Continuation of a previous post…

Standard Oil’s destruction of the petroleum exchanges and subsequent unilateral institution of its posted price regime had a significant damping effect on what had been an extremely volatile commodity market (Brown and Partridge, 1998). Average oil price fluctuation fell from 53% per year, prior to the mid-1880s, to an average of 24% per year during the company’s reign (McNally, 2017, p. 32). Yet, the posted price regime was ultimately short-lived. After a slew of state-level legal battles, the U.S. Supreme Court ruled in 1911 that the Standard Oil Trust was in violation of the 1889 Sherman Antitrust Act, ordering its dissolution into thirty-four independent companies. While many large refineries still continued to use something like posted prices for long-term contracts, a growing mass of marginal barrels became subject, once again, to major price swings.

Perhaps ironically, immediately following the collapse of Standard’s monopsony power over the upstream sector independent producers began advocating for the centralized, rational management and conservation of oil. A string of major oil discoveries in Oklahoma had led to the formation of the Independent Producers League by 1914, which lobbied the Oklahoma Corporation Commission (OCC) to set controls on the production of the state’s oilfields. In response, Oklahoma instituted the first prorationing mechanisms in the country, prohibiting pipelines from purchasing oil from the Cushing and Healdton fields for less than a new price floor set by the OCC.

In 1915, the state legislature granted the OCC further discretion. It allowed for the Commission to throttle production whenever it found evidence of either physical or economic waste. That is to say, the OCC could now regulate production not only if oil was wasted through dumping, leakage, evaporation, etc. but also if supply exceeded available demand. This is particularly notable, as the Texan counterpart to the OCC, the Texas Railroad Commission (TRC), was granted powers only to regulate physical waste, while being explicitly excluded in state statute from regulating economic waste.

Through the 1920s, however, these production controls remained “toothless and weakly enforced” (McNally, 2017, p. 47), and oil producers of the largest producing states were mostly left to regulate themselves. As geographer Matthew Huber (2011) has noted, it was only when the whole oil market risked total collapse that the state would finally step in and meaningfully mediate oil prices. This occurred, famously, after the discovery of the massive East Texas Oil Field by Columbus “Dad” Joiner in 1930. In its wake, we see the start of the gradual consolidation of what would become a new and very effective mid-20th century price regime: prorationing.

News of the “Black Giant” spread quickly across the country, spurring “thousands of land deals in a matter of weeks” (McNally, 2017, p. 72). Soon enough, 350,000 barrels of East Texas oil were flooding into the US market everyday—15% of total domestic consumption. Oil prices crashed from $1.15 in 1930 down to $0.15/bbl in 1931 (Huber, 2011, p. 820). To make matters worse, in July 1931 a federal district court ruled against state-led efforts to throttle supply from the East Texas field, affirming that the TRC only had authority to regulate physical, not economic, waste. After this ruling, rumors begun to circulate across the oil patch that a “coalition of landowners and 1,500 oil producers” were plotting to sabotage oil infrastructure in the attempt to restore prices to more profitable levels (ibid., p. 821).

Fearing a “state of insurrection,” Texas Governor Ross Sterling declared martial law, dispensing soldiers to enforce mandatory prorationing of wells across the state. Meanwhile, on August 3rd, 1931 a federal court ruled that the OCC quota system in Oklahoma, i.e. the economic regulation of production, was illegal—just as regional oil markets risked the folding of thousands of high-cost independent producers. The following day, Oklahoma Governor William “Alfalfa Bill” Murray followed Sterling’s lead an ordered troops to shut down 3,106 active wells in the state: “The state’s natural resources must be preserved,” ‘Alfalfa’ Bill declared, “and the price of oil must go to $1 barrel; now don’t ask me any more damned questions” (qtd. in McNally, 2017, p. 69).

In September 1933, the Roosevelt administration incorporated the National Industry Recovery Administration (NIRA) (see Murphy, 1949). The Code contained numerous formal measures to bolster the prorationing price regime first catalyzed by the East Texas crisis. In particular, the Code invoked federal powers over interstate commerce regulation in Section 9(c), which “declared illegal any interstate shipment of hot oil,” that is, oil “produced in excess of state authorizations” (Libecap, 1989, p. 838).

Illegal purchases and sales persisted, however, through nighttime production, hidden pipelines, and at least one case of covert storage dispensed through bathroom faucets (McNally, 2017, pp. 77-78). Significantly, these schemes were often concocted not simply in the name of political defiance, i.e. against ‘big government’, but because drillers were in desperate need to pay back short-term loans:

A large part of the original investment of the independent operator is usually borrowed—probably at a premium because of the speculative nature of the enterprise. Assuming that the principal sum draws interest of at least 6% and must be amortized in the first three or four years of operation and that 1/8 of the gross income is paid out as royalty, and that a further outlay for production taxes, gathering, transportation and operating expenses is necessary before an operator can realize any income from his well, it is obvious that an insufficient volume of production, even at a “fair” price, tempts an operator, burdened with such unavoidable “costs,” to increase his volume by illicit production. (Marshall and Meyers, 1933, p. 704, note 8)

While the Supreme Court ruling of Panama Refining v. Ryan (293 U.S. 388, 1935) had declared Section 9(c) of the Code unconstitutional in January 1935, it was reinstated a month after by the “Hot Oil Act,” sponsored by Texas Senator Thomas Connally. Later that same year, US Congress went further in support of interstate regulation of the oil trade through the ratification of the Interstate Oil Compact Commission (IOCC), which granted agencies in Kansas, Louisiana, Oklahoma, and Texas the formal authority to proration their respective state’s oil output. Thus, by 1935, the combination of new congressional measures in place to restrict the sale of hot oil, and the additional regulatory power vested in the Interstate Oil Compact to control output, meant domestic oil markets once again saw price stability not seen since the days of Standard Oil.

Once formalized, this new price regime contained three major mechanisms to control oil production. The first was the legal authority to shutdown oilfields through police force, as witnessed in 1931 in Texas and Oklahoma. The second was the ability to impose an upper limit to a given field’s “maximum efficient rate” (McNally, 2017, p. 80). This allowed for the stabilization of reservoir pressure and hence the conservation of oil through the optimization of production yields. The third and most complex (and contentious) was “market-demand proration,” through which supply was actively regulated to match anticipated demand (Libecap, 1989, p. 850). Market-demand proration was assessed through monthly or bimonthly meetings between regulators and major buyers of crude oil, with the latter submitting “nominations” of quantities of oil they intended to purchase over the next business cycle. Then, public officials from each state estimated available supply over this period and subtracted from that number exempted wells (returned to in the next paragraph), imports, and supply from other states. The resulting total was known as the state’s “call” for crude oil, which was used to determine the prorated quota for each wellhead in the state.

Despite its contentions, this new price regime proved quite effective. Production outputs closely tracked demand and prices remained relatively stable throughout the period of its institution. This is despite the discovery of a number of new oilfields across the United States, which would go on to raise the estimation of total U.S. reserves from 908 million barrels in 1934 to 3.3 billion in 1970.

Crucially, some of the biggest supporters of prorationing—or what was, in effect, the US government-sponsored cartelization of domestic oil production—were independent producers, many of whom operated high-cost “stripper wells,” defined as those producing less than ten barrels of oil per day. Given the new presence of cheap oil flowing into domestic markets from the East Texas Oil Field, state regulators worried that high-cost producers would be forced out of business with a sustained decline in oil prices. This, in turn, would devastate “local economies and the careers of politicians if thousands of small, high-cost oil firms, refineries, and well service and supply companies were to fail” (ibid., p. 837). As Huber observes, the price regime’s assessment of “reasonable demand” was thus a product “not of market equilibrium but of a concerted effort to protect high-cost, often independent, oil producers from the ruinous effects of market competition” (2013, p. 184).

This is only half the story, however, as many independents were themselves also involved in low-cost plays—for instance, the 1,000 or so small independents operating in the East Texas field by 1935 (Prindle, 1981). Thus, while the Interstate Oil Compact did render exempt operators of high-cost “stripper wells” from the quota system, it also protected small low-cost independents through preferential production allocations. Until 1964, for instance, the IOCC deliberately biased the distribution of monthly quotas toward depth over acreage (the latter requiring larger capital allocations, i.e. for lease purchases). While a well drilled 1,000 feet servicing 10 acres was allowed to produce 18 barrels a day, every additional acre was granted one additional barrel of allowable production. In contrast, for every 500 feet of increased depth of the well, 9 more barrels were allowed, up to 7,000 feet. Beyond 7,000 feet, allowables increased to 38 barrels per 500 feet, up to 10,000 feet deep. Thus, oil producers holding smaller acreage benefited more greatly from quotas by digging deeper rather than wider. The upward rise of production cost witnessed through the midcentury thus resulted from the combination of two political-economic dynamics: the prorationing price regime helping keep high-cost producers viable while also accommodating less efficient methods in low-cost, smaller producers, such as excessively or inefficiently deep wells (Libecap, 1989, p. 855).

Drawing on my previous posts, we can thus say that the interstate regulation of the domestic oil trade helped simultaneously facilitate an increase in the organic compositions of capital across both high- and low-cost independent producers, subsequently discouraging them from investing in virgin fields. As a result, oil producers with relatively lower organic compositions of capital were able to capture very large differential rents. To point back to Marx’s analysis of Differential Rents I and II, both forms of rents are simultaneously determined by the contradiction between landed capital and productive capital, which in the case of oil was increasingly mediated through the mid-20th century by this burgeoning prorationing price regime.

Put differently, it was clearly not the case that there was some inevitable shift of oil production from more to less ‘naturally’ productive oilfields. Through the early 20^t century, low-cost fields were continuously being discovered in the United States, but any rise in the organic composition of capital was checked ultimately not by market conditions but by the prorationing price regime. Indeed, in addition to well-deepening, mandatory quotas also created the incentive to increase the capital intensity of oilfields via well densification, given that quotas were imposed not on field production but on individual wellheads. Thus, while “spare capacity” swelled as more wells were produced at lower quotas per well, the increase in capital outlays made it that much more difficult to realize a return on investment (McNally, 2017, p. 83).

Although McNally heralds well densification as the means by which the prorationing price regime loosened the stickiness of oil supply by expanding productive capacity—and, in turn, helping further stabilize oil prices—keeping the country’s maturing fields online meant oil prices could continue to be determined by higher-cost producers than would otherwise be economically feasible. This situation would prime the onshore industry for a rude awakening in the 1970s, as the production prices of oil saw a dramatic readjustment with: the de-insulation of the US domestic oil market, the breakdown of the “International Petroleum Cartel” (i.e., the Seven Sisters’ cartelization of European markets), and, with the rise of OPEC, ironically the first genuine internationalization of oil markets in history (see Bina, 1985).

By way of conclusion, it’s important to remark on how oilfield development was financed during this time period. Through the early 20th century, access to finance capital among independent producers was very limited. As Bernard Clark reports (2016, p. 43), small producers had little contact with bankers, lawyers, or accountants. When producers did take loans, it was typically short-term and only against their tangible capital assets, i.e. either produced oil or oilfield equipment (ibid., pp. 99-100). This, in addition to the absence of petroleum exchanges, meant there was little means for producers to securitize revenue against future price risk.

While prorationing “made quick profits in the oil industry more difficult than ever,” it also signaled a new alignment of time horizons of investment between industrial and financial capitals (Mount, 2008, p. 226). Bankers began to lend with more confidence precisely because cash flows became more predictable with slowed and rationalized production as, simultaneously, this institutionally-mandated slowdown of the rate of turnover of capital spurred the need for long-term lines of credit (Clark, 2016, p. 96). Perhaps the most significant outcome of this temporal alignment was the innovation of “reserve-based loans”, where regional energy banks allow oil producers to collateralize oil still in the ground to finance ongoing oilfield development.

The possibility of reserve-based loans was contingent upon not only the new prorationing price regime but also the production of new statistical information about the oilfield (Tinkle, 1970, p. 227). In part, oilfield production accounting was facilitated by the aforementioned state and federal bureaus, who were now charged with regulating the onshore oil business. Indeed, the breakdown of oil markets during the early 1930s inspired new efforts to amass and centralize information about the oil industry. To be sure, the US Bureau of Mines had already been providing estimates of oil demand for the Federal Oil Conservation Board by 1929, but the discovery of the great East Texas field granted new legal weight and economic significance to these assessments.

But again, producing trustworthy information about the oil industry became essential not only for regulatory agencies but also for increasing the lender’s confidence that the borrower-producer would be able to service his or her debt. While other primary industries certainly had their own investment risks in productive investment (e.g. crop failures, input bottlenecks, etc.), these paled in comparison to the challenge of evaluating oil prospects. Particularly under the new restrictions on output, loans for ‘oil in the ground’ would only be worthwhile—from the perspective of a potential financier who typically knew little about the ins and outs of the oil industry—if a reasonable, objective assessment of the value of the oilfield could be procured.

For this reason, the proration price regime became “the catalyst that brought about studies leading to the adoption of sound engineering practice in petroleum production” (Murrell, 1964, p. 12). Seeking to mediate this gap between financiers, regulators, and oil producers, the oil famous prospector Everette Lee DeGolyer had founded a consulting firm in 1939 with one of his colleague’s, Lewis MacNaughton, to develop a “consistent and accurate system of valuation for oil properties” (Mount, 2008, p. 229). Speaking as the chairman of their consulting firm, John Murrell had remarked:

[DeGolyer and MacNaughton] believed that proration, now a fact, would bring about stability of production and temper, if not eliminate, the wide swing in prices that plagued the industry. They foresaw that curbing production would drastically reduce the sudden large income that had hitherto rewarded one who made a discovery. Such reductions, they surmised, would bring about a need for long-term financing for many entities in the industry. (1964, p. 15)

DeGolyer and MacNaughton took consulting jobs worldwide, traveling by “jeep, junk, and jackass to carry out assignments. They have trudged across the tundra and slogged through swamps. They have sweltered in Saudi Arabia and shivered in Saskatchewan” (ibid., p. 23). To aid in the dissemination of oilfield information, DeGolyer and MacNaughton organized “schools” for financiers and insurance officers on all aspects of the inner workings of the upstream oil industry (ibid., p. 17).

Perhaps their biggest contribution was the collection and classification of massive amounts of oilfield data, which had previously been siloed across thousands of independent producers. This catalog of data about “production memoranda, well completion, and scout reports” would eventually amalgamate in millions of note cards housed in the firm’s Dallas office and used to assess the valuation of thousands of prospects (Mount, 2008, p. 231). This assessment could then be used by a bank to assess the prospect as against the dollar amount of a loan. Later, this catalog was also used to assess supply and demand, state-by-state productive capacities, or “trends in the market value of properties and analyses of the financial position of a large number of companies” (Murrell, 1964, p. 24).

The business of economically evaluating an oil reserve, however, remained deeply fraught. Despite all of the information collected by firms like DeGolyer and MacNaughton, there was in the end very little certainty about how much oil could actually be produced from any given field until after it was actually produced. All oilfields are unique in their geological makeup, and there was in truth no ready-made, universal pricing model for economic oilfield assessments. All that one could do was infer value through comparison to roughly analogous producers tapping into roughly analogous fields at various stages of maturity.

