Among other sources, a recent NYTimes op-ed told us not to worry about wealth inequality, but rather to make sure the economy lifts all boats.
But this article shines a light on why that’s a false narrative.
If a small sliver of owners has enough working capital to buy off our politicians, who then continually shift policy in a direction that makes the owners even wealthier while the masses get crumbs – all while doing untold long term damage to the planet – then all those boats are going to turn into life rafts on a sinking ship.
The grim situation, faced by the U.S. fracking industry, is emblematic of the overall declining position of U.S. based capital in the global economy. The Iraq War, the some on the left mistakenly interpreted as a “War for Oil” was nothing of the kind. In fact, the U.S. oil companies wanted no part of that war. They were doing fairly well in the Middle East operating in a difficult milieu of rising power of OPEC countries over control of their resources. As a result of the fall out of the U.S. invasion of Iraq in 2003, conducted primarily to pull Israel’s chestnuts out of the fire, American based oil majors were largely pushed out of the region. As a result they increased their activities in West Africa, and in extracting various types of “extreme oil deposits”. The results were such debacles as the Gulf of Mexico oil well blow-out, increased activity in the Athabascan Tar Sands in Alberta Canada and the still unsuccessful attempt to connect the Gulf Coast with Alberta via pipeline, and the increased amounts of fracking inside the U.S. All of these sources are “high cost” oil.
Now the Saudis, see a chance to eliminate the weakest and “highest cost” of the 3 major oil producing regions (Saudi and the other OPEC producers, Russia, and the U.S.). The U.S. frackers are largely financed by high interest loans of Junk Bond status. They have had to keep pumping oil, losing money on every barrell, just to service their loans and are now starting to go belly up. The Petro-Dollar system, that dominated the oil industry and global currency relations for the last 49 years, is seen by all major players as nearing the end of its time. Like many U.S. economic operations the U.S. petroleum industry is not viable without massive subsidies and bailouts. They are just one of the many members of the rich and well-connected bellying up to the public trough yet one more time. We certainly need to organize to make sure they are denied.