Oiling the Wheel of Despair at the Edge of Scare City

The future is bleak. That seems to be the message that everybody wheeled into the public spotlight is keen to tell us. Indeed, if you can’t say that the future is bleak, you have no business being on the news. 

Other than the current comparisons to today’s economic climate with the Great Depression, there seems to be two main categories of doom saying; the first tells us that the stuff we do will cause irreversible damage to the planet. The second tells us that we’re running out of stuff to do stuff with anyway. Either way, we’re up a certain creek without a paddle. It’s a ticking time bomb. A disaster waiting to happen. Not if, but when. The disaster B-movie has mutated, grown limbs, escaped its fantasy celluloid landscape, and found a new home in the imaginations of the people whose expertise we might have thought would protect them – and us – from such silliness. But embracing disaster movie clichés is now part of the expert commentators’ routine.  

Matthew Simmons, CEO, Energy Investment bank Simmons & Co joined Richard Heinberg – Senior fellow, Post Carbon Institute, and Liberal-Democrat, John Hemming MP, Chair of the All Party Parliamentary group on Peak Oil and Gas for a recent edition of BBC Radio 4’s consumer affairs programme, You and Yours, for some lunch time fear-mongery.

You can listen again, here.

This kind of thinking is straight out of the environmentalists’ cookbook. But it is not unique to environmentalists. 

PRESENTER: And when you’ve been asked before if it’s time, you know, for this whole idea of peak oil and gas to be part of the public policy you’ve said, ‘it’s passed time, and in fact the solution now is to pray’. Is it really as dire as that?   

MATTHEW SIMMONS: I beleive so, and I beleive the data is overwhelmingly… it’s not perfect yet… it won’t be until we look back with, you know,  the benefit of two or three year hindsight… But I think the data is pretty clear that basically we reached, the sustainable top oil production in 2005. So we’re now three years beyond the tipping point. 

Amongst many critics of environmentalism on the right, environmentalism is regarded as the continuation of the Left. Environmentalists are ‘watermelons’, they say; green on the outside, red in the middle. Various eco-warriors haven’t been keen to challenge this perception, arguing that climate scepticism was a front for the interests of oil companies, who face a reduction in their profits. This was also the claim of a former director of media relations of the UK’s Royal Society, Bob Ward. Ward sent angry open letters to Exxonmobil and the media, demanding that they stop funding sceptics, which he continued even after he left the RS to work at insurance products firm, Risk Management Solutions (RMS). But as we pointed out, if Ward is criticising oil companies for having an interest in the public’s doubt about global warming, then Ward, now working for RMS, which sells products relating to the effects of climate change, has an interest in the public’s undue fear of catastrophe. If nobody feared climate change, there would be no market for the products created by Ward’s new employers. Fear is to RMS as oil is to Exxonmobil. 

Similarly, Matthew Simmons has something to gain by promoting the idea that the oil is about to run out, and we’re all going to die. Scarcity, or the belief that something is scarce, makes his commodity more valuable. It pushes the price up. It means that, as a CEO of an energy investment bank, he has to do less investing for each dollar of return, than he would, were prices lower than they have been in the past. The urgency with which he presents his case also creates the drive to subsidise ‘renewable’ energy installations, which he will no doubt benefit from. 

The company’s website announces itself, 

Simmons & Company is the only independent investment bank specializing in the entire spectrum of the energy industry. Founded in 1974, the firm has acted as financial advisor in over $134* billion of transactions, including 535 merger and acquisitions worth over $93 billion. Simmons has served as co-manager on over $35 billion in public debt and equity offerings. During 2007 Simmons closed 49 M&A transactions worth $26 billion and co-managed 10 offerings worth $4.9 billion. The firm’s clients range from small, privately held companies to multi-billion dollar public entities.

Does that sound to anyone like workings of a secret socialist conspiracy? 

Richard Heinberg lightens the mood of the conversation. ‘We’re going to have to re-think just about everything we do’, he says. 

PRESENTER: Are we talking about population control at some point? 

RICHARD HIENBERG: Well, certainly we’re going to have to look at how to reduce population increase and perhaps even contemplate ways to reduce fertility so that gradually the human population can contract back to a level that we can sustain. Obviously we want to do this in the most humane way, without disregarding human rights, but at the same time, the ecological reality is we may not be able to support seven, eight, or nine-billion people. 

And here we see the ecological and depletion arguments converge. Humans must balance not merely their lifestyles, but their lives, and the lives of the families they want to have, and their rights against ‘ecological reality’. All that is necessary to demand people lower their horizons, aspirations, and expectations is to invoke ‘ecological reality’. Gone are the days when nature was studied in order to be harnessed for the benefit of humanity. Today’s study of nature is a political exercise that is undertaken in order to discover ways of legitimising social control. You want liberty? Well, tough, ecological reality dictates that it’s not possible. Start digging. 

And don’t expect capitalists to rush to the rescue. 

PRESENTER: Matt Simmons, do you really think we’re going to have to have population control as a result of your fears over peak oil?

