The present oil glut and the insanity of the market.

  “Drillers from Houston to Riyadh won’t quit pumping despite the oil glut” WSJ 1-12-16

Richard Mellor

Afscme Local 444, retired

The term madness is definitely overused. Too often behavior is described as madness when it clearly is not. But it is impossible not to recognize that the so-called free market, the system we call capitalism is madness and its adherents and many of its victims become mad themselves.  So much sickness, mental and physical, is due to the nature of the society in which we live.

There is a massive crisis brewing in the energy industry as oil prices continue to fall. Prices are presently around $30 a barrel but are expected to fall further according to the major investment banks.  Already, “ More than 30 small companies that collectively owe in excess of $13 billion have already filed for bankruptcy…” the Wall Street Journal announces today and as many as a third of US oil and gas producers could file for bankruptcy. We should be clear that when the Wall Street Journal refers to “small business” it is not talking about community businesses that can be an important part of our communities.

What an anarchistic system of production capitalism is. Within a few years we have seen a huge boom in shale production that has turned communities and almost entire states in to boom areas with the accompanying prostitution, crime, alcohol and drug abuse, not to mention environmental destruction. Peoples lives have been transformed and uprooted and are being so again as the situation reverses itself. 

That much of the present economic crisis in the US has to do with the economic slowdown in China is cause to remind us that the world economy and society is integrated more than any time in history. The idea that even a huge country and economy like the US can isolate itself from the rest of the world is nonsense. Imagine the crisis that will erupt when the Chinese working class, already volatile and active, moves on to the offensive against the Chinese bureaucracy in a major way.  It is imperative that workers build a powerful and international movement against global capitalism if we are to avoid catastrophe.

Investors are saying the current downturn in the energy industry is “…deeper and longer than each of the five oil price crashes since 1970”  But no matter, the oil is still being pumped out of the ground, by the ones that survive that is. Here’s more madness: “Energy companies that took on huge debt loads to finance their slice of the U.S. drilling boom have no choice but to keep pumping to generate cash for interest payments. As they do, they are drilling themselves into a deeper hole.” the WSJ reports.

This is the madness merry-go-round.

As Marx pointed out, credit allows capitalism to go beyond its limits. In this case, the product can still be sold for a moment but as the scenario worsens, the merry-go-round will come to a halt, the credit will dry up and the destruction of production and value will intensify. According to the “experts” private-equity firms are hanging around like vultures waiting to scoop up assets, “…opportunistic firms are waiting for the wave of bankruptcies to arrive.” the Journal adds.  The same occurred during the Great Recession as private equity firms spent billions buying up single family homes whose occupants were driven out of by sheriffs on behalf of moneylenders. Big landlords have historically stayed clear of single family homes as they like their victims in one place like apartment complexes, but the prices were too good to ignore.

This is nothing less than barbarism. It is not civilization. It is interesting to note that it is almost impossible to file bankruptcy to get a federally backed student loan from around one’s neck.  Just yesterday the US Supreme Court declined an appeal aimed at making it easier to erase student loans through bankruptcy.

Jill Stein, the Likely Green Party candidate for US President has called for the nationalization of the energy firms and this is an important first step in reigning in the uncontrolled and anarchistic free market. I see Bernie Sanders has hinted at Elizabeth warren as a running mate for November’s election, both of them like Reich, are running as candidates of the big banks and Wall Street, those around his campaign have a more pro-worker and environment candidate in Stein. The capitalist class, and that means their two parties, Republicans and Democrats, are not capable of ending this madness. The Green Party may not either, but that is not as clear at this point and electorally there is no other viable alternative. One thing is certain is that if this unplanned for-profit system is not replaced by a democratic socialist system of production, a genuinely free collective global society, it will destroy life as we know it on this earth at some point.