Good for the environment? Good for us?

Submitted by AWL on 1 July, 2008 - 10:34 Author: Colin Foster

The activist left, being heavily concentrated in city-centre areas with relatively copious public transport, may be liable to underestimate the impact of fuel price rises.

Even in Britain, probably the majority of the working class live in outlying areas of cities and in small towns: they have no choice but to drive a car to get to work. About two-thirds of all journeys to work in Britain are made by car.

In more sprawling cities in other countries — as, for example, in the vast stretches of suburb in western Sydney — reliance on the car is even more compulsory. It doesn’t matter what people living in those areas think about the preferability of public transport in general: for now, and for the foreseeable future, they have to drive to get to work or to almost anything else.

In poorer countries, increased oil prices hit by making fuel for heating and cooking more expensive. They contribute to spiralling food prices by making fertiliser more expensive and raising the cost of food imports.

But it is not within the power of the labour movement, or even of a workers’ government in a single country or group of countries, to stop the rise in world oil prices.

It would not be desirable for the labour movement to press governments towards paying large subsidies to keep down the prices of fossil-fuel, when we know that cheap oil is unsustainable in the long term — supplies are limited, and in any case the world has to shift urgently from fossil fuels to less carbon-emitting alternatives if we are to avert huge ecological damage.

Under capitalism, the higher oil prices mean huge profits for oil companies, and a boost for the most ecologically-damaging projects for oil extraction, as in Alaska or in the oil sands of Canada. To save the world, we need to replace profit by social planning as the driving force of economic life.

But the higher oil prices are pulling down the sales of four-wheel-drives far more than reams of activist agitation against the gas-guzzlers ever has done. The oil price rise pushes governments and businesses to move faster on alternatives to fossil fuels: it would be foolish to want to counteract that effect.

Some left-wing agitation attributes the oil price rises exclusively or mainly to speculation, suggesting that a firm hand with the speculators would solve the problem.

In an international market like oil, it would be almost impossible for the labour movement to stop the speculators, short of a workers’ government controlling most of the world. In any case, it is unlikely that speculation is more than a secondary reason for the price rise.

Speculation — rich people buying oil “futures”, in the expectation that the price will rise — can make a price “bubble” swell faster. But there are not vast hoards of oil being kept off the market in order to raise prices. Inventories are low. The speculation can only speed up a trend which is already there.

The trend is there because demand for oil is outstripping supply, and more and more expensive sources of oil are becoming marketable.

Low production in Iraq because of the chaos there since the US/UK invasion is one factor. More fundamentally, it may be that we are nearing “peak oil”, the point in history where the Earth’s finite oil reserves have been so thoroughly tapped that in future supply can only dwindle.

An official report for the US government tells us that: “oil companies have conducted extensive exploration over the last decade, but their results have been disappointing”. A survey article by economists Mikka Pineda and Rachel Ziemba for notes “sky-rocketing exploration and development costs”.

At the same time, demand for oil has been increasing, especially with the rapid industrial development in China and India: China’s crude oil imports have grown by almost 20% a year since 2003.

After the two “oil shocks” of 1973-4 and 1979-80, from about 1985 oil prices moderated. If oil prices are measured in “2007 dollars”, in 1998 they reached an all-time low, and up to 2003 they were lower than in 1986.

The current price rise started in mid-2004, and over the last four years has increased the cost by four times (measured in current US dollars), two and a half to three times (measured in constant US dollars), or two to two and half times (measured in euros).

This is a solid and well-established trend, and probably means that the long-term trend for oil prices for many years to come will continue upwards.

In response to the continuing rise in oil prices, as with other “necessities”, we should demand that the labour movement establish an accurate cost-of-living index based on working-class circumstances, and fight for an automatic escalator clause guaranteeing that wages and benefits at least keep pace with that index.

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