MATTHEW SIMMONS: I think population control is like introducing a new car. It’s a great concept, but basically it just takes too long. We don’t have the time for these. We would have had the time if we started thinking about this in the ’70s or ’80s, but again, population control, unless we’re talking about genocide, it takes decades to implement so… Liberating the workforce, and allowing people to work when they want and where they want, growing food locally, ending globalisation, ?[making things we’re using]? can be implemented in three to four years, so. That’s the draconian measures we need to do. And long-term we need to think about these other things, but they’re very long-term implementations, and we don’t have that time, we ran out the clock. 

‘Liberating the workforce’ in Simmons’ argument is not really about liberation at all. He’s principally talking about telecommuting. Which is fine if you happen to be in his line of work (not to mention if you have a nice big house, with plenty of room for working in). If you happen to be one of those people doing the ‘growing food locally’, it means hard work, and low pay. Allowing people to work ‘where they want and when they want’ is also a neat idea. But Simmons doesn’t mean freedom. It doesn’t mean allowing people to work 100 miles away from where they live. It doesn’t mean letting people drive, or, heaven forfend, flying to new opportunities. Industry with a ‘low ecological impact’ isn’t liberating. It’s back-breaking, manual labour. And what to make of a CEO of an investment back calling for an end to globalisation?! 

Once upon a time, capitalists sought to find new ways of meeting human needs and desires. Even if that meant, sometimes, creating things we didn’t really want, or didn’t really need. It is curious, then, that Simmons should be using ‘ecological reality’ as the basis for an argument against globalisation, and for a radical change in our lifestyles. 

This pessimism has found a home in the establishment as much as it has amongst the self-proclaimed revolutionary activists. Anti-globalisation protesters clash with the authorities at G8 meetings, but if CEOs of energy investment banks are saying the same things, then it’s not clear what either are asking for. Between the demonstrators and the companies, the Government, and the political parties, there is very little difference of perspective on the problem. 

‘I think we need to recognise that there is a link between food and energy.’ Says Lib-Dem MP, John Hemming. Well, you’d have hoped so, wouldn’t you? 

JOHN HEMMING: Fertilisers are generally… the feedstock is from oil. So you will always have a link between the two. And the policy changes that are needed are the same, whether you agree with the doomsday scenario or not, we still need to be much more orientated towards controlling the use of fossil fuels.

PRESENTER: And is the Government currently doing that? Is it doing as much as it not only could but should, desperately should according to Matt and Richard? Do you think it is? 

JOHN HEMMING: I think the Government’s not even doing as much as it intends to. The first problem from the Government is denial. They estimate the peak, global peak for hydro-carbon production to be in 2030. They explain that’s based on the IEA figures, and the IEA perhaps indicate a figre of 2011 2012. If you start by denying there is a problem then it’s not suprising they’re not doing anything about it. 

PRESENTER: So what should they be doing?

JOHN HEMMING: There’s a wide range of things. We’re producing a number of reports. But the fact that you cannot for instance, have a third runway at Heathrow Airport is a very obvious thing. They plan for a growth in air transport. It’s a farce to plan for a growth in air transport when there isn’t actually the fuel to power it. 

If there really is no fuel to power aircraft at Heathrow, then there’s no real problem about it being built. So it is odd that Hemming makes a point of it. 

It is telling that the Chair of the All Party Parliamentary group on Peak Oil and Gas does not focus his responsibilities to finding new ways to power the country, were his fears about peak oil to be correct. He recognises that energy is essential – he tells us that it takes ten calories of fuel energy to make one calorie of food energy. This is a good thing, because the more fuel energy that has gone into producing food, the less human labour has gone into producing it. He doesn’t recognise that, and wants instead to control the use of fossil fuels. Hemming continues:

Energy is going to be rationed, by the price, or by tradable energy quotas. If it’s rationed by price, poorer people will suffer to a far greater extent than aiming… and it require international action, there’s no question about it. One country can’t resolve this on their own. But you have a limited numbers of ways of dealing with it. When you look at the numbers game in terms of alternative energies, they’re all various partial solutions, it’s not clear that they add up to a complete solution, therefore, you have to look at how you equitably deal with the fossil fuel provision that we have. And the tradable energy quotas is one way forward, the other one is pricing the poor people out of the market, which isn’t very fair. 

Hemming has ignored coal, and he has ignored nuclear, and the other fossil alternatives. The ‘peak oil’ crisis relates only to a relative depletion of crude oil reserves, not of fossil fuels. Much of South Africa’s petrol is produced from coal. Alternatives such as oil shale and sands exist in much greater quantities than crude ever has, but what stops these from being exploited has been the low price of crude until relatively recently. While there is uncertainty about the future of the global economy, and the way in which oil prices will respond, there is little incentive in investing in alternatives which may not, in the medium term, compete with crude. But plenty of alternatives – some of them renewable – exist, and in abundance. The problems are, firstly that these alternatives are incompatible with environmental anxieties. The second is that they are incompatible with the intellectual vacuum driving the thoughts of men such as Hemming, Simmons, and Heinberg. 

PRESENTER: Matt Simmons, you’re an expert on the impact that this could have on the, as it were, the global economy, it seems that pretty well every and any solution is going to have an impact on those at the bottom end of the scale.

