this assumption coming back to haunt the world of fossil fuels with a vengeance. Oil, like any other commodity, has a break-even point which determines whether a production site is profitable. If, due to oversupply from excessive production or a significant decline in demand, the price per barrel drops below a field’s break-even point then that field goes from being an asset to a liability. A recent study in Science argues if this point is sustained for an extended period, which they call the minimum viable scale, then fossil industries will cease to function properly and the consequences of any bad decisions will be multiplied by the reduced availability of funding, equipment, and personnel. For those who depend on oil wealth for their power and influence, like Russia, Iran, the Persian Gulf monarchies, or the oil and gas producers supporting Trump’s regime, renewable energy destroying demand for their products is more than just a business problem, it is an existential threat to their empires of dirt.
These institutions have also responded as one might expect anyone facing such pressures would. The fossil fuel industry, by itself, has spent trillions on climate denial & disinformation since the 1970s when their own scientists confirmed that carbon emissions were cooking the planet. Russia, Saudi Arabia, and the Trump regime have also made climate denial & building up fossil fuel production central to their policy regimes.
Such soft power struggles to strangle renewable energy in the cradle are, on their own, already reminiscent of the Cold War, a question which was recently examined by economist Adam Tooze. The larger discussion around this topic, as Tooze describes, presumes the material interests of the petro-states will drive them into conflict with emergent electro-states in China and the European Union. In such a world, petrostates would pursue control over key oil resources to ensure production continues under his control while continuing to sabotage further renewable adoption at home & abroad, as Trump has openly done in Iran and Venezuela.
Such patient, escalating competition was certainly a possibility for the world but we may also be living through a different option best described as carbon's last stand. In this scenario, the logic of fossil fuel production, the whims of petrostate autocrats, and the accelerating rate of renewable adoption have pushed carbon energy's backers against a wall. If we, indeed, are living in such a moment of uncertainty then our world's escalating conflicts may be best understood as the petrostates’ desperate, hopefully final attempts to fend off their demise by consolidating control over the world’s oil supply.
Materially, there is a fairly strong foundation for describing the ongoing conflicts in the Caribbean, the Middle East, & Venezuela as fossil fuel-driven resource wars meant to shore up the empires of their petrostate aggressors. In the case of Trump's conflicts there is no question his attacks on Venezuela & Iran are heavily motivated by a desire to seize both nations’ oil supplies, mostly because Trump & his subordinates have repeatedly said as much. Even his economic assault on Cuban oil supplies is another example of petrostate hard power in action which shows strong similarities to Putin’s 2015 gas blockade of Ukraine.
For Putin, the question is much less clear-cut as he has long couched his aggression against Ukraine on nationalist grounds or as a response to the perceived threat of NATO expansion. It cannot, however, be denied that Ukraine’s rich natural resources, like lithium and rare earth minerals, would be a significant addition to Putin’s economic arsenal. Such prizes, when filtered through Putin’s own visions of empire, make the high cost his regime has paid somewhat more understandable.
Even the high oil prices, which many analysts have treated as a political cost that may undo Trump’s latest acts of aggression, are best understood more as a feature than as a bug for fossil fuels. A recent analysis found that US oil companies stand to reap an immediate estimated windfall of $63 billion from the ongoing oil shock as higher prices mean greater profits for oil producers. For petrostates like Russia, these windfalls are, in the eyes of analysts, providing some immediate fiscal relief in the form of an estimated additional $150 million flowing daily to the Russian war effort though how long these windfall will last and the percentage of profits are devoured by inflation remains to be seen.
When understood based on these realities, this desperate lunge for dominance makes sense. Fossil fuels simply cannot compete with electrotech & over a long enough time frame will lose out to the systemic efficiencies, stability, & greater productivity offered by renewable economics. In such conditions, going all-in on destabilizing resource wars offers the promise of immediate profit and enriching the position of the petrostates at the expense of all potential rivals. It also would fit with the mentality of an industry which has long been defined by risk-taking and a focus on extracting value over building enduring, positive sum systems