DeGolyer knew all of this intimately: while at Mexican Eagle as a young geologist, he was asked by the US federal government to find a method of computing depletion allowances for the purpose of tax allocations within the oil industry. Quickly, DeGolyer had grown frustrated with this task, as the necessary information to assess depletion was unavailable; thus a “single curve” which could “fit more than one oilfield was unrealistic” (Mount, 2008, p. 229). In February 1919, he was forced to conclude that a “formula for depreciation is not possible.” Despite these early frustrations, the appearance of the reliability of technical assessments would nevertheless become essential means for small producers to gain access to finance capital from the 1930s onwards. On their basis, energy lending from regional energy banks grew to become a massive source of credit for oilfield development by World War II. This would change during the postwar period, however, as the internationalization of the oil trade meant reliance on state proration became a less meaningful securitization against price risk, particularly as imports began to overtake domestic production (Clark, 2016, p. 105).

References

Bina, Cyrus. 1985. The Economics of the Oil Crisis: Theories of Oil Crisis, Oil Rent, and Internationalization of Capital in the Oil Industry. London, Merlin Press.

Brown, John Howard, and Mark Partridge. 1998. “The death of a market: Standard Oil and the demise of 19^th century crude oil exchanges.” Review of Industrial Organization 13, pp. 569-587. https://doi.org/10.1023/A:1007795128137

Clark, Bernard. 2016. Oil Capital: The History of American Oil, Wildcatters, Independents and Their Bankers. Self-published.

Huber, Matthew T. 2011. “Enforcing scarcity: Oil, violence, and the making of the market.” Annals of the Association of American Geographers 101(4), pp. 816-826.

Huber, Matt. 2013. “Fueling capitalism: Oil, the regulation approach, and the ecology of capital.” Economic Geography 89(2), pp. 171-194. https://doi.org/10.1111/ecge.12006

Libecap, Gary D. 1989. “The political economy of crude oil cartelization in the United States, 1933-1972.” The Journal of Economic History 49 (4), pp. 833-855. https://doi.org/10.1017/S0022050700009463

Marshall, J. Howard, and Normal L. Meyers. 1933. “Legal planning of petroleum production: Two years of proration.” Yale Law Journal 42, pp. 702-745. http://hdl.handle.net/20.500.13051/3937

McNally, Robert. 2017. Crude Volatility: The History and the Future of Boom-Bust Oil Prices. New York, Columbia University Press.

Mount, Houston Faust II. 2008. Oilfield Revolutionary: The Career of Everette Lee DeGolyer. PhD dissertation, Southern Methodist University.

Murphy, Blakely M. 1949. Conservation of Oil & Gas: A Legal History. American Bar Association.

Murrell, John H. 1964. “Science—skill—service: The story of DeGolyer and MacNaughton.” Adress at a National Newcomen Dinner of the Newcomen Society in North America, 19 March 1964, New York.

Prindle, David F. 1981. Petroleum Politics and the Texas Railroad Commission. University of Texas Press, Austin.

Tinkle, Lon. 1970. Mr. De: A Biography of Everette Lee DeGolyer. Little, Brown and Company, Boston and Toronto.

The first question from the audience should have been easy enough to answer. “What is a data center?” It was at this point still forgivable to think the company founder was prepared for dialogue fielded this question. Or rather there was no reason to assume he wasn’t ready to answer questions at a town hall his own company helped convene, particularly one as harmless as the first. He held out his phone like a stage prop—an invocation of the quotidian, one which the humble country folk he found himself surrounded by could surely understand—announcing that “a data center is how this works.” This was not followed by an explanation of how data are transmitted from one to the other, or how data would be stored and managed on site, or the actual scope of the proposed project (which was not just cloud storage but “AI-ready” network, cooling, and power infrastructure). The phone was instead the first item in a mental list he had apparently made of all the sorts of gadgets that data centers make “work.” Relaying this list to those in attendance eventually led him to the mysterious conclusion that “the data center is the heart of our communities.”

At no point in the evening would the audience actually receive anything like an answer to the question of what a data center is. Certainly many knew something, and many already had skepticism about data centers before they arrived at the Penn State New Kensington campus theater hosting the town hall, but the general mood of the audience seemed to mostly be confusion. Who are these people? What are they doing in our community? As I learned afterward, lack of clarity about the scope of the project was an explicitly stated concern motivating the need for a town hall. But when all was said and done, it was unlikely anyone became any wiser about what the developers of this project were up to at old Alcoa/Arconic research facility some 30 miles northeast of Pittsburgh.

This failure to understand was not for lack of effort on the part of the audience, who had many times pressed the man on stage to fill in the gaps between the scarce project details reported in the local press, such as the much-touted plan for 3 gigawatts of on-site power generation capacity (more than the peak energy use of the entire city of Pittsburgh), or the $2 million Redevelopment Assistance Capital Program (RACP) grant the project had received from the PA government. These points were not elaborated so much as talked around. The man on stage, for instance, first acted as if Pennsylvanian taxpayers hadn’t paid him anything, which forced the township supervisor sitting behind him to speak up and clarify that the RACP grant was on a reimbursement basis (why play dumb like this? why not just bullshit about how much more the community will get out of this modest public investment?). Others in the town hall would also ask about water usage, noise pollution, and air emissions, the sorts of controversies they had likely heard were plaguing data center projects elsewhere. This was typically met by the man on stage with some vague assertion that his company, TECFusions—a marginal, bit player in the industry, with no prior experience in GW-scale data center infrastructure—“does things differently.”

That said, it would take a while before the founder would actually allow anyone else to ask any other questions. After the inaugural non-answer, he was intent—and, I cannot stress this enough, without any provocation whatsoever—on first working himself up into a fit, as needlessly defensive as it was condescending, about the sour reputation recently garnered by data centers. He said he found it “interesting” that data centers have become such a “bogey man,” given they’ve been around since the ‘90s. Smugly, he informed the audience that there was already a data center on the Alcoa research site he acquired. About five minutes into the town hall, he already seemed exhausted at having to remind the audience of these simple, uncontroversial facts (the first of about a dozen references to “closed loop cooling systems” would arrive shortly thereafter).

“So I’m confused why I’m here.” The first lie of the night set a misplaced, indignant, combative tone which the audience did not ever come close to matching. Much to their credit, participants remained tireless in probing for questions the man on stage might actually answer. Attempting to cure him of his feigned confusion, for instance, the second person to stand up that evening acknowledged the existence of the existing data center and then tried to nail down the specific expansion plans being proposed. A question as direct, obvious, and neutral as the first, but unfortunately no less successful in retrieving a coherent response. With a—as we were quickly realizing, characteristic—touch of bombastic mystery, the man responded that he wanted to make the existing data center in Upper Burrell Township the “largest in the world.”

After this second non-answer came the longest bout of rambling of the night. Pacing around, the company founder spent the next 10 or so minutes blurting out a host of loosely connected, thinly veiled resentments about the recent notoriety surrounding data centers. “I will not hurt the environment” and “I will not hurt your community,” he insisted (again, the question, still unanswered, was about what the project did plan on doing). Shortly after that, he offered the odd insult—injuriously compounded by coming from the mouth of a muscle-bound, Florida sun-toned man, who could already barely contain his contempt for his captive audience—that this community didn’t even have any energy infrastructure that he could “ruin.”

This, after all, was the reason why he would need to build it all himself, on-site. (An aside: one particularly grating rhetorical choice was the constant reference of corporate activities in the first person, e.g. “I’ve built data centers in 56 countries.” I have preserved this stylization for immersive effect.) This would take “redundancy”—meaning, a lot of spare power capacity—but he insisted residents had nothing to worry about because all of this would be powered by natural gas, which burns “cleanly.” Really, they should all be grateful, as the project would eventually “put power back onto the grid” (probably a lie, but more on this in a moment).

It was only at this point, probably twenty minutes in, that we finally had something of an answer to the question of what the developers actually planned to do: reboot and dramatically expand the existing Alcoa/Arconic data center through the deployment of 3 GW of new, on-site, and off-grid power, to be generated by burning natural gas. While he kept confusing turbine engines and natural gas-fired reciprocating engines, it was clear from the founder’s description of equipment and from the ongoing global turbine shortage that he had to be talking about the latter. In the process, and constantly stressing their “efficiency,” he deployed a familiar tactic among AI data center developers, promoting natural gas as so much better for the environment than what existed before. “Do you know what an aluminum smelter is?” He at one point sardonically quizzed the audience with, referencing the industrial process which had excelled the Pittsburgh-headquartered Alcoa to global dominance in aluminum production (note there was never a smelter on the site TECFusions acquired).

But now to return to the claim that the project would eventually feed excess power onto the electricity grid. The plan to do so was dubious, as astutely sniffed out by the audience. When asked how exactly that would work, the man on stage suggested that it was going to be something the community would have to “push PJM to do.” In what world would it be incumbent on residents to lobby the regional grid operator for interconnection on behalf of a private data center? This fake ‘concept of a plan’ was little more than a mask of the fundamental motivation for siting the data center in southwestern Pennsylvania in the first place: easy access to Appalachian natural gas—the land TECFusion acquired from Alcoa hosts several active frac wells—which in turn will allow the project to co-locate with power generation and avoid grid dependency (and FERC regulations) entirely. And, of course, if business will indeed be booming, which is presumably the developer’s plan for the “largest data center in the world,” there will be little spare capacity to feed back onto the grid anyway.

It would be remiss not to mention jobs, the promise of which was dangled by the founder in front of the town hall participants on several occasions. Like most rural Pennsylvanian counties, Westmoreland County, where the site is located, has been bleeding jobs since the 2008 financial crisis. Its population has been in decline since the 1980s. Naturally, then, when the man on stage claimed to want to hire “a lot of people,” it elicited a number of questions from the audience about how many, what kinds of jobs would be available, and who would be receiving them. Noncommittally, he suggested having a jobs fair “on this stage” at some point in the indefinite future. When asked whether township residents would be prioritized for these jobs, he said the proper answer would be to say “yes,” but then—in a moment of what he seemed to think was straight-talking candidness—confessed he hired “based on merit” (he also mentioned “preferring” contractors). When asked how many township residents currently work for the company, he guessed “two?”, glancing back to the company’s COO, who sat behind him and didn’t say much. A period of swirling ensued, and the exact employee count was never clearly established (the answer is probably nobody).

One of the more interesting moments occurred when a young woman relayed a recent announcement that the “Department of War” was partnering with a host of big tech companies to deploy “AI capabilities” on the Department’s “classified networks.” Initially, it appeared as if she was going to ask about whether the data center planned on renting space to AI companies involved in the US war machine. This is at least what the founder seemed to think when he interrupted her with an extremely obnoxious “HOO-RAH” before she could actually get out her question. After this, the trajectory had shifted: her question ended up not being about potential complicity in the military’s atrocities at all (God knows what his answer would have been), but instead whether his plan to build the “largest data center in the world” posed a national security risk, which could render local residents vulnerable to attack.

“That’s a good question,” he conceded, momentarily stumped. The gears were turning—how to respond? The obvious answer is that there is no real threat because he was not actually going to build the largest data center in the world on the outskirts of the Pittsburgh. The hyperscalers with which the Department of War is partnering with are several orders of magnitudes larger than his company, and as the former move aggressively toward verticalization, it is increasingly unlikely they would ever have any need at all to rent space in his data center. To date, the only announced tenant of the New Kensington project is TensorWave, a $500 million-valuation startup which has taken on the particularly risky strategy of breaking NVidia’s AI compute monopoly by relying solely on AMD chips.

But of course he couldn’t admit any of that—and particularly not after making the completely preposterous claim that his data center would be so big that it would help restore “data sovereignty” to PA residents, who now had all their data stored in Virginia (one of the strangest lies of the night). In either case, this apparent moment of introspection about the national security implications of his claims was fleeting, and he quickly rebooted back into his typical condescending programming and turned to mock the woman for hypothesizing about a terrorist attack on a US data center. Bizarrely, he also felt the need to inform her that “Pete’s [Hegseth] a good friend of mine,” proceeding to compare the data center project to Israel’s Iron Dome (“This data center will protect us” in the same way the “dome around Israel is protecting Israel”), and then concluding that “if China bombs us, we got bigger problems.” Honestly, I have amnesia about how we managed to escape that particular spiral. It was one of the most baffling moments of industry-public discourse I have ever experienced (at one point during this dizzy spell the founder also mentioned upholding “Judeo-Christian values,” as a sort of knee-jerk reaction to the woman referencing how Iran had already attacked data centers in US-aligned Gulf states).

Near the end of the town hall, an audience member asked the other Upper Burrell Board of Supervisors also on stage, but who had thus far said nothing, if they had any thoughts about the project they would like to share. One man responded, again with the same unearned exhaustion as the company’s founder, that it “didn’t matter what you tell a person against [data centers], nothing is going to change their mind.” But the problem was no one was even trying to tell anyone anything. One could not have possibly learned even what a data center was from attending the town hall, much less what the upsides and downsides of its local development were for residents. Beyond an abbreviated explanation of closed loop cooling systems, the founder seemed satisfied with vague gestures to using “the best technology,” at times claiming said technology had “no pollution” and “no waste,” at other times contradicting this by claiming compliance with emissions standards set by DEP (thus implying there would of course be pollution). The township supervisor seemed exasperated with all these damn questions—what one would assume is the purpose of all of our being there—insisting to attendants that they were just going to have to “trust him” on this stuff.

The cruelest irony arrived late in the evening, as a woman stood up and identified herself as an employee of Penn State New Kensington. She expressed skepticism about the suggestion, mentioned previously, that there would ever be a TECFusions “jobs fair” in that particular theater, given the branch campus is slated to be shut down next year. Clearly unaware of this, the founder scrambled to keep up the appearance of an imminent jobs boon connected to this data center. “We’ll see about that in six months.” A nonsensical premonition to cap off the night, a final insult to the intelligence of everyone in attendance who already knew Penn State’s consolidation plans were a long time coming. And of course, lest we forget, the point of the project is to chase after the AI boom, which its promoters have been constantly insisting will kill off the kinds of jobs a degree from Penn State might have once occasioned. The point is to build a big data center—the biggest in the world!—which will do nothing but hasten the collapse of rural economies and livelihoods, the total conversion of America’s hinterlands into depopulated, deteriorated wastelands of automated warehouses and resource extraction.

Broadly speaking, my dissertation project was a study of 1) some techniques that oil prospectors have historically used to model the subsurface (in particular, exploration seismography), 2) how and why these techniques have changed over time, and 3) the reasons motivating those changes. With respect to the third aspect, I follow Georg Lukács and István Mészáros in characterizing (some of) these reasons in terms of a general tendency to formalism, which I take to be broadly characteristic of modern science. Importantly, this is not just to say that subsurface models have become more abstract, numerical, or decontextualized. More specifically, I was interested in the “ideological function,” in Mészáros’ terms, inherent to this tendency: the separation of certain questions of natural science—e.g., what are the properties of the earth and how can we study them?—from the material history of socio-ecological conflict.