MATT SIMMONS: That’s one of the reasons we basically can’t let the market sort this out. Because the market sorting it out is going to last for a few weeks and then we have social chaos, and then we’re into a resource war. What we really need to realise is this is a global problem, it’s not a UK problem, it’s not a United States problem, it’s not a California problem or a Texas problem. And we’re basically on the edge of scarcity of oil which means we basically have to do a fast retreat from our heavy addiction to using oil. As Richard said, this is transportation. All the other forms of energy relate to electricity and heat. But this is transportation, so it’s pretty simple, we have to travel less, and that means liberating the work force, paying by productivity, any long-distance commuting… luckily we have a tool kit we’ve already developed to do that… But we now need to implement something which has the intensity of a war effort of world war 2, or the Manhatten Project, or rebuilding Europe, and do this all very fast in the next two or three years, or we’ve really lost the battle. 

Turning a restriction on travel and ‘payment by productivity’ into ‘liberating the work force’ is an impressive example of Orwellian spin. One might say ‘freedom from freedom’, and make as much sense. ‘Payment by productivity’ might be a great idea if you’re a CEO of an investment bank. But if you’re working in ‘localised food production’, it means little more than a few pence from the gang master if you shove more dirt. One of the best things about the ability to move is that it freed people to move to find work on better terms. Reducing the opportunity to travel means reducing opportunities to work. John Hemming’s perspective is no deeper. 

Well I think we need to focus more on quality of life rather than standard of living, and the evidence is that people aren’t necessarily happier in an environment where they commute for two hours each day. Those factors need to be taken into account. And what is critical is we need to look at an equitable way of dealing with scarcity and to just price the poor people out of the market, which is what the Government are doing isn’t an equitable way of dealing with it. 

Perhaps here we begin to see what’s at the heart of the nonsense emerging from these three men. Hemming has nothing to offer us at all. Scarcity is an inevitability as far as he is concerned, because without the prospect of doom hanging over us, he is, as was the Emperor, without clothes. He can’t raise people’s expectations with a positive vision because he lacks one. Instead, he exploits the story created by ‘ecological reality’, to cast himself as the saviour. He can’t make any claims to make us any richer, but he tells us that he can make us happier, if only we’d abandon our attachment to our materialist ‘standard of living’. This isn’t politics, it’s Buddhism. His concern for the poor is quite moving. But rather than worrying about their happiness, we’re pretty sure they’d rather he got on with the business of raising standards of living, so that they can get on with their emotional lives, by themselves, thank you very much. Just who does he think he is? 

We’re realy are at the stage where Government needs to move on from denial. The people can adjust their own lifestyle to be less energy-dependant, and that’s strongly advisable thing to do because we’re not going to see over time a massive reduction in prices, whatever happens. So it’s in everybody’s interests to adjust their lifesytle to minimise their use of energy.

We have noted before the tendency of political parties not in power to escalate the scale of the problem faced, and to say that only their policies reflect what the ‘science says’, and that the other parties are therefore ‘in denial’. When we began this blog, the Labour government had announced their commitment to a 60% reduction in CO2 emissions by 2050. Shortly after, the Conservatives announced that they would see an 80% reduction by the same time. The Liberal Democrats – Hemming’s party – announced that by 2050, they would make Britain carbon neutral by measures including banning the petrol engine, and, curiously, banning nuclear power. This process owes nothing to science, and is merely posturing by percentage points like boys boasting about their physical strength. In the past, politicians would try to attract your vote by arguing that the political philosophy and economic theories they espoused would make a better life either for you, or for everyone. Now, people like Hemming argue that you need to make lifestyle changes, and get used to less. ‘Ecological realities’ are invoked in place of principles and values. Statistics that bear no relation to human experience underpin stories of terrible ecological consequences and social collapse. 

Similarly, investment capitalists once sought to innovate ways to achieve an edge over their competitors, and passed on some of the savings made by economies of scale, efficiency, and industrial processes to the consumer. Like the politicians embracing environmental tenets, today’s CEOs of energy investment banks suffer from a scarcity, not of natural resources, but the ideas and imagination required to continue providing the world with the services it needs. Instead of innovating, Matthew Simmons appears to be protecting his commercial position by lobbying for regulation, and protecting the value of his commodity by creating the illusion of scarcity. 

Environmentalism is not unique to the Left. It is being absorbed by parties and individuals positioned across the political spectrum; Conservative, Liberal and Left, and by capitalists and anti-capitalists, radicals and establishmentarians alike. Intellectually exhausted political parties and their members and zombified corporate CEOs try to breathe life into their collapsing organisations by wrapping themselves in green. But this reinvention brings them ever closer to ‘end-is-nigh’ sandwich board lunatics like Richard Heinberg, and further and further away from the public. The tragedy is that their limited vision is the basis on which the future is being constructed. Politicians should be engaged by the task of enabling the exploration of new, cheaper and more abundant sources of energy, and investment capitalists should be finding ways of making them commercially viable. Instead, we seem to be facing an economic crisis, with rows upon rows upon rows of public figures telling us to expect less and less. With people like that at the helm, it is no wonder this ship is sinking. Down is the only direction these people know.