Resurrecting a Discussion: Energy's Affect on Economies

My buddy psychohistorian is really going to enjoy Alastair Crooke's latest, "Our ‘Rhythmically Dancing’ Physical Real Economy". Taking a page from Declan Hayes, Crooke begins his essay with a tribute to poet WB Yates that brings us to these two paragraphs:

"Today, the West is caught up in the ‘image-ideas’ of mechanistic causality and financialism. Wall Street economists pore over the entrails of monetary variables, and have come to see the world through mechanistic-financial spectacles.

"This artifice, however, was always illusory, giving its analysis a false sense of empiricism and of data-led certitude: The idea that real wealth would emerge out from inflated fiat debt; that such debt expansion had no boundaries; that all debt must be honoured; and its overhang was only to be solved by more debt was never credible. It was a ‘fairy tale’."

Such was the glamour that enthralled all too many and generated our current nightmare. Crooke continues his tale:

Nonetheless, this changed attention has – literally – shaped how we ‘see’ the world. Some of its consequences might be hailed in terms of great tech advances, but we should be aware too, that it has also led to an increasingly mechanistic, materialist, fragmented, decontextualised world – marked by unwarranted optimism.

Financialism was, after all, just ‘a narrative’; one crafted by technicians, whose credentialled expertise ‘may not be questioned’. It was intended to support a particular illusion (in which many, including the money-men, firmly believed); It was the ‘myth’ of debt and credit-led, recession-free growth. The true aim though, always was the appropriation of global purchasing power to the oligarchic élites.

But there was an older black magic that empowered the money-myth, the very thing that fueled the empowerment of humans into a huge revolution that has yet to completely end--ancient solar energy sequestered within the earth as part of one of our planet's many cycles, in this case the Carbon Cycle, the black magic being coal, then later oil.

The shift in narrative towards financialism nevertheless, has had the effect of removing attention from the ‘other’ facet; the obverse side of a dynamic real economy: that of being a physics-based network system, powered by energy.

I was curious when energy would finally enter the discussion aside from being the subject of illegal sanctions and poor policy choices prior to them. As Crooke notes in his Al-Mayadeen essay, "The EU Begins the Start to Retreat [on sanctions] Does the ECB drill for oil? Does the ECB run a farm? Does the ECB drive a truck? Does the ECB pilot a cargo vessel across the Pacific or load freight at the Port of Los Angeles?" The EU is backing down while trying to save face in its latest round of illegalities aimed at Russia. Being rolled back are sanctions on energy for machines and humans as the fiat euro dives downward having very little backing as the secondary title describes. Crooke continues his tale with a long citation attributed to longtime Oil Drum Blogger and ASPO activist Gail Tyverberg who "states the obvious: Modernity is contingent on fossil fuels."

Crooke's essay echoes numerous Oil Drum discussions we had examining Peak Energy and its affects on humanity in general and economies specifically. I recently tabulated the proven gas reserves of the top ten, eight of whom are connected to SCO or BRICS+ and thus reside outside NATO, while the two top NATO nations only have proven reserves at present extraction rates for just the next 17 years whereas the other eight can continue for many decades well into the 22nd Century.

At this point, Crooke's essays meld together. Hudson isn't the only one to observe that the triangle of Big Oil, Merchants of Death, and the FIRE sectors have built, captured and control the Outlaw US Empire's governing apparatus, and there are a certain number of analysts within that matrix who are genuine realists, not enthralled neoliberalcons, who understand hydrocarbon depletion rates and where the most reserves are located. Yes, the wars weren't specifically for oil but for energy resources that include oil, natgas, coal, uranium, and other components, but primarily for the first three--hydrocarbons. All of the Empire's quests to steal/acquire those resources have failed, although some is being stolen from Syria and previously from Iraq. But The Prize slipped through their fingers, or so they think--Russia--although Saudi Arabia was the First Prize but isn't any longer--it's too depleted.

If the Global South is going to develop so it can raise its populace from poverty, a high proportion of what remains of proven hydrocarbon reserves will be used for that project, while the West wants as much as possible for itself alone. Currently, the ultimate commodity and collateral are hydrocarbons. Other energy systems will eventually replace them, but not for several more decades as that capacity/capability will take time to build up. And thus NATO's very large, unspoken problem--its geoeconomic dependency on the rest of the world, flipping the relationship that's existed for the last 500+ years.