That said, even if it can be described as a general tendency, it is critical to stress that scientific formalism includes very different kinds of abstractions, which themselves have been developed for very different reasons. The question thus cannot simply be reduced to whether knowledge of the earth is ‘more abstract’ today than before but why different kinds of abstractions emerged at different times. As an example: a geophysical abstraction such as a seismogram, despite being more quantitative, is not necessarily more abstract than a qualitative geological abstraction, such as a cross section model. Something like the anticlinal theory of petroleum accumulation, for instance—which suggests oil originates in source rock deep in the earth and migrates upward, eventually pooling underneath impermeable layers of caprock—is indeed quite abstract with respect to the intensely heterogeneous, uneven, and porous geological structure of the earth. Notably, into the late 19th century, the theory was in fact too abstract to predict the location of oil in Appalachia, and for this reason it was abandoned by oil men. Its (now commonly accepted) reputability gained ground only once it proved more useful in prospecting out West, near the turn of the century. Conversely, early exploration seismography frustrated academic geophysicists because it was not abstract enough: its practitioners had taken to inferring time-depth conversions from local observations rather than rely on textbook formulae. What exactly differentiates different abstractions? And, from a historical perspective, what was insufficient about prior abstractions such that new kinds had to be proposed?

The history of oil prospecting felt to me like a particularly useful context for these inquiries—the ‘ideological function’ of scientific formalism and its changing manner of abstraction—given how oil exploration has been both riven with conflict and also productive of knowledge about the subsurface in ways that have proven immensely influential in the development of 20th-century earth science. Indeed, to speak of the ideological function at work here: it is fascinating how few histories of earth science even bring up the revolving door (and financial ties) between universities and oil companies; the borrowing among academic geologists and geophysicists of survey techniques pioneered by oil prospectors; myriad shared intellectual endeavors, such as the premier scientific journal Geophysics (founded by oil prospectors). In brief, the ties of 20th-century earth science and the oil industry are as thick as those between, information science and the Cold War, and yet far fewer historical accounts of these relations exist (the most important exception being Aitor Anduaga’s fantastic Geophysics, Realism, and Industry).

And, at the same time, changes in techniques for producing scientific knowledge of the earth were often intimately related to rather mundane, practical problems of oil-finding. It was with this in mind that I became more interested in the history of oil prospecting, because I thought it may be a way of working backwards from the concepts of ‘complexity’ and ‘system’ that take such a strong hold on scientific consciousness by the mid-20th century, and which have since become totally hegemonic, presented across social and natural sciences as if they are necessary forms of being—it is in practically beyond reproach across countless disciplines that existence ‘in itself’ is composed of ‘complex’ ‘systems’. And so what I thought might be useful to do was to find a way to denaturalize and politicize these concepts, namely, by linking their emergence to specific concrete technologies and practices associated, first, and most obviously, with modern computing but second, and much less appreciated, with oil exploration.

So then I set about investigating this long history of the development of techniques of abstracting the earth, particularly within the upstream oil industry and again to try to see it in relation to this broader tendency to formalism and the separation of questions of natural science from the material history of socio-ecological conflict. This is not to say that this had all been decided in advance, or that there are no countertendencies, but rather I suggest that there is indeed a defining formalistic logic to the technological evolution of the oil and gas industry, across otherwise quite disparate modes of abstraction, and that this has had two important, enduring consequences. First, it has afforded the industry a remarkable flexibility in finding and extracting oil across otherwise highly variable geological, political, and economic milieus. To this point, the importance of science’s social mediation is a lesson I learned from Geoffrey Bowker’s Science on the Run, which among other things shows how the development of prospecting techniques was enabled and constrained by different property regimes: unlike electrical loggers pacing the surface, for instance, seismic waves don’t need landowners’ permission to enter the otherwise privatized subsurface domains of the US. Conversely, in the USSR, access to land posed less of an issue post-collectivization, and thus electrical logging flourished as a prospecting technique.

But the other consequence of scientific formalism is that it tends to reproduce the same type of problem within the industry (and within modern science) again and again—namely, as Lukács talks about in History and Class Consciousness, problems which emerge from the non-identity of the intelligible form of the subsurface with its content. Colloquially, these problems are often recognized as ‘bad data’, which can arise from all sorts of contingencies and circumstances, whether geological obstructions like fault lines or technical problems of sensing and data transmission, but which speak to the irremediable gap between the sensible subsurface and the technologies used to sense it. This is to say that there is thus no ‘final abstraction’ (and, pace the Lukács of H&CC, no culminating subject-object identity), inasmuch as the earth remains resistant to its conceptualization, recalcitrant to its being known and systematized, and it is this negative or planetary materiality that continuously regenerates and re-emerges in the discrepancy of subject and object, form and content, model and fact.

Along these lines, one thing I try to argue is that a notion of ‘complexity’ subsequently emerges within the oil industry as one possible way to address this discrepancy, given certain social and technological constraints. In particular, I suggest that it emerges through the advancement of 1950s digital seismography, in relation to a novel statistical approach pursued to move beyond the limits of older prospecting techniques, which tended to either be too generic and principles-driven (formal or scientific geology) or else too vernacular and context-dependent (‘practical’ or rule-of-thumb geology). There are antecedents, to be sure—in particular, experimental technologies developed during the 30-year history of exploration geophysics leading up to the 1950s—but I suggest that these statistical techniques developed with the advent of early modern computing had not only allowed oil prospectors to mediate the subsurface differently than before but fundamentally changed subsurface epistemology, giving way to notions of ‘complexity’ and ‘system’ in oil prospecting.

One of the major focal points for me was the Geophysical Analysis Group (GAG) at MIT, and in particular the work of its most central member, Enders Robinson, while he was a geophysics PhD student. Equipped with the techniques of time series analysis he had learned from the great cybernetician Norbert Wiener (one of his mentors, in addition to finding inspiration in Schumpeter’s theory of innovation, an important connection I can’t get into here), Robinson is credited as the ‘father’ of digital seismography for his development of a deconvolution algorithm, which he used to ameliorate ‘bad’ seismic data generated by oil companies off of the Gulf Coast. To put it briefly, his algorithm—‘predictive decomposition’ as he called it—was able to identify interfaces between rock beds that were otherwise obscured by the expanding seismic wave as it bounced around and interfered with itself underground.

The technical process to do so is complex, and I do not want to get into it any further here. But it is worth pausing to appreciate not only the difference in degree but also the kind of abstraction necessary for digital seismic analysis, again in view of this broader tendency toward scientific formalism I am interested in. Robinson gives a particularly revealing account, worth quoting at length, concerning how this idea to apply predictive filtering to seismic data first came to be:

One day, Wadsworth and Hurley fell into a discussion about the use of mathematics in geology. As the story goes, Wadsworth was needling Hurley a bit, chiding him because he thought not enough mathematics was being used in geology. Wadsworth was used to analyzing weather time-series data, which he described as data that ‘go up and down.’ Hurley said that seismic traces also ‘go up and down,’ and that geophysicists had to ‘eyeball’ them in order to pick reflections. […] An inquiry was sent to the Magnolia Petroleum Company, which provided eight seismic records. When I showed up, Bryan, with a sigh of relief, gladly handed me the eight records. (p. 11JA)

I have hung on this passage for some time. How could a ‘system’ as dynamic and variable as the weather be in any way comparable to something a ‘system’ fixed and deterministic as the subsurface? Ultimately, it is because of the equivalency of the presupposed form of data being worked on, which, by virtue of its means of production, has not just been removed from its concrete origins—the local engagements of prospectors with the earth—but in the hands of the digital seismologist takes on the abstract appearance of a time series that ‘goes up and down’. It it this form of appearance that translates the older scientific problem of finding subsurface geometries likely to harbor oil—articulated since the dawn of (analog) exploration seismography in the 1920s—into a problem of finding patterns in discrete, aspatial data, thus a problem legible in precisely the same way filtering noise from electrical signals or predicting the weather was legible. It is this distinct form of digital abstraction, and not merely quantitative, that I think is so significant for understanding the ideological function of scientific formalism, which above all provides for a different way of mediating contingency. But more on this another time.

Now, the algorithm Robinson developed with this new principle of abstraction in mind would become central to the digitization of oil prospecting in the following decade—not only for ‘digital seismography’ but for the industrial geophysics more broadly. And unsurprisingly this convergence of computing and geophysics heavily shaped and was shaped by the Cold War. Here, I just want to briefly note the important yet very understudied role which the company Texas Instruments (TI) played. Today not well-known beyond those familiar with high school calculators, TI was indeed an important US semiconductor and electronics manufacturer through much of the mid-20^th century. It was heavily involved in a number of high profile federal government and military contracts, including seismic applications for the US government’s nuclear test detection program under Project Vela, computational and electronic equipment developed for rockets during the Space Race, and military seismic and radio equipment contracted with the Bureau of Aeronautics and the US Air Force from the Korean to Vietnam Wars.

Most importantly for my purposes is that TI was originally the manufacturing department of Geophysical Services Incorporated, an oil prospecting company founded in the early 1930s. While, in the 1950s, corporate restructuring turned GSI into a subsidiary of TI, its prospecting wing maintained global leadership through the mid-20^th century precisely by leveraging TI-manufactured computer and electronic equipment for oil exploration—and at the center of which were the kinds of digital algorithms first pioneered at MIT.

TI’s integrated circuit-equipped Digital Field System, for instance, which was originally developed as part of Project Vela in the early 1960s, was subsequently adapted by GSI engineers to be mounted onto seismic recording trucks to capture digital seismic data out in the field. It would then be processed back at GSI’s offices on all-transistorized Texas Instruments Automatic Computers, or TIACs, where GSI-developed software packages applied the latest statistical techniques of data analysis, including deconvolution, to the problem of seismic interpretation. So the corporate history of TI then becomes illustrative of precisely this midcentury convergence of personnel, expertise, and hardware between oil prospecting and the emerging information and communication technology industry, all mediated by geophysical science—and again, important for me is this technical substrate for abstracting subsurface information into time series, such that it could like weather data be made legible to programing techniques developed on early modern computers.

Now, the co-development of oilfield industry technology and information technology of course does not end here: after the birth of digital seismography in the 1960s, there were very heavy IT investments of the 1970s among the oil majors, including acquisitions of the ‘venture wings’ of big companies like BP and Exxon, as investigated by Cyrus Mody (2023). At the same time, with respect to their own computing resources, as Lawyer, Bates, and Rice’s Geophysics in the Affairs of Mankind attests, through the 1980s, the geophysical industry used more magnetic tape and digital computer power than any other industry (2001, p. 179); as Robinson himself confirms, the “lion’s share of worldwide scientific computer time” was dedicated to seismic data analysis (1985, p. 43).

To conclude with something I hope to elaborate in a subsequent post: despite their alienated appearance, abstractions of the earth and the techniques used to produce them have never ceased to imply particular socio-ecological arrangements and thus the specific conflicts—e.g. over oil, land, environment, development—that have emerged within them. All concepts, including scientific concepts, are ‘merely historical’ forms of being, ‘vanishing necessities’ in Marx’s terms. In turn, challenging the hegemony of ‘complexity’ and ‘system’ concepts means not only historicizing them but also rendering them more natural—that is to say, artifacts of our planetary being, our natural history. Put another way, scientific concepts do not originate idealistically, distilled in the head of some hero scientist, but in the earth’s irreparable failure to explain itself, the discovery of which, we should not forget, is so often accompanied with immense scales of suffering, planetary suffering through the breakdowns of social, ecological, and technological mediations of thought and thing, form and content, subject and object.

One of the most important advantages that Marx’s theory of value maintains against classical and neoclassical theories of price is the attention it pays to the monetary nature of capital. In contrast, classical political economy attributes no specific, internal dynamic to the money-form; it is merely a means of circulation. While Marx’s theory acknowledges this role of money, it also seeks to explain why capital finds its necessary expression in the medium of money. This, to be clear, is not to say that money is capital’s only form of expression, but it does mean that the medium of money, as distinct from its use as a means of circulation, is indispensable to Marx’s theory of value, insofar as both the initial capital advanced (M) and its end result (M’) are necessarily realized in terms of money.

In my view, precisely this centrality and homogeneity of the money-form, contra Moseley (2016), throws into question the “actuality” of production prices as “long-run equilibrium prices.” As discussed in Part II, for Marx money is a medium which also comprises the substance of value as abstract labor. The general equilibrium approach, which continues to ground so many interpretations of Marx’s theory of value, inevitably collapses into “Walrasian Marxism” (Freeman, 1995) and is for this reason incapable of grappling from a Marxist perspective the value of money.1

Prahbhat Patnaik (2008) has made this point most clearly: the nature of money as the universal form of equivalence makes long-run equilibrium prices a constitutive impossibility under capitalism. Marx had already gestured toward this in Volume I, Chapter I, when he wrote that the “quantitative incongruity between price and magnitude of value, i.e. the possibility that the price may diverge from the magnitude of value, is inherent in the price-form itself” (Marx, 1976 [1867], p. 196).2 Most fundamentally, this is because the price of money does not respond merely to its “transaction demand” in circulation, given that money is also useful in itself as a form of wealth. Interest in exchanging money for nonmoney goods therefore is not merely responsive to the value of the latter in money terms but also depends upon expected rates of return for holding money against other forms of wealth.

This, as Patnaik suggests, opens up the irresolvable and ultimately prevailing tendency toward “generalized overproduction,” which results from the economically rational preference to hoard money when expecting price increases and the subsequent failure to clear markets (ibid., p. 8). For Patnaik, this also means that the tendency toward overproduction is never internally resolved within capitalism but depends upon is linkage to “surrounding precapitalist modes” of production, that is, “encroaching on precapitalist markets” in order to clear markets and restore the valorization process (ibid., p. xv). In distinction from Rosa Luxemburg, Patnaik insists that this need not realize a “quantitatively significant” degree of surplus value, but the existence of precapitalist markets must always exist “on tap” to be utilized by as a “means of turning [capitalism] around whenever it is on a downward movement” (ibid., p. xv).

In either case, if the value of money cannot be determined through its supply and demand, then the value of all nonmoney commodities expressed in terms of money can likewise not be determined by supply and demand (cf. Freeman, 1995, pp. 20-21). This, after all, was Marx’s key contribution to monetary theory: he argued that the market value of money expresses a relationship between the “labour embodied in a unit of money as compared to a unit of the basket of non-money commodities” (Patnaik, 2008, p. 187).

Despite his reliance on commodity money in the formulation of his theory of value, Marx understood that in the possibility of hoarding—i.e. insofar as money can serve as an independent form of wealth—money need not actually appear in the form of a commodity, e.g. gold. This gives Patnaik reason to, controversially, group Marx with Keynes in a ‘propertyist tradition’, contra the ‘monetarist tradition’ from Ricardo to Walras.

Even still, the collapse of Bretton Woods and the ascendancy of fiat currency has not, in fact, allowed the value of money to escape the world of commodities. For one, despite floating exchange rates, monetary stability remains essential to global trade. As evinced by the massive dollar reserves held across the world, the US dollar is still recognized by its holders to “constitute a stable medium for holding wealth” (ibid., p. 223). Ultimately, then, as Patnaik argues, this confidence in the US dollar is derived from the stability of value of the commodity labor-power to be reproduced domestically through “crucial imported inputs that go into the wage bill and materials bill” (ibid., p. 7).

In turn, as the most significant input by far to the reproduction of labor-power within the United States, petroleum and petroleum-based commodities play an outsized role in stabilizing the value of money. For this reason, Patnaik suggests that the dollar standard is in fact an “oil-dollar standard […] control over oil is essential for the preservation of the present international monetary system” (ibid., p. 8).3

While I believe Patnaik is justified in pointing to the crucial linkages between global oil markets and international monetary stability, particularly in the context of the OPEC price hikes of the 1970s (see also Ortiz, 2020), his conclusion that the US either always acts toward or is even capable of preventing a “secular increase in the dollar price of oil” to maintain dollar hegemony is questionable (2008, p. 235). No doubt, the United States has since the 1970s regarded the stability of domestic oil consumption to be a central issue of ‘national security’. However, if nothing else, the “oil-dollar standard” is not doing a particularly good job of stabilizing oil prices, as crude prices have seen more volatility over the past twenty years than they had in the past century. Yet, despite this, dollar hegemony remains more or less stable, with the United States capable of running huge deficits without fear of the currency devaluation.

With this in mind, it would be remiss to here not also consider the role of finance capital (of which Patnaik makes little mention) in maintaining this possibility of a stable dollar and, in particular, the role of finance capital within the oil industry. As Labban (2010) has argued, with the dominance of “financial logic” in the modern oil trade, the production of oil as a commodity (“wet barrels”) and its circulation as an asset (“paper barrels”) have been fully disaggregated, constituting two separate realms of capital circulation (M-C-M’ and M-M’-M’’). No longer, he suggests, does the “availability of physical supplies” have any “direct bearing on the price of oil” nor does a “high market price […] automatically induce investment in exploration and production capacity” (Labban, 2010, p. 542).

Thus, what financialization has accomplished is not so much the mediation of these two realms as their further separation. Put another way, the physical trade remains largely masked beneath the financial trade, which, while completely dwarfing the former today in terms of total trading volume, does not trade oil directly but rather its “difference: difference of price over time, across products or different types of crude, or across markets, and the difference between a price determined by financial market activity and the price of a physical product delivered somewhere and determined by other factors” (Labban, 2010, p. 547).

In turn, futures prices have their own “space-time logic that is not directly related to trade in physical deliveries and is therefore not directly determined by ‘market fundamentals’” (Labban, 2010, p. 547). This “decoupling” was clearly evident in 2008-2009, for instance, when crude oil prices spiked despite a decline in demand and excess global capacity. Against these underlying physical conditions, market analysts nevertheless forecasted that future spot prices would increase, which raised the futures prices, which raised the spot prices. The spot price was hence “driven by speculation on conditions in spot markets mediated by the reaction of financial markets to such speculation. So-called market fundamentals, therefore, determine oil prices only by way of the effects on financial markets of speculation on future conditions in spot markets” (ibid., p. 548). This price sensitivity becomes even more fickle as a result of the greatly increased fungibility of paper barrels—that is, it is much easier to buy and sell oil derivatives than send and receive physical oil. All of this, in turn, contributes different influences on crises beyond real supply and demand:

Contemporary oil crises thus result less from market shortages or natural scarcity than from dislocations between futures and physical markets, decline in shareholder value and shortages of credit, inability of corporations to meet analysts’ forecasts, or even simply the technical parameters of commodity futures exchanges (see this post on the infamous 2020 oil price collapse). Financial crises occur, in other words, when the resource commodity fails to make the salto mortale and bring its value into existence—value already appropriated in the market according to traders’ stochastic models predicting price fluctuation, but now with no necessary material basis in reality (ibid., pp. 550-551).

Still following Labban, the ascendancy of financial logic has thus changed the calculus of oil companies when it comes to the relationship between investment decisions and oil prices. Maximization of shareholder value need not coincide with productive investment but, instead, toward further boosting stock prices, e.g. through the increase of dividends and stock buybacks.

Of course, the central reference for the price of stocks, as a claim on future earnings, is still the capacity of the company to generate profit (albeit not necessarily with the intent to maximize profit, cf. Bichler and Nitzan, 2004). Hence, investments in production and refinement are still pursued by the major oil companies, but this is now accompanied by purely financial motivations for stock and asset appreciation (Labban, 2010, p. 550). Productive investment has become “disciplined investment […] disciplined by the dictates of financial logic and centered on the creation of ‘ever-greater shareholder value’” (ibid., p. 550).

It is illuminating to close this final section by reading Labban’s summarization of the contemporary financialization of oil against remarks made in the early days of oil derivatives trading. And here, I am not referring to the 1980s, but the 1870s—indeed, the financialization of oil is by no means a contemporary phenomenon. As Grote, Wojcik, and Zook (2023, p. 6) have attested, oil production networks and financial networks have been “inseparable” since the inception of oil industry. What’s more, the very same justifications for financialization—liquidity, market stability, and price information—had indeed already been articulated by A.J. Greenfield, President of the Oil City Oil Exchange, in his opening address of the new Oil City Petroleum Exchange building on Tuesday, April 23^rd, 1878:

I sometimes think we fail to realize the importance our Exchange bears to the trade. It is here the markets are made for the world. It is here the surplus stock is carried during the non-shipping season. Without this large speculative trade I doubt if oil to-day would command half its present price. Here the producer always finds a cash market for his oil, and when he enters into any combination that tends to destroy, or drive away this speculation, that our Exchange has concentrated here from all parts of the country, he adopts a policy suicidal to his best interests. (qtd. in Bell, 1890, p. 520)

Speaking later in the evening, H.L. Foster defended the exchange against the perception that it was “speculation pure and simple […] the Exchange of the oil country not only invites, but are the means of bringing here vast amounts of outside capital that but for them would remain outside forever” (qtd. in Bell, 1890, p. 521). This capital is what helps “bridge over times of depression […] a positive good to the whole body politic.” Thus, the liquidity provided by the exchange purportedly allows for not only the appreciation of oil prices, at benefit to the producer, but the adequate attenuation of the oil industry to macroeconomic risks. As we shall shortly see, these promises were hardly what the early paper trade brought about in practice—and neither did it bring about the ‘discipline of investment’. Rather, the financialization of oil invited immense price volatility, market manipulation, and a rationalization of the first true oil price regime: Standard Oil’s posted price system.

The difficulties encountered throughout the development of successive oil price regimes are incredibly dynamic and variable. From very early on, they will involve not only the interests of commercial agents (producers, shippers, and refiners) but also a new ‘decoupled’ class of financial participants (including speculators, bankers, and the general public) whose interests reside strictly in oil prices ‘in-themselves’ (M-M’-M’’). The possibility of decoupling is intimately related to variabilities in organic compositions of capital which, above all, produce risk in the realization of value. This, in turn, will lead to widely disparate rates of profitability against which the price-form will strain to accommodate the “Law of Simple Reproduction.” Most famously, as Bina has long argued (1985), this helps explain the changes in the objective production conditions which gave way to the 1973 oil crisis, the response to which marks a return of the futures exchanges which have not financialized so much as re-financialized the oil trade in the contemporary period.

References

Bell 1890Bell, Herbert Charles. 1890. History of Venango Country, Pennsylvania, and Incidentally of Petroleum, together with Accounts of the Early Settlements and Progress of Each Township, Borough and Village, with Personal and Biographical Sketches of the Early Settlers, Representative Men, Family Records, Etc. Chicago, Brown, Runk & Co, Publishers.

Bichler, Shimshon, Nitzan, Jonathan. 2004. “Dominant capital and the new wars.” Journal of World-Systems Research 10(2), pp. 255-327. https://doi.org/10.5195/jwsr.2004.304

Bina, Cyrus. 1985. The Economics of the Oil Crisis: Theories of Oil Crisis, Oil Rent, and Internationalization of Capital in the Oil Industry. London, Merlin Press.

Freeman, Alan. 1995. “The psychopathology of Walrasian Marxism.” In Alan Freeman and Guglielmo Carchedi (eds.). Marx and Non-Equilibrium Economics. Aldershot, Edward Elgar, pp. 1-29.

Grote, Michael, Dariusz Wojcik, and Matthew Zook. 2023. “Sticky substance with sticky power: Oil in global production and financial networks.” EPA: Economy and Space 0(0), pp. 1-18.

Labban, Mazen. 2010. “Oil in parallax: Scarcity, markets, and the financialization of accumulation.” Geoforum 41: 541-552. https://doi.org/10.1016/j.geoforum.2009.12.002

Marx, Karl. 1976 (1867). Capital, Volume I: A Critique of Political Economy. Translated by Ben Fowkes. London, Penguin.

Moseley, Fred. 2021. “A critique of Shaikh’s two interpretations of Marx’s transformation problem.’” Cambridge Journal of Economics 45, pp. 577-589. https://doi.org/10.1093/cje/beaa047

Ortiz, Roberto. 2020 (7 Dec). “Oil-fueled accumulation in late capitalism: Energy, uneven development, and climate crisis.” Critical Historical Studies 7(2), pp. 205-240. https://doi.org/10.1086/710799

Patnaik, Prabhat. 2008. The value of Money. New York, Columbia University Press.

In Inhuman Nature, Nigel Clark writes about the need to account for “things that will be otherwise whatever we chose to do” without any consideration for how thought can produce such accounts, how thought is in the first place capable of rationalizing to itself such alterity (2011, p. xix). Not only the manner by which the “inhuman” structures consciousness but the particularity and definiteness of a structure of consciousness are both taken for granted. Indeed, the problem of consciousness no longer even poses a historical question in Clark’s account—all the more ironic considering much of the compulsion to write of an “inhuman earth” concerns, for him, the achievements made, via a resolutely scientific cognition, in accessing it: the most distant pasts, the most infinitesimal spaces, and so on. But, surely, the very recognition of these vast expanses of nature which remain indifferent to our existence results from critical self-consciousness. With gaze fixated on the earth-in-itself, no reflection on this paradox can be found in Inhuman Nature.

Among other important examples, Clark notably provides as evidence of our “vulnerability to otherness” the 1755 Lisbon earthquake, that ‘raw material’ of so much speculative philosophy since Kant (1994 [1756]). For Clark, there was nothing that could have been anticipated about the “eventfulness” of this earthquake; it came to us “directly from the ‘otherness’ of nature” (2011, p. 86). Hence, very importantly for his argument, there was for Clark nothing ‘socially constructed’ about it; it was a deep and alien intervention which rocked the “very foundations on which thought and practice base themselves” (2011, p. 82).

But if the earthquake did truly shake human “thought and practice” down to its foundations, how was it recognized at all? Its “eventfulness” was indeed registered, after all, and quite meticulously among artists, philosophers, and politicians. But by what means, what frame of reference could have allowed for this? Does our recognition of the earthquake not itself mean there was some prior inscription in ‘the human’ already prepared to receive it?

These questions seem to me to indicate that it did not, in fact, disrupt all thought and practice, but that it revealed that what was thought to be the foundation of thought and practice to be both false and self-posited. What followed from this event, in other words, was precisely the recognition that “thought and practice” were already based on other foundations than those conventions to which they had been habituated.

But this, then, means that the earthquake did not arrive “directly” at all, that it was in fact already mediated, and that this mediation was a necessary prerequisite for it to be recognized. How could it be otherwise? We can speculate there are an infinite number of events occurring at all moments all around us, of which we have no sense, perception, or understanding. Conversely, we can also freely speculate that there are numerous entities in the universe who never experienced the Lisbon earthquake at all—certainly not as something that shook all “thought and practice” down to its foundations—or who otherwise experienced it in a very different way. But the reality we actually experience is not an infinitely tumultuous ocean; it is a reality determined by all sorts of mediations which precede and suspend us, and which we often do not recognize ourselves in.

It is also worth commenting on how this “collapse of a way of making sense of the event itself” compelled, as Clark notes, the “disinvestment of moral meaning from nature” (ibid., pp. 89-90). While this is clearly a “definitively modern distinction,” it was not in fact recognized by bourgeois consciousness as valid only for itself but imputed onto the whole of human history. This is indeed the historical paradox of any ontological commitment: after 1755, the radical separation of the ‘is’ and the ‘ought’ had always existed. The point, for me, is that at no point do such ontological commitments cease to presuppose the prior historicity of “thought and practice”, not even in ‘events’ as apparently upending and inhuman as earthquakes.

Again, we are self-evidently free to speculate all we want about the existence of nature beyond human impact, fashioning for ourselves precisely the sort of “ground” which Clark argues is missing from the “constructionist” arguments. My contention, however, is that, without sustaining an inquiry into critical self-consciousness all the while, such a speculative “ground” exists only negatively, and therefore incompletely, for thinking the ground ‘in-itself’ always already implies thought’s self-negation. Recognition of the negativity of nature ‘in-itself’ always risks leading us precisely into the same Kantian cul-de-sac—that is, a self-posited limit point of the ‘thing-in-itself’, which cannot be overcome simply through a one-sided abandonment of the former for the latter.

To be absolutely clear, none of this is intended to deny the objective validity of scientific claims about the independence of the “force of things” existing before and beyond human thoughts and practices (Stengers, 2000). What I stress is that already necessarily implied in all relations, including these relations of nonrelation, is cognitive mediation. The ‘discovery’ of such relations of nonrelation thus simply cannot not imply a changing form of critical self-consciousness, and hence, if we take Marx (and Hegel) seriously, changing practical human activities within, against, and alongside the independent “forces of things.”

These changing human activities do not vanish in our recognition of the autonomy of the inhuman—they change! By asserting the independence of the inhuman, one is thus already implicitly accounting for the conditions under which consciousness apprehends the non-relational, asymmetrical, and non-identical, and it is those conditions which thought must clarify to itself if it is to justify the independent force of things at all. As I see it, dialectical reason strives to achieve this, namely, by taking stock of the totality of relations which constitute being, including the self-mediation of being in thought.

References

Clark, Nigel. 2011. Inhuman Nature: Sociable Life on a Dynamic Planet. London, SAGE Publicatons.

Kant, Immanuel. 1994 (1756). ‘History and physiography of the most remarkable cases of the earthquake which towards the end of the year 1755 shook a great part of the earth’ in Four Neglected Essays. Hong Kong, Philosophy Press.

Stengers, Isabella. 2000. The Invention of Modern Science. Minneapolis, University of Minnesota Press.

Variations in the Organic Compositions of Capital

Mazen Labban (2008) is one of the very few geographers who has explored the relations between magnitudes of prices/values and rates of surplus value/profit within the oil industry.1 In order to do so, he closely tracks Marx’s commentary on variations in the organic composition of capital, mostly in the third volume of Capital. What follows will primarily be an overview of his argument, with some further commentary on the special role of capitalist rent in the transfer (or lack thereof) of value within the international oil industry.

But first, it is important to once again note how Marx removed many of the constraints on the study of capital accumulation which he maintained earlier. In Volume I, it was necessary to, among other things, suspend issues that arise from intra-capitalist competition in order to demonstrate that, even under perfect competition between homogeneous capitals, profit is derived from the difference between the “resources employed” during production and the “product obtained” (Ricci, 2021, pp. 4-5). As stated in Part I, Marx discovers that this difference is rooted in the exploitation of a special commodity, labor-power, which is capable of producing more value (qua socially necessary labor-time) than it needs to reproduce itself.

In the third volume of Capital, Marx expands his inquiry to consider the significantly more concrete circumstances of the production of value across heterogeneous capitals—that is, capitals of differing compositions of variable capital and constant capital (as clarified in a moment). Under these new conditions, Marx agrees at one level with the classical political economists on the question of profit equalization: capital investments tend to seek out economic sectors where the rate of profit can be maximized, hence, they tend to migrate from sectors with low profitability to those with higher profitability.2 However, as we saw in Part I, for Marx this is not merely a question of the circulation of capital in the market but also involves the question of the production of value across differently composed industries. What thus must be considered is not only the movement of the mass of (existing) capital but also how new, variable investments in production alter the magnitude of total social capital and, in turn, alter the distribution of profits across competing capitals as they enter into exchange relationships with one another.

That is quite condensed, I know, so I will try to unravel it here. First, consider how Marx defines the rate of profit, p, in Volume I:

p = s / (c + v)

where s is surplus value, c is constant capital, and v is variable capital. Already, we can see that if there is no change in the rate of surplus value (i.e. the ratio of surplus value to variable capital, or s/v), any increase in the magnitude of constant capital will result in a lower rate of profit (Marx, 1981, pp. 318-319). Likewise, we can also see that an increase in the sum of constant capital and variable capital (c + v) can alter the rate of profit if the magnitude of surplus value produced remains the same. Put more plainly, more capital expenditures yielding the same surplus value equals a lower rate of profit.

What I focus on in this post is how changes in c + v, or what Marx called the organic composition of capital, affect the transfer of value during the act of exchange. Indeed, one of the most important contributions of Volume III is Marx’s observation that, when brought into exchange relations, capitals of different organic compositions transfer magnitudes of value between themselves at rates which are delinked from the prices of the actual commodities exchanged. Moreover, this for Marx remarkably works not against but in service of the equalization of profit across total social capital as a whole. Put another way, the equalization of profit depends on the uneven transfer of value beneath the equivalence of price, and this is itself a result of the heterogeneity of organic compositions of capital being brought into exchange.

An important point before proceeding: as Sweezy had cautioned, one must understand the organic composition of capital is a “value expression,” that is, it as an expression of the socially necessary labor time congealed in constant capital versus variable capital (1942, p. 103; see also, Marx, 1981, p. 343). Hence, the merely physical amassing of machines and materials may indicate an increase in the technical composition of capital, but it need not signal any increase in the organic composition of capital—if, for instance, the increase of constant capital is also matched with a similar rise in the productivity of labor (thus, an increase in the rate of surplus value), or if new intensive processes lead to “capital saving,” i.e. the cheapening of per unit capital expenditures through the more efficient use of machines (Hodgson, 1974, p. 35). (NB: Labban has a slightly different approach: as a measure of not merely quantities of labor and machines but values, he argues that the organic composition of capital depends on both the technical composition and the “value composition,” or the “relationship between the value of constant capital in relation to the value of its variable part). While the first varies with changes in labor productivity (the amount of labor necessary to employ a definite mass of means of production), the second varies with fluctuations in prices of the means of production and the wages of workers” [2008, p. 21].3)

In either case, again, the tendency toward the equalization of profits means that value must be transferred between capitals during its realization in exchange—to stress, specific to Marx is the observation that the root cause of the different rates of profit in the first place is its ‘natural price’ but the variability of the organic composition of capital.4 While higher rates of surplus value should yield higher rates of profit, and do in exchange among homogenous capitals, this cannot be guaranteed in the more concrete situation of heterogenous capitals because it is not necessarily the case that individual capitalists “directly realize the surplus value produced by the workers they employ” (Labban, 2008, p. 14). What is exchanged on the market and realized in the form of profit, in other words, is not the direct quantities of labor-time embodied in the commodities but their formal equivalencies in price. In this way, the struggle for a greater share of surplus value within the market itself becomes another realm of capitalist competition—that is, beyond the competition which unfolds between capitals as producers of “greater masses of social surplus value.”

“In a pure capitalist economy, therefore, exchanges normally are non-equivalent because the commodities are not sold at their value, but at a value modified by the equalization of profit rates forced by capitalist competition” (Ricci, 2021, pp. 5-6). Labban provides a useful illustration of this phenomenon in the hypothetical case of four producers: apparel (I), pharmaceuticals (II), oil (III), and cars (IV). First, consider the scenario where the only pertinent variability across producers is their individual organic compositions of capital (Table 1).

In other words, all producers have the same rates of surplus value (s / v = 100%), the same initial investment ($10 million), the same turnover rate, and the same market conditions (i.e. demand is sufficient to clear all markets at the average rate of profit). Under these assumptions, the prices of production will definitionally be the same across producers (prices of production being equal to the cost of capital k advanced plus the product of capital cost and the average rate of profit, or kp’).

Despite this equivalency, as Labban stresses, the producers with lower compositions of capital (I and II) will see a portion of the value they produced transferred to those producers with higher compositions (III and IV). Whereas the magnitude of value (C) produced by I and II was $12 million and $11.5 million, respectively, the realization of value through exchange (observed in the resulting price of production) means that I and II “lose” $750,000 and $250,000 to IV and III, respectively.5 Further, because the distribution of surplus value is determined not only by the organic composition of individual capitals but also the relative magnitude of each individual capital to the total social capital, the mechanism of price does not reflect the ‘real value’ of a given commodity but, as a form of mediation, serves to adjust the allocation of surplus value as necessary for the reproduction of capital as a whole (what Marx called “Simple Reproduction,” cf. Marx, 1978 [1885], p. 501).

In the real world of capitalist exchange, of course, neither the rate of exploitation nor the turnover rate, nor the capital advanced, remain constant, as maintained in Table 1. Mediation of the process of value transfer by the dynamics of real markets (and real market participants) thus complicates this situation much further, as capitalists will compete with one another for greater share of the total surplus value produced and, in turn, make various attempts to limit the transfer of value to other capitalists in other spheres of production (Labban, 2008, p. 26). However, this does not nullify the effect of different compositions of capital on the unequal exchange of value vis-à-vis the realization of the general rate of profit—value, in other words, has to already tend to be transferred in order for that transfer to be obstructed.

Acknowledging this, Labban provides another example, this time of hypothetical oil producers with variable compositions of capital, but which are now compelled to adjust to fluctuating market conditions (Table 2). Consider first that each producer has substantially different cost prices of $5/bbl, $10/bbl, and $15/bbl—analogous to the real variability of production costs across the Middle East, the North Sea, and the Gulf of Mexico. Assuming effective demand is sufficient to absorb all available product (in this example, 3 million barrels), market price will be determined by the production price of the most expensive producer, e.g. the “Gulf of Mexico” analogue in this scenario (see also Bina, 2013, pp. 13-14). Together, all producers will realize $49.5 million in the market price of oil, with producers I and II receiving $11/bbl and $5.5/bbl in excess profits, respectively.

Under these circumstances, one would expect capital in the next cycle to migrate toward the most profitable producer, i.e. producer I. Thus, let us assume in a subsequent period that three times more capital is invested into producer I than the first cycle (while the organic composition of capital remains the same), leading to the production of three million additional barrels (five million barrels in total across all producers). If effective demand increases in pace with supply, then the market price will remain $16.5/bbl, as determined by the highest-cost producer, and all producers will profit, with producers I and II making surplus profits as before.

However, in a scenario where demand does not grow to absorb producer I’s 3 million barrels (Table 3), the market price will have to be adjusted downward if the market is to be cleared. This, in turn, threatens the profitability of the more expensive producers. In response, the latter will often either find ways to prevent the access of the oil of producer I to market, or else attempt to minimize their own production costs, e.g. through the investment in new fields or new cost-saving technologies. They may even attempt to merge with producer I in order to lower their average per-barrel cost price. Throughout the history of the oil industry, as Labban remarks, all of the above strategies have been attempted by producers, and often in combination.

Now, for my purpose, one thing this example makes clear is the contradiction between the individual and collective interests of oil capital. Unevenness in both the production costs and the organic compositions of capital guarantees unevenness in the distribution of surplus value, such that individual producers are incentivized not only to produce more surplus value for the sake of their own profitability but also to compete for greater share of the distribution of total surplus value. They are also incentivized to block this transfer of value whenever they can.

Negative Territoriality and Capitalist Rent

And here, finally, is where an important distinction concerning primary production’s relationship to nature comes into play. The “negative territoriality” (Labban, 2008, p. 75) of landed capital has a unique advantage in its capacity to impede the equalization of profits, precisely by restricting the extension of capital into nature—that is, in our case, the oilfield. This leads to the formation of capitalist rent, which is neither simply a vestige of the “natural” economy (Bryan, 1990, p. 180) nor, worse, a natural attribute of the land in-itself (à la Ricardo, 1911, pp. 38-39) but, instead, a direct result of the valorization of landed property (Bina, 2013, cf. Marx, 1981 [1894], pp. 799, 923).

Hence, to be very clear, capitalist ground-rent does not result from “natural scarcity”; rather, it rent is reproduced under capitalism because of the simultaneous extension of capital investments into the ground and its negation in the “monopolization of nature by landed property […] The transformation of nature into private property is initiated by capital itself that, in turn, comes to stand against its own self-expansion and accumulation in the form of rent” (Bina, 2013, p. 51). In a word, rent as a form of surplus-value persists because, as Cyrus Bina remarks, the “medium of nature” persists, namely as an externality which remains irreducible to the capital invested within it (ibid., p. 45).

For Marx (and again quite uniquely) rent is thus not merely a question of the distribution of surplus-value (“price-determined” by the cost of cultivation on marginal land) but is a factor directly involved in its production, i.e. in the “dynamics of capital accumulation in conjunction with the barrier of landed property” (Bina, 2013, p. 55).6 Hence, even when we speak of “differential rent” as what defines the rent awarded to the most productive fields vis-à-vis the least productive, we should be very clear that its source is not merely within the variability of physical geography but, recalling Part I, is derived from the social mediation of natural difference through value.

This is clearly what Marx had tried to stress in his (dialectical) distinction of Differential Rent I (DR I), which reflects variation of soil quality while holding capital investment constant, and Differential Rent II (DR II), which reflects variations in capital investments while holding soil quality constant (Marx, 1981 [1894], Chs. 38-40). In Marx’s writing, these two types of differential rent are inextricably related both to each other and to agricultural production: “the formation of social value is the result of the unequal applications of capital to unequal qualities of land through competition” (Bina, 2013, p. 55).7 Once again, unlike Ricardo, Marx understands the movement of capital from better to worse land to be neither automatic nor inevitable but dependent on extenuating, objective, and social conditions of production (Marx, 1981 [1894], Ch. 40). It is thus not simply marginal production but capital which regulates the market value of natural resources like oil.

Once valorized, landed property becomes landed capital, which, although it stands in contradiction to productive capital, is not therefore external to capitalist development, i.e. in the sense impeding the growth of competition. Rather, as Bina has insisted, accumulation proceeds by virtue of the movement of the contradiction between productive capital and landed capital. Once again, the extractive industry occupies a special position with respect to the organic composition of competing capitals, as it is “more directly determined by property inland and resources,” which not only empowers its claim to rent but also determines the development of “capital as a whole” (Labban, 2008, p. 15). This means that the extractive industry conditions the competition for control over the “natural conditions of production”: the monopolization of landed property prevents the mobility of capital and, in turn, the equalization of rates of profit, securing for the natural resource sector both profit and rent surplus to the value which that sector produces.

Now, for understanding the relevance of the price-value distinction for studying the oil industry, what is still left to consider is what Moseley calls the “monetary nature of capital” (2016), i.e. why capital finds its necessary expression in the medium of money. This, to be clear, is not to say that money is capital’s only form of expression, but it does mean that the medium of money plays a central and indispensable role within the capital circuit mentioned in Part I—both its initial advance (M) and its end result (M’) must be realized in terms of money. Does the monetary nature of capital have any structural bearing on the oil trade? Prabhat Patnaik (2008) suggests yes. In Part III, we will work through his argument that the ascension of the US dollar to quasi-world money has as its most fundamental condition of possibility the control over oil.

References

Bina, Cyrus. 1985. The Economics of the Oil Crisis: Theories of Oil Crisis, Oil Rent, and Internationalization of Capital in the Oil Industry. London, Merlin Press.

Bina, Cyrus. 2013. A Prelude to the Foundation of Political Economy: Oil, War, and Global Polity. New York, Palgrave Macmillan.

Bryan, Dick. 1990. “‘Natural and ‘improved’ land in Marx’s theory of rent.” Land Economics 66(2), pp. 176-181. https://doi.org/10.2307/3146367

Fine, Ben, 1979. “On Marx’s theory of agricultural rent.” Economy and Society 8 (3), pp. 241-278.

Labban, Mazen. 2008. Space, Oil and Capital. London and New York, Routledge.

Marx, Karl, 1978 (1885). Capital, Volume II: The Process of Circulation of Capital. Translated by David Fernbach. London, Penguin.

Marx, Karl. 1981 (1894). Capital, Volume III: The Process of Capitalist Production as a Whole. Translated by David Fernbach. London, Penguin..

Moseley, Fred. 2016. Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the ‘Transformation Problem’. Leiden, Brill.

Ricardo, David. 1911. The Principles of Political Economy and Taxation. London, J.M. Dent & Sons.

Ricci, Andrea. 2021. Value and Unequal Exchange in International Trade: The Geography of Global Capitalist Exploitation. Abingdon, Routledge.

Shaikh, Anwar. 2015. Capitalism: Competition, Conflict, Crises. Oxford, Oxford University Press.

Sweezy, Paul. 1942. The Theory of Capitalist Development: Principles of Marxian Political Economy. London, Dennis Dobson Limited.

Part I: Notes on the Transformation Problem

Observations that commodities can sell at prices (i.e. exchange-ratios) that do not reflect their values (i.e. socially necessary labor-time) has motivated a rich debate within Marxism, and it has often been suggested that this discrepancy is not an exception to but the normal condition of capitalist exchange (Ricci, 2021, p. 34). In this post, I offer some notes on the significance of this price-value distinction for Marx’s theory of value, and in particular its relation to the so-called “transformation problem.”

First, it is useful to sketch the theory of prices formulated by the classical economists, which Marx moves against in the development of his own theory of value. Of course, long before Marx, it had been widely recognized that market prices fluctuated in accordance with changes to supply and demand. Early economists had posited that these movements oscillated around a center of gravity, what they called the “natural price” of a given commodity. Natural prices were themselves thought to be the consequence of the “Law of Equal Profitability,” which suggests that capital regulates individual profitability by flowing into sectors with high rates of profit, increasing their supply until market prices sink and, conversely, exiting sectors with low rates of profit until the scarcity of output increases prices (Shaikh, 1977, pp. 116-117). These market-wide movements determine the average profit rate which, when combined with the costs of production inputs specific to a given commodity, determines and differentiates its natural price, which because of this derivation is also known as its “price of production.”

Famously, David Ricardo suggested that variations in natural prices were themselves ultimately determined by the specific quantities of labor required to produce different commodities (1911, p. 30). Marx raises one of his many criticisms of Ricardo precisely on this point. In Theories of Surplus-Value (1968 [1863], pp. 189-202), he reveals Ricardo’s error: labor costs are not determined by quantities of labor at all but rather by wages. In making this distinction, Marx stressed that the magnitude of labor embodied in a commodity is not simply a physical input but already socially mediated, namely, by the value-form. Further, as Anwar Shaikh notes (1977, p. 117), Marx relates this revelation to another of Ricardo’s errors: his failure to disclose the origin of profit, which he regarded as a self-evident factor of production. By contrast, Marx spends much of Volume I of Capital trying to show where profit comes from, bearing in mind this distinction between the concrete labor contributed to the production of the commodity and the wage received for this contribution. As he suggests, at least within generalized commodity production mediated through wage-labor, profits can only arise from surplus value—that is, it follows from the surplus labor produced by workers for which they do not receive compensation in the form of the wage.

In the third volume of Capital, Marx makes many significant adjustments to his argument, removing a lot of the assumptions (e.g., of perfect competition) he maintains in Volume I. Notably, he also returns to the “prices of production” concept in order to again insist that the latter are derived not from the physical quantities of embodied labor but by the magnitudes of value of the production inputs—i.e., the magnitudes of the money capital advanced for purchase of the means of production (constant capital) and labor-power (variable capital). This so-called “transformation” of the magnitudes of labor values into magnitudes of the prices of production explored in Volume III has proven to be one of the prickliest points of contention in Marx’s theory of value. First pointed out by J.V. Komorzynsky in 1897 and further popularized by Ladislaus Bortkiewicz (1907), one key part of the argument raised against Marx is that this “transformation” involves an erroneous or at least unjustifiable assumption that the variable capital and constant capital employed in the production process are purchased at their values (i.e. at a price equivalent to the socially necessary labor-time necessary for their production).1

The initial solution was thus: given that the inputs of (capitalist) production are themselves commodities (and thus already mediated by prices), the calculation of the prices of production (and, hence, the general rate of profit) must itself start with the magnitudes of the prices of the inputs, not that of their values (see also Kliman, 2011). Introducing the work of Bortkiewicz to the Anglophone world, Paul Sweezy (1942) provides the classic discussion of this “alternative solution” to the “transformation problem.” The “Bortkiewicz-Sweezy model,” as Fred Moseley has termed it (2021), is comprised of a dualistic set of input-out matrices deployed for calculating, respectively, the magnitudes of value and price across three “departments” of social production (i.e. means of production, wage goods, and luxury goods). The discrepancy between them is resolved through the implementation of “transformation coefficients” which are applied to both the inputs and outputs of production in “value terms” to yield the correct price-magnitudes.

But the Bortkiewicz-Sweezy model has by no means settled the debate surrounding the transformation problem. For one, the rather convoluted process involved in converting magnitudes of value into prices has led many to question whether quantifying value at all is an “unnecessary and sterile muddle” (Samuelson, 1971, p. 399).2 Indeed, if the whole point is to arrive at prices of production, as seems to be suggested by Marx’s return to the concept in Volume 3, why bother calculating value in the first place? Relatedly, it has been cast as a special point of embarrassment for orthodox Marxism that capitalists are not themselves “aware of, or disposed towards, any embodied labour calculation” (Hodgson, 1974, p. 56). Capitalists do not think of capital outlays, wages, productivity, or profitability in “value terms;” they think exclusively in, and hence act according to and are motivated solely by, prices.

Against the charge of the “redundancy” of Marx’s theory of value, Sweezy had made clear that proceeding solely on the basis of price calculations—and, moreover, solely from the perspective of capital—loses sight of the essence of Marx’s critique of political economy: showing that profit is not derived from ‘thrift’, nor does it spontaneously emerge in the exchange process, but rather it is a result of the production of surplus value, expressed as a “deduction from the product of total social labor” which is left unaccounted for in the monetary expression of value (1942, p. 129). If one only thinks in terms of price, in other words, the origin of profit in surplus value is masked behind the merely formal relationship between the total capital outlay and the return on investment. It is thus only by tracking the production of value by (abstract) labor that one can follow Marx to his conclusion that capitalism is an inherently exploitative system. As I.I. Rubin had surmised: “The specific character of Marx’s labor theory of value lies in the fact that Marx does not base his theory on the properties of value, i.e., on the acts of equalization and evaluation of things, but on the properties of labor in the commodity economy, i.e., on the analysis of the working structure and production relations of labor” (2008, p. 81; see also Marx, 1976 [1867], pp. 173-174).3

Within Marxist scholarship, the “alternative solution” introduced by Bortkiewicz and Sweezy has also been challenged as itself a capitulation to the non-Marxist demand that the economy functions according to a “general equilibrium” (Freeman, 1995; see also Shaikh, 1977; Fine and Saad-Filho, 2010). Moreover, Fred Moseley (2016) (drawing on the “temporal single-system interpretation” [TSSI], see Kliman and McGlone, 1988, 1999) argues that the entire idea of a “transformation problem” stems from a fundamental misunderstanding of Marx’s critique, which only knows one system: the actual and temporally sequential process of capital accumulation. For Moseley, attempts to distinguish the initial value of inputs to production from production prices, in order to derive both simultaneously through input-output matrices, completely disregards Marx’s insistence that capital accumulation can only be understood as a circuit (M-C-M’), where the initial capital (M) is given before the rate of profit, and hence the prices of production, can be determined.4

Further, in the “sequential determination” of production prices, the constant capital and variable capital expended at the beginning (M) “has already been represented objectively and socially as this actual quantity of money capital advanced” (Moseley, 2016, p. 30). Recall the above point of critique Marx makes against Ricardo: capital does not pay for units of labor; it pays for wages. The value of the inputs to production are never understood by Marx to be “ideal” units of labor-time which must be later corrected through substitution with actual prices; they are the “same actual quantities of money capital” expended on constant capital and variable capital which had been given in Volume I.5 The quantity of money capital advanced (M), in other words, is never assumed to be proportional to the labor-time necessary to produce it; the former are simply the actual, given magnitudes of the “money variable capital” and “money constant capital” with which the production process begins.6

What is critical to bear in mind here is that, throughout Capital, the center of analysis is thus the new value which emerges only within the production process (Freeman, 1995, p. 14).7 The derivation of the magnitude of surplus value is necessary to calculate the production prices, but this does not elicit any retroactive “transformation” of the inputs. Rather, it simply denotes that the employment of labor-power is subsequent to the capital advanced (M), and thus employed labor-power must first reproduce the value necessary to remunerate the capitalist for M in order to then go on to produce gratis the surplus value which determines the rate of profit and, in turn, the prices of production.

It is worth pausing to note that bourgeois economics had recognized its own inability to derive profit from capital outlays by the 1950s, as one aspect of the broader “Cambridge capital controversy.” The initial concern here was that the quantity of capital expressed by the neoclassical production function was meaningless, given the heterogeneity of the units of measurement for the value of capital goods (e.g. cost price, purchasing power, productivity; see Robinson, 1953, pp. 83-84). Further, within any of these measures it is also the case that the value of capital changes over time (e.g. through depreciation). Without any stability in the unit of measure for capital inputs, profitability cannot be reliably measured. As Geoff Hodgson has stressed (1974), this controversy rebukes not only the neoclassical model of prices but also the tendency toward a naïve substantialism among many Marxian economists, who often assume that the value-magnitude of capital is composed of static, ‘dead’ labor.

What, in other words, the capital controversy clarifies, specifically for Marxists, is that the magnitude of value does not abide by any law of “conservation” (cf. Mirowski, 1989), as it can only ever be determined in relation to present total social output—to note, this is precisely what Marx had meant by “socially necessary”—which is itself continuously in flux:

[N]o measure of the amount of capital, be it ‘value’, price or whatever, is independent of the rate of profit and the distribution of the product between social classes. As these alter, so too will the book value of the bourgeois world. The consequence of heterogeneity is that there is no independent measure of capitalist wealth. (Hodgson, 1974, pp. 41-42)8

Thus, not only price but value, too, can only meaningfully be understood in “processual” terms, as Andrea Ricci has recently argued: “The substance of value [qua abstract labor] is potentiality in becoming rather than actuality already become” (2021, p. 8). I would add further: the supreme difficulty in Marx’s theory of value is precisely how to conceptualize abstract labor as a relational substance—which is to say how to not conceptualize value is merely relational but as self-consistent across its manifold determinations, albeit dynamically rather than conservatively so. Measurements of value, i.e. price, may very well not be independent of what they value, as Hodgson suggests, but the point is they still measure something. This ‘something’ is what Marx sought to uncover—and to do so without any of the arbitrary stipulations about market movements (e.g. Say’s law) made by political economists before him (Freeman, 1995).

To conclude Part I: what has been argued is that Marx understood the relationship between price and value not as that between ‘real’ and ‘ideal’ magnitudes of capital—in a manner analogous to the classical political economists before him, i.e. market vs. natural prices—rather, he argued that prices are composed of values, even if it is, at the same time, through price that value receives its necessary form of expression. Further, the discrepancy between magnitudes of price (exchange-ratios) and magnitudes of value (socially necessary labor-time) is a result of the fact that the production of value is decoupled from, and moves independent to, its realization in the market. The mystery left to unravel is is, in turn, not only how it is that value comes to be produced by labor and realized by capital but also how the substance of value comes to regulate, through its discrepancy with the form of price, its own production and realization. As will be demonstrated in Part II, unraveling this mystery has relevance not only for understanding the transfer of value between industries (i.e., of varying organic compositions of capital) but also within industries, and in particular in my case the oil sector.

References

Bichler, Shimshon, Nitzan, Jonathan. 2004. “Dominant capital and the new wars.” Journal of World-Systems Research 10(2), pp. 255-327

Bortkiewicz, L. 1949 (1907). “On the correction of Marx’s fundamental theoretical construction in the third volume of Capital.” In Eugen von Böhm-Bawerk. 1949 [1896]. Karl Marx and the Close of his System. New York, August M. Kelley, pp. 199-222.

Fine, Ben, Saad-Filho, Alfredo. 2010. Marx’s Capital (Fifth Edition). New York, Palgrave Macmillan.

Freeman, Alan. 1995. “The psychopathology of Walrasian Marxism.” In Alan Freeman and Guglielmo Carchedi (eds.). Marx and Non-Equilibrium Economics. Aldershot, Edward Elgar, pp. 1-29.

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While the Appalachian fracking boom has already had severe health, environmental, and climatological consequences, its own infrastructural and geographical constraints have for a long time prevented things from getting worse. Already the largest gas-producing basin in the US, the Appalachian Basin could be producing more, but its output has been throttled by takeaway constraints. In brief, there are limited cost-effective ways to get Appalachian natural gas to where it is demanded, e.g. in Northeastern energy markets, coastal refineries, or overseas. This is despite a number of major Appalachian pipeline expansion projects developed during the 2010s to address this bottleneck.

As ORVI has pointed out, one reason for the relative underinvestment in takeaway capacity in Appalachia is that gas produced there must compete with other basins closer to these major sources of demand. In particular, the massive Permian and Haynesville plays are already well-connected to refineries in Texas and Louisiana. Because of their proximity to the Gulf Coast, they are also closer to most of the country’s major LNG terminals. Finally, the Permian is also an ‘associated gas’ play, meaning the gas is produced there alongside oil, and for this reason its supply is insensitive to natural gas prices. By contrast, Appalachian producers are almost entirely gas-only producers and thus production decisions are more sensitive to gas price swings.

In either case, a new ‘demand surge’ is threatening to overcome these infrastructural constraints to making the Appalachian Basin more productive. On the one hand, massive new pipeline investments are now in development as a result of growing demand in Northeastern energy markets, including the expansion of several new pipeline projects. Increasing takeaway capacity in the Appalachian Basin has been a particular sticking point for the second Trump administration, in the name of ‘Ending the Green New Scam’ and ‘Unleashing American Energy’. In addition to lifting Biden’s temporary pause on LNG export construction and successively clawing back public renewables investments appropriated by the BIL and IRA, Trump’s Day 1 executive orders mandated that federal permits for pipelines, among other ‘critical energy infrastructure’, be ‘simplified’, ‘expedited’ and ‘streamlined’. The Trump administration has also of course been proactive in weaponizing energy development to undermine its political opponents. Back in April, for instance, Trump’s Secretary of the Interior Doug Burgum ordered a halt on Equinor’s construction of a wind farm off the coast of Long Island. Then, in May, the US Bureau of Ocean Energy Management abruptly lifted the order, with the Trump administration alleging its reversal was part of a deal with NY Governor Kathy Hochul to greenlight construction of the Constitution Pipeline, scrapped in 2020, and the Northeast Supply Enhancement project, which will deliver natural gas to New York and New Jersey markets.

On the other hand, regional gas producers are also attempting to stimulate in-basin demand by persuading AI companies to co-locate new data center projects with gas plants in the region. Back in July, for instance, EQT announced a deal with Homer City Redevelopment (HCR) to supply gas to a massive 4.4 GW power plant in Homer City, PA. Converted from a decommissioned coal plant, the plant will be dedicated to powering ‘The Homer City Energy Campus’, spanning 3,200 acres. That same month, EQT also announced a deal with another data center project under development by the Frontier Group of Companies (FGC) in Shippingport, PA, which likewise plans to retrofit an old coal plant with gas turbines (pictured above). Together, these two deals alone represent a commitment of 1.4 Bcf/d new gas supply, or about 4% of current daily gas production in the Appalachian Basin.

Of course, any new gas demand ought to be alarming for anyone concerned about the catastrophic consequences of ongoing fossil fuel consumption. This is particularly true for new in-basin demand, as many of the typical political pressure points in fossil fuel infrastructure—namely, pipeline development—will likely be mitigated with this shift. This is because new pipelines feeding into data centers are unlikely to cross state lines or encroach tribal lands, where some modicum of proceduralism grants the legal possibility of protest. Additionally, as AI infrastructure buildout occupies a ballooning portion of the country’s economic growth, whatever meek attempts existed in the Biden era to introduce a ‘green industrial policy’ are rapidly deteriorating. Trump has gutted the IRA, and all the major AI developers, once pivotal bulk purchasers of clean energy, have ‘quietly scrubbed’ net-zero emissions pledges from their corporate websites and shareholders reports. As cheerily conveyed by a regional gas conference attendee shortly after Microsoft’s announcement of a 20-year power purchase agreement to restart nuclear facilities at Three Mile Island, ‘they would burn trash if they had to’.

But in the effort to resist the urge to succumb to the bleakness of our situation, I want to try to situate the recent frenzy about AI-driven in-basin demand within the broader context of the fracking boom in Appalachia. For one, it is important to stress that Appalachian developers and state governments have been struggling to regionalize the natural gas commodity chain for a long time, and it is by no means guaranteed that AI will allow them to do so. The AI push is only the most recent in a series of attempts that have been going on since the gas glut of the mid-2010s. Past failures, including an Appalachian ‘Petrochemical Renaissance’ and the soon-to-collapse Appalachian Regional Clean Hydrogen Hub (ARCH2) project, speak to an important countertendency: the viability of an American onshore oil and gas industry, takeaway constraints notwithstanding, has become increasingly tied to its integration within global production networks. This includes not only the LNG boom but also the robust US crude oil and natural gas liquid (NGL) export markets. An army of onshore, gas-powered AI data centers could reverse this trend, no doubt, but the point is they will now have to contend with competing, export-oriented factions of fossil capital.

This isn’t exactly good news, of course. Among other things, the rise of the US as a net energy exporter allows national carbon accounting schemes to obscure the ongoing dependency of the US economy on carbon emissions. But nevertheless it is important for activists to be privy to the political stakes of these competing infrastructural geographies of onshore oil and gas development. It’s with this in mind that I review the recent history of the give-and-take dynamics of Appalachian gas—in order to understand better the underlying economic logic of the regional gas industry and, in turn, find ways to anticipate the conflicts looming on the horizon. Again it is critical to identify and isolate the interests of distinct factions of fossil capital here, which do not agree on how and where to develop AI data centers, much less whether the US gas commodity chain can or should be regionalized. Identification of these nascent intra-capital conflicts can, hopefully, bring to light new fractures in the political-economic terrain underpinning onshore oil and gas development.

Keeping It within the Region I: Petrochemical Renaissance

Since the beginning of the fracking boom, a ‘resource curse’ has been cast over Appalachia. Thanks to the combination of improvements in hydraulic fracturing and horizontal drilling, the abundant reserves of natural gas trapped in the Marcellus and Utica shales are now economically retrievable, but its ongoing extraction has brought little benefit to those living in the region. While the GDP of fracking counties has skyrocketed, other important indicators of economic health, such as labor income and total employment, have lagged behind state- and nationwide metrics. As a whole, Appalachia in fact continues to experience population loss, in spite of the jobs created by the increase of gas industry activity.

Of course, the ‘resource curse’ is not owed to the gas itself but a result of the latter’s social characteristics as an extractable commodity. Appalachia has long been an internal colony of the US, a region of abundant natural resources recovered at the non-tallied expense of immense, localized human and environmental sacrifice. Extractive capitalist investments in the local resource economy, of course, have neither any reason nor obligation to stay in circulation there. Whether we are talking about timber, coal, or gas, primary commodities are only valuable to capital if they can be sold, and their demand (e.g. among industrial capitalists) pools in urban population centers far away from where they are extracted. Redistributive mechanisms can be imposed by the state to try to ameliorate this (although here it is notable that such attempts have rarely improved the health or economic outcomes in Appalachia), but the unevenness of development remains an essential feature of capitalism.

This said, one thing I want to stress is that regional small capitals, e.g. independent gas producers, do not necessarily desire to be the foremen of internal colonies. Although this point can sometimes be ambivalent, and of course they would take demand anywhere over demand nowhere, local producers frequently and explicitly advocate to see more value generated across the natural gas commodity chain retained regionally. There are affective reasons for this (attachment to Appalachian cultural identity), political-ideological reasons (jingoism, rural chauvinism), and economic reasons (a need to find fresh demand to avoid overproduction crises). To be sure, none of this necessarily translates into economic benefits for labor. It simply means that, for a variety of reasons, many regional producers tend to seek the recirculation of capital in spatially adjacent industries (and hence it typically also means labor’s intensified exploitation).

As a result, regional industry advocates have repeatedly tried to remedy the ‘curse’ through a spatially reconfiguration of the natural gas commodity chain. The first attempt to do so followed the energy glut of the mid-2010s, when producers began to speculate on the possibility of a “Petrochemical Renaissance” to turn the Ohio River Valley into a major developer of plastics and other petrochemical products. This would allow fossil capital to take advantage of one of the features of Appalachian natural gas that had thus far been greatly devalued. A substantial portion of Appalachian gas, particularly on the border of Pennsylvania and the West Virginian panhandle, is ‘wet’, meaning it is found underground comingling with a variety of ‘natural gas liquids’, or NGLs, such as propane and ethane. While these NGLs are important feedstocks for the petrochemical industry, the issue in Appalachia had been that there are few NGL customers in the region, so, to commodify these NGLs, they had to be transported to existing refineries. But because the amount of NGLs co-produced with natural gas in Appalachia far exceeds existing pipeline capacity, a lot of it was simply ‘rejected’, that is, it remained in the raw natural gas stream instead of being extracted.

The objective of the “Petrochemical Renaissance” was thus both to reduce wasting this valuable resource and to keep more natural gas processing in the region, envisioned as a pathway to bolster local economic development. Pennsylvania had been the most activist among the Appalachian states in attempting to cultivate this petrochemical buildout: in 2012, PA’s state legislature passed a $1.65 billion tax break for Shell, which in exchange agreed to build an ethane cracker plant in Beaver County, just north of Pittsburgh. And, as the plant began construction in 2015, regional excitement grew: a commonly referenced 2017 American Chemistry Council report praised the “potential economic impacts” of installing four more of these cracker plants across the Appalachian region, claiming it could generate 100,000 jobs and $2.9 billion in federal, state, and local tax revenue annually.

In the end, no one followed Shell’s lead. The supposed comparative advantage of co-locating NGL production and plastics manufacturing in Appalachia, as promoted by a 2017 IHS Markit report, was vastly overstated. Economies of scale, enduring industrial relationships, and legacy infrastructures of the Gulf Coast remained economically preferable to starting a new petrochemical industrial complex from the ground-up in Appalachia. Most importantly, the physical geography did not change. Being on the coast allows for a much more seamless integration with not only existing infrastructure but emerging overseas NGL markets, versus being takeaway-constrained 300 miles inland. On that point, it is also notable that regional excitement about a potential Appalachian petrochemical buildout came at a stunningly bad time in the global plastics industry: ethylene markets in the mid- to late 2010s were weak, and they had become even less profitable as a result of the abundance of low-cost naphtha flooding in from Russia and OPEC (naphtha is a byproduct of petroleum production that overlaps with ethane in terms of its use as a petrochemical feedstock).

While the dreams of a “Petrochemical Renaissance” in Appalachia were crushed, the efforts regional capital took in commodifying Appalachian NGLs nevertheless had three lasting impacts: 1) the development of huge in-basin gas processing facilities to strip NGLs from the gas stream (e.g., the MarkWest complex in Houston, PA); 2) the concomitant expansion of NGL pipeline infrastructure to send it to markets elsewhere (e.g., ATEX, TEPPCO, Mariner East, Mariner West); and 3) the expansion of some petrochemical infrastructure on the East Coast, most importantly the Marcus Hook complex in southeastern PA. Altogether, the commodification of Appalachian NGLs has indeed expanded dramatically since 2015, but those commodity chains have not stayed in-basin. With the exception of the Shell (which, uncoincidentally, is now looking to sell its Beaver County plant as its 10-year tax credit scheme draws to an end), the majority of this NGL product is sent to the coasts, and thus extractive capitalism continues to dominate in Appalachia.

Keeping It within the Region II: ‘Clean’ Hydrogen

Another significant attempt to stimulate in-basin gas demand emerged as part of the Biden administration’s “Regional Clean Hydrogen Hubs” (H2Hubs) Program. Incorporated into Biden’s climate agenda, the H2Hubs Program was intended to help mitigate hard-to-abate emissions sources, such as heavy transport, fertilizer manufacturing, and steel and cement production. In brief, hydrocarbons continue to serve an essential purpose for many industrial activities that are difficult to electrify and hence unaffected by solar and wind power buildout. Numerous gaps remain in a renewables-based socioecological fix, such that, if the US economy is to reach ‘net zero’ emissions, finding substitutes for these fossil fuel end uses is essential. For reasons of its heat content, storability, and chemical-reactive qualities, hydrogen molecules are often believed to be able to serve as the gap-filler for most of these remaining emissions sources.

The H2Hubs Program thus sought to kickstart a nationwide ‘hydrogen economy’ via public-private coordination of regional hydrogen hubs distributed across the country. Each hub was designed to leverage existing local energy and resource economies to alleviate infrastructural frictions and reduce barriers to entry. For instance, the Pacific Northwest Hydrogen Hub (PNWH2) intended to develop electrolysis technology on the basis of its abundant hydropower infrastructure to help reduce costs of water-based hydrogen production. In the Appalachian Regional Clean Hydrogen Hub (ARCH2), this strategy analogously meant taking advantage of fracked natural gas to produce hydrogen through another process, known as steam methane reforming, which breaks down methane molecules into their constituent elements, carbon and hydrogen.

One thing to mention is that the vast majority of hydrogen produced today is derived from fossil fuels (globally, ~99%), and that this process is very carbon-intensive. Hence, to meet the ostensible goal of reducing emissions, ARCH2 project managers had to also pledge that the adoption of carbon capture and storage technology would be central to the Hub’s development, thereby rebranding ‘gray’ hydrogen (produced via steam reforming) to ‘blue’ hydrogen (produced via steam reforming, but ‘clean’ inasmuch as it captures some degree of associated emissions). What counts as ‘clean’ hydrogen had been the topic of much debate during the Biden administration, but clean hydrogen standards were eventually finalized by the DOE to mean 4kg/CO2 per 1 kg/H2 produced for the purpose of eligibility for the 45V Clean Hydrogen Production Tax Credit. This entails about a 60% reduction in emissions versus ‘gray’ hydrogen production.

Now is not the time to get into the dubiousness of the cleanliness of ‘blue hydrogen’. I will simply note the now-infamous article authored by Howarth and Jacobson (2021) and point out that the energy penalty for adopting CCS is so immense that the necessary increase in energy throughput significantly counteracts emissions ostensibly captured by the technology when installed on grids that are primarily powered by fossil fuels (such as in PA). And this is to say nothing of the increased energy and resource requirements for switching from fossil fuels to hydrogen, which is harder to handle and much more energy-intensive to transport.

But rather than getting into that, here I just want to characterize ARCH2 in the context of this recurrent problem of creating new in-basin demand, which re-emerged after the demise of the Petrochemical Renaissance plan. Thus, both ARCH2 and the Petrochemical Renaissance should be thought of as ways for Appalachian gas producers to not just circumvent the large expenses and coordination associated with alleviating takeaway constraints but also use the latter as a catalyst for the regionalization of the natural gas commodity chain. Here, the increase in absolute energy throughput necessary for both CCS and hydrogen adoption is of course not at all a deterrent, as it simply means more local demand for the gas already being extracted in the region. Moreover, this newfound demand is particularly desirable in the context of the plateau of electricity demand that the US had experienced in the 2010s and had throttled domestic natural gas demand. But, again, rapid buildout of crude oil, LNG, and NGL export markets was a direct response to the latter’s saturation, and through which the international faction of fossil capital has since established an increasingly large interest in onshore US oil and gas development. Hence, there is a nascent intra-capitalist antagonism between the international and regional factions of fossil capital concerning whereto source new gas demand.

Although ARCH2 remains active (it is currently in the planning phase), its future does not look promising. It is very likely that any regional blue hydrogen producers that do emerge will find themselves folding into international or at least national flows of fossil capital in a similar way as had occurred after the failure of the Petrochemical Renaissance, which realized dependencies on existing infrastructural geographies in order to find the lowest-cost, least resistive paths for valorizing natural gas. That said, the Trump administration is now playing a decisive albeit incoherent role in simply seeing out ARCH2’s total demise. Early this year, his DOE was rumored to be looking to axe the H2Hub Program entirely, removing any federal stimulus for regional hydrogen economies and thus undermining the project to create new natural gas demand within Appalachia. Meanwhile, tariff war notwithstanding, the administration’s relaxing of federal permit review and support of pipeline expansion projects only further disincentivize regionalization of the natural gas commodity chain, intensifying extractivism within Appalachia in service of the broader US economy.

Keeping It within the Region III: Data Centers

This brings us back to recent plans to bring data centers into Appalachia. First, it is worth stressing that, unlike prior attempts to keep it within the region, this most recent effort is motivated not by any scarcity of demand but primarily because of restrictions in existing energy supply. That is to say, because data center development are expected to buck the 15+ yearslong trend of stagnant rates of energy consumption across the country, AI companies are looking to secure basically any stable energy source they can find. There is in turn a scalar shift taking place in this third attempt to regionalize the gas commodity chain. Appalachian producers are no longer attempting to stimulate more gas demand through relatively independent economic development; instead, they are trying to channel some portion of this sweeping increase in energy throughput that data center development portends at the national scale. From the perspective of Appalachian gas industry, it is no longer a question of creating a demand wave but of finding some way to siphon a portion of one that otherwise remains beyond their purview.

With this in mind, it is certainly also advantageous to regional producers that the anticipated commodity chain to be regionalized is much simpler and more conventional than in preceding attempts. It does not require any broad coordination with petrochemical or hydrogen industries—themselves populated with different players with their own divergent interests—or the build out of complex new infrastructures—CCS, hydrogen pipelines—but simply building more of what the regional industry already builds: well pads, pipelines, and gas-fired power plants. Indeed, the pretense of local economic development in the Petrochemical Renaissance and Hydrogen Hub projects has become completely farcical in the context of data center expansion, which promises minimal permanent jobs, has very little ‘employment multiplier’ potential, and, as a result of the immense specialization required to produce its primary asset, AI chips, has no prospect of spurring the growth of adjacent industries in the region.

In effect, the opportunity that any given AI data center project presents to gas producers is a new, city-sized wellspring of gas demand stripped of practically all the social, political, and infrastructural interdependencies that would otherwise exist concomitant with such demand. As mentioned at the beginning, this is what makes the prospect for data center development in Frackland so foreboding—it seems to me that the kinds of infrastructural attachments, which have been so critical for recognizing shared conditions of struggle across otherwise disparate communities, will be much more difficult to cultivate in geographies of co-located, fragmented, yet extremely high-throughput energy production and consumption.

But again, this transition is not yet inevitable, and, should in-basin demand begin to affect regional gas prices, we are likely to see new intra-capitalist conflicts emerge between the LNG export industry and more regional interests in natural gas. What can Appalachians do to adjust to these nascent conflicts in the name of ending the extraction of fossil fuels and the divestment of their communities? For one, we must be mindful of getting stuck in the middle of two mutually reinforcing poles here: in isolation, blocking Appalachian data center development will embolden new pipeline development and LNG exports, just as much as any future federal-level pause on LNG terminal buildout will encourage regional producers to find new local sources of demand. Avoiding being a pawn of either side means confronting the problem at its source: ongoing gas development in Appalachia.

The challenge of course is that this becomes considerably more difficult in the potential absence of the kinds of infrastructural attachments that had once connected disparate communities, particularly via pipelines. Thus, secondly, it is critical to recognize that the electricity grid is now the key political terrain in which decisions about co-locating data centers and gas plants can be contested (and are already being carried out). With this in mind, it is imperative to find ways to strategize against future grid fragmentation, not only because of the risks that fragmentation poses to ratepayers but also because the grid now serves as the most critical infrastructure through which shared concerns materialize over both AI data centers and ongoing gas development in Appalachia.

(This was originally published on here a few years ago, but I took it down for one reason or another. Anyway, it is now back up.)

Over the course of a little under two years, the price of WTI front month contracts ranged from -$37.63/bbl to $123.70/bbl (respectively, the market close prices for April 20, 2020, and March 8, 2022). It seems to me obvious that this situation exposes the limits of the explanatory power of ‘supply and demand’. And yet, reviewing financial press of the time, one can see the most delusional mental contortions exercised in efforts to ham fist these extreme bounds into a conventional (or rather, imaginary) analysis of ‘market fundamentals’.

With respect to the lower bound, the Financial Times cited “analysts” who believed “lack of available storage capacity” at Cushing, Oklahoma (the meeting point for physical delivery of WTI-benchmarked crude oil) was the primary culprit for the historic dip of WTI front months into negative prices. Reportedly, this was the result of the convergence of two trends. First came the steep drop in demand as the COVID-19 pandemic imposed a slowdown in economic activity across the world. This, in turn, is supposed to have applied downward pressure on crude oil prices throughout March and most of April.

The second trend was that more and more commercial oil traders were electing to keep their inventory stored at Cushing: rather than sell crude to refineries in the near-term at rapidly falling prices, traders elected to hold onto the oil, taking on the additional carrying cost in order to sell contracts for long-dated delivery which, at the time, were settling at much higher prices. These two trends reinforced one another: news reports of storage capacity at Cushing nearing its limit pushed the front month price down even further, and mounting panic finally erupted in a fire sale on April 20. On that day—importantly, as I will note below, one day prior to expiration of the May contract—any remaining long traders with open positions but without any means to exercise their contracts and take physical delivery were forced to realize huge losses in order to take those obligations off their books.

As for the higher price bound, much ado had been made in 2020-2022 of the so-called “commodities supercycle.” Here, it is predicted a structural imbalance in increasing demand for a host of primary commodities is set to overwhelm supply, pushing prices upward across the “commodity complex.” This imbalance is supposed to be especially acute in the oil industry, the derivative products of which serve as inputs for nearly every other industrial sector. Jeff Currie, head of Commodities Research at Goldman Sachs, has been sounding the alarm about this since early 2021. Of course, the 2021-2022 oil price spike helped buttress this narrative immensely, with the added tension of Russia, a major oil exporter, embroiled in war with Ukraine precisely as the global economy sees recovery in demand following the shock of the pandemic. This led many oil market analysts in the year following to become heavily bullish on oil prices remaining above $100/bbl in the medium- to long-term, insofar as sustained or rising demand, chronic North American “underinvestment,” and regional “price wars” remain the order of the day in the global oil trade.

These two explanations of crude oil price movement for the lower and upper bound, respectively, seem to me unsatisfying. For one, it makes little sense to say that the anticipation of a 30% demand drop at the onset of the pandemic could send WTI crude to crash into negative prices, even when considering the carrying cost and potential for bottleneck at Cushing. Among other things, arbitrageurs should have been able to buy the front month contracts, take delivery, and hold the oil offsite at quite lucrative rates of return with minimal risk well before the -$38/bbl bottom. Why didn’t this happen?

Secondly, again, recent economic slowdown combined with rising capital costs, thanks to hikes in interest rates at the Fed, had (at the very least) halted any supposed impact of a “commodities supercycle” on oil prices. Indeed, despite all of the handwringing about underinvestment in North American upstream exploration and production, WTI crude prices have since fallen as low as 35% off their 2022 peak.

How does one explain such extreme price movements in such a short amount of time? Are we really to believe that these prices respect rational and perfectly-informed expectations about the market, or even more absurdly that supply and demand have actually fluctuated to an extent that would justify such volatility?

The conditions of possibility of negative oil prices

So, let’s first turn to the infamous May 2020 WTI contracts. It is important to clarify three things about futures contracts immediately. First, the day of expiry for a monthly WTI future is set to the third business day before the 25th calendar day of the month preceding the delivery month—unless the 25th calendar day is not a business day; if that is the case, the date of expiry is 4 business days prior to that date. A mouthful. What it means is that, for the infamous May 2020 futures, this date of expiry was April 21 (a Tuesday, the 25th being a Saturday). Either way, this buffer is specified so that commercial traders can arrange pipeline scheduling for physical delivery for the next month. Typically, non-commercial traders (i.e. those who are merely trading paper and thus have no intention of sending or receiving physical oil) avoid holding contracts into the date of expiry because on that day they will be obliged to take on physical delivery. Most will have long since "rolled over" their positions into the next month's contract.1

A second point of clarification is that by “oil futures price” I am referring to the price at which the future delivery of oil is purchased or sold. In the press, the most commonly cited price for "WTI crude oil" is the market price for the front month contract, i.e. the monthly contract with the nearest date to expiry. This is different than the “spot” or “cash” price of the WTI, which typically refers to the benchmark price of oil marked for “immediate” delivery (in reality, the delivery is not in fact "immediate" but set within a scheduling window of several up to as many as 60 days). What is important to know is that spot markets have very low trading volumes relative to the total amount of oil traded on any given day, with over 90% of physical oil being traded through medium- and long-term forward and futures contracts.2 This means the price signal of the spot market is not particularly reliable. The bulk of the oil trade being arranged through long-term contracts also means that forwardness is fundamental feature of the oil trade, and hence that the temporal separation of purchase, sale, and delivery is mediated primarily by the prices of the oil futures markets.

Third, and related to the second point, there are market prices of course not just for the front month but also for each consecutive month's contract exchanged on NYMEX. This trading calendar extends 11 years into the future. Even though contracts with expiries in the nearest few months comprise the vast majority of trading volume on the exchange, these illiquid long-dated futures prices are often mistaken as if they give meaningful information about what spot prices in the future will be. Indeed, and despite the fact that futures prices have been proven to be worse predictors of future spot prices than no-change forecasts, traders routinely assume as much about futures prices. Given the central importance of expectations of future price movement, oil traders will thus incorporate this pseudo-information into pricing models which, in turn, actively shape their trading behaviors in the present.

Ultimately, it is the forwardness inherent to the oil trade and the mediation of this forwardness through futures markets which explains why commercial traders were incentivized to hoard oil at Cushing. To explain, it will help to further elaborate the conventional narrative sketched out above: The destruction in demand for oil at the onset of the pandemic, combined with expectations about its future rebound, were taken to be ‘priced in’ to the futures market through what is known as “contango”, where near-dated contracts were being sold at discount to far-dated contracts. Commercial traders can (and will) take advantage of this upward price curve by utilizing a trading strategy called a “calendar spread,” through which they buy near-term, lower-price futures contracts and sell long-term, higher-priced futures contracts. This allows them to eliminate any future price risk and immediately lock in as profit the difference between the sale and purchase of their futures contract (less the carrying cost, i.e. the cost of storage and transportation).

The ability to profit off of hoarding, however, has ‘real-world’ limits: taking oil out of circulation and marking it for future delivery also means that the physical market increasingly risks no longer fulfilling its first-order function—that is, clearing inventory at Cushing. This is precisely what is said to have played out in April 2020. Storage capacity had been reported to be reaching critical levels, and those still holding front month contracts on the day before expiry (April 20) appeared to be caught scrambling trying to find any way to close their position, fearing that they would be unable to physically take May delivery at Cushing.

Now, while this narrative isn’t ‘wrong’ per se, it overlooks much about the specific mechanics of the WTI futures market and the distinct characteristics of its different participants. Both of these factors are necessary to explain the negative price crash on April 20, 2020.

First, as Ilya Bouchouev has shown, the contango in the oil market was already accelerating by February, back when Cushing inventories were at less than 50% of total capacity utilization, which was well below the historical norm. The CFTC claimed in a November 2020 report that storage at Cushing was “nearing capacity” by March 2020. During that month, storage utilization was in fact hovering around 50-55%—ranging from lower to roughly equivalent to the capacity utilization at the time of the CFTC report, which had been written in the context of a markedly different pricing environment (see Figure 1 above). While April did see capacity utilization peak above 80%, this is as close as inventories ever came to topping tanks at Cushing. Hence, the relationship between contango and storage capacity utilization is not linear, with markets ‘pricing in’ storage risk and participants automatically responding. Rather, it is more of a spiraling feedback loop, where the expectations of an imminent physical bottleneck at Cushing, combined with the availability of hedging strategies like the aforementioned calendar spread, incentivized hoarding which lowered the price, which incentivized more hoarding, which lowered the price...

Now let’s turn to those who were holding May 2020 contracts and were purportedly panicked about the bottleneck at Cushing. While there was some legitimate concern that any remaining marginal storage capacity would not be available to those who had not already contracted with storage operators, it is hard to believe a professional trader could not have found a solution for significantly less than the losses ultimately realized on April 20. Cushing is certainly a very large and centrally important site of storage, but it is only one location in a much more geographically integrated North American oil market than this panic about ‘topping tanks’ would have one believe. Of course, transportation and storage costs present a significant barrier here, but, as stated at the beginning, not one so thick that arbitrageurs wouldn’t be able to buy the remaining May 2020 futures, take delivery offsite, and realize a quick profit simply by selling the next month’s futures—which, notably, never dipped into negative prices. This, indeed, would have been the economically ‘rational’ thing for any counterparty with the funds to do the moment asks started heading south of $0/bbl. Why was there no arbitrage?

As I will return to in a moment, one major reason arbitrage did not happen was that it was not professional traders who realized those losses. As the CFTC reports, on April 20, the largest remaining long positions on the front month contracts were held not by commercial traders but by over-the-counter (OTC) swap dealers. In particular, the Bank of China (BoC) had a bulk of the outstanding positions in the May 2020 contracts on April 20, held on behalf of clients to which the Bank sold a custom financial product called Yuányóu Bǎo, or “Crude Oil Treasures”. Now, it is important to note that these “Crude Oil Treasures” did not allow for direct ownership of either oil or oil futures contracts; instead, they were swap contracts hedged with WTI futures. What the swap allowed for was exposure not to the price movement of crude (because they were used neither to buy nor sell physical crude) but to the ‘rollover yield’ realized from buying long-dated contracts and selling them as they neared expiration. This, it is important to note, reaps a positive return only when futures markets are in ‘backwardation’ (as, historically, oil futures markets usually are)—the situation opposite to contango—wherein front month contracts have higher prices than back months.

But, before I return to the very important role of the BoC, it is important to say that arbitrage also failed to occur for another two reasons. First, the $55 price swing down to -$40/bbl happened in less than a single trading day, with the largest portion of the squeeze happening in the final hour of trading. This is, of course, not a lot of time to arrange the transport and storage of tens or hundreds of thousands of barrels of oil—particularly with so few remaining open positions in the front month contracts. The price crash is in this way an example of the futures market failing to mediate the forwardness inherent to the oil trade.

But perhaps the most important reason why prices fell as far as they did, and in particular broke the $0 barrier, is because of the abrupt change to the rules governing the exchange for the remaining open positions. Once again, the bulk of open positions were linked to swaps. Like most over-the-counter contracts which use NYMEX as clearinghouse, the open interest linked to these outstanding positions is not placed on the intra-day trading order books. Rather, any asks for WTI futures linked to OTC contracts are posted on a different book for orders which settle at the closing price at the end of the trading day, or what is known as “traded-at-settlement” (TAS). The central issue on April 20 was that there was a very large amount of TAS ask orders which needed to be closed, given it was the day prior to expiry, but these positions could not find sufficient bidders in the TAS market. The price movement, in other words, was not the result of a ‘demand shock’ but a crisis of liquidity conditioned by certain specific mechanisms of the paper barrel trade. Realizing this threat early on April 20, NYMEX made the unprecedented move of telegraphing its participants and requiring any remaining front month futures holders to close their TAS position through the regular non-TAS order book by the last half-hour of the trading day.

As one might expect, this TAS mechanic was being actively exploited by professional day traders. In particular, a group of nine traders in Essex affiliated with a small UK-based trading firm called “Vega Capital” bought up many of the outstanding WTI contracts linked to swaps, including the Yuányóu Bǎo contracts, and then proceeded to short-sell WTI futures over the course of the trading day until they were “flat,” i.e. until all barrels bought off TAS were now matched by paper barrels sold on the regular market. This trading scheme was proven to be immensely successful as prices continued to fall over the course of the trading day, such that, at market close, the Essex group was able to profit off the difference between the OTC contracts they had already bought TAS and the futures they sold during the day. In fact, the crash into negative prices meant not only that they were profiting off the difference but were effectively being paid for the TAS contracts they had ‘bought’ at negative prices.

Much of the $660 million profit ultimately realized by the Essex group was derived from retail traders, in particular a group of roughly 60,000 small investment accounts holding the aforementioned Crude Oil Treasures. These participants were not professional traders but primarily middle- and low-income workers and students living both inside and outside of China. The latter had been sold these derivatives without being informed by the Bank of China of the possibility of negative prices, instead presuming them to be prudent “wealth management” products, as a Chinese college student described it. She had “invested” 70,000 yuan (approx. $10,000) into Crude Oil Treasures. After finally settling her position on her behalf on April 20, BoC promptly informed this college student that, as a result of her investment, she now owed the Bank 183,271.20 yuan (approx. $26,000).

Concluding Remarks

In sum, then, it was a combination of active exploitation of the trading day’s changing TAS rules, the selling of OTC derivatives to insufficiently informed retail traders, and, to be sure, some ongoing background macroeconomic events (e.g. the pandemic) which combined to precipitate the huge price drop on April 20. To reduce the dynamics underlying WTI’s price movement to a storage panic at Cushing is to miss entirely how the abrupt change to the mechanics of TAS trading, in a very clear and concrete way, conditioned this short-run price movement and in turn allowed for professional traders to capitalize off the slow response, misinformation, and general ineptitude of their retail counterparties.

More than that, overstating the effect of ‘supply and demand’ obfuscates the anarchic way in which the WTI futures market mediates the oil trade. It is commonly stated that the futures markets help ‘mitigate’ risk and therefore stabilize prices, but this is not really what any futures market ever does. What futures and other derivatives markets do is help some participants redistribute risk to other participants; and, increasingly in the oil market, this redistributed risk is absorbed by a new ‘counterparty of last resort’: the retail investor, who is providing liquidity—as is evident with the Yuányóu Bǎo, more liquidity than they even realize—in exchange for the false promise of passive ‘wealth generation.’

Of course, the liquidity provided by retail traders is a drop in the bucket compared to that provided by institutional investors, but I am not making the argument that it holds the entire trade afloat. Rather, my point is that it serves as an effective backstop for short-term panics. In effect, that is what retail financial products are designed to do. And, while BoC’s “Crude Oil Treasures” have since been scandalized and the Bank fined nearly $8 million by the CCP, this particular OTC swap contract is not some excessively speculative aberration of the normal procedures of the WTI futures market. It is one of a host of derivatives products explicitly marketed toward retail traders under misleading pretenses of gaining “exposure to oil prices”. I include here other analogous products offered by JP Morgan and the Royal Bank of Canada, as well