American Turm-OIL: Crisis ahead for the US and its imperial decline
By JAZIR MOHAMMED
President Joe Biden delivers remarks before signing the “Inflation Reduction Act of 2022”, Tuesday, August 16, 2022.
Two weeks ago, Biden announced that he would sell around 15 million oil barrels from the Strategic Petroleum Reserve (SPR) - an emergency stock of oil that is managed by the US Department of Energy. The aim of this was to curb the rising costs that were sparked by the global disruption created by the war in Ukraine. Given the midterm elections in November, it was a key strategic move to avoid public discontent and to maintain support for the Democrats in the midst of rising inflation and growing economic precarity.
However, it is worth noting that energy companies are reporting record high profits globally, with them seeing 11-figure turnovers that vastly exceed revenue from previous years, especially ExxonMobil which has doubled its last year's turnover to $17.85bn. Further research shows that with all firms combined together, the oil and gas industry has made $2.5 billion a day, every day, for the last 50 years. These results show the testament to the power of the Big Oil lobby, not just in the US but globally - where they were able to secure $151 billion in bailout funding from G20 governments in addition to their profits. This clearly shows that it is convenient, for politicians all over the world, to use the war in Ukraine, as a cheap excuse for propping up this system of oligarchic dominance of energy companies and to shift blame to Putin as jingoistic rhetoric (which by no means is new in the face of war).
Furthermore, this crisis exposes the moral bankruptcy of the market, which is seeking to maximise profit in the wake of ever-rising prices throughout the globe. In the richest nation itself, 32% of Americans are falling behind on paying vital utility bills, as their inflation rate of 9.1% is an all-time high over the last 40 years. With more Americans relying on credit and lending, 43% of the population is expected to see their debt increase. These outcomes are inevitable in a nation where 63% are living paycheck to paycheck.
If Biden’s move to curb inflation proves unsuccessful, it might end his chances of gaining a second term as POTUS, giving way to potential Republican candidates like Ron DeSantis, Marco Rubio or even Trump himself as he hinted very recently that he would run again.
“This grotesque greed of the fossil fuel industry and their financiers is punishing the poorest and most vulnerable people, while destroying our only home”, is what UN Secretary-General Antonio Gutierrez said about the energy crisis during the Conference on Trade and Development back in August this year. Not only is this global crisis of inflation (as well as a recession in many areas) a direct result of the rising energy costs and the scourge of profit-seeking behaviour by the oil giants, this is also a result of the contradictions caused by the US and others in their aim to achieve net zero. In an article I had co-written last year in the wake of the failures of COP26, Western nations sought to achieve this target with no aim of moving away from the dependence on fossil fuels, with renewable energy as a mere counter to fossil fuel emissions. The Biden administration itself had given the green light for the biggest amount (2,500 permits) for drilling natural gas and oil.
So, what will be the impact of this global oil shock on Biden’s presidency throughout the rest of the term? As Gore Vidal famously said in 1975, “There is only one party in the United States, the Property Party ... and it has two right wings: Republican and Democrat.” This testament to US politics shows the oligarchic nature of its political system, with more and more Americans feeling disillusioned by the political system. If Biden’s move to curb inflation proves unsuccessful, it might end his chances of gaining a second term as POTUS, giving way to potential Republican candidates like Ron DeSantis, Marco Rubio or even Trump himself as he hinted very recently that he would run again. However, it is worth noting that political science research shows that the poor, not just in America, have low voter turnout rates (only 12% in the 2014 midterms). In that case, as presidential elections generally see a meagre turnout rate of 60%, the switch to the republicans will be far from a democratic transition. It is also worth noting, that whilst the 2020 election saw a relatively higher turnout of around 67% (7% more than in 2016), Biden gained only approximately 5 million votes more than Trump did. This means he is serving on a very fragile mandate.
Another part of Biden’s move in selling oil reserves was instigated by Saudi Arabia’s decision to cut oil production to 2 million barrels a day, with the aim to move further away from being reliant on oil production. This shows the USA’s loosening grip over its once loyal key allies, and the decline of its status as a great world power. With foreign policy failures like Libya and Afghanistan, allies like India supporting Russia over their invasion of Ukraine, and Saudi Arabia looking more towards Chinese investment in their projects, it seems that we can kiss goodbye to PAX Americana - the era of American dominance is now over. Today’s precarious situation is far from the gilded age for America at both domestic and international levels.
Image: Flickr/ The White House