The Invisible Hand at Work

October 30th, 2007

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Posted by ChrisG at 3:53 pm

In the debates over whether or not we have reached the peak oil point, where the remaining reserves are now less than those which have already been drained, a common argument in favour of not worrying too much is that as the price of oil goes up, the exploitation of hard to extract reserves becomes economically viable. Consequently, the peak oil point is an illusion – there will always be new reserves as the development of technological means for extracting oil from sources like shale and oil sands is motivated by the rise in price.

As is so often the case, such a technocrat’s view of economic processes as a kind of magic bullet which will automatically seek out social problems and solve them proves unconnected with reality.

Aida Edemariam writes in today’s Guardian of the huge social and environmental pressures generated by a rush in the extraction of oil from oil sands in Fort McMurray, Alberta. The market incentive provided by the higher price of oil also acts as an incentive to use the cheapest (and dirtiest) means of extraction possible. There is no incentive within really-existing capitalism to produce cleaner technologies first – especially when the zone of production is on the frontier (both geographically and in terms of the economic conditions that make it feasible).

The extraction of the oil requires heat, and thus the burning of vast amounts of natural gas – effectively one barrel of gas to extract two of crude – and some estimate that Fort McMurray and the Athabasca oil sands will soon be Canada’s biggest contributor to global warming; nearly as much as the whole of Denmark. This in an area that has already seen, according to David Schindler, professor of ecology at the University of Alberta, two degrees of warming in the past 40 years.

The use of resources also produces more immediate environmental destruction.

Two barrels of water are required to extract one barrel of oil; every day as much water is taken from the Athabasca river as would serve a city of a million people. Although the water is extensively recycled, it cannot be returned to the rivers, so it ends up in man-made “tailings ponds” (tailings is a catch-all term for the byproducts of mining), which are also visible from space. According to the US Department of the Interior, the dam holding back Syncrude’s pond is the largest, by volume of construction material, in the world. Four of the projects haven’t started production yet, so their tailings ponds haven’t begun, but theirs, too, will soon be full of sand and what Schindler calls “dead water” because, he says, they’re full of carcinogenic hydrocarbons and toxic trace metals such as mercury, cadmium and arsenic, all topped off, in Syncrude’s case, with an oil slick.

Edemariam surveys the complex social processes which bear the pressures of such a sudden rush to the frontier and which make Fort McMurray a sociologist’s dream: migration (at the level of a 100% increase in the town’s population over 10 years, along with the accompanying greater load on ecological and social carrying capacity), changing patterns of crime, declining health among workers (due to the nature of the work, but also to alcoholism and abuse of other drugs), the social inequalities in income and housing that open up between workers in the well-paid oil industry and those working in service industries, and the way the phenomenon of frontier capitalism boosts political structures and forces which work against the possibility of democratic decision-making.

As for oil, so for uranium. As demand increases and moves to outstrip current supply, so the extraction of new reserves will become viable. More land will be seized, more resources diverted to mining, and more hazards will be externalised onto those who benefit least from the results – and we will have still more evidence that the technocrats’ economics will not save us. Instead, we will more than ever need to be saved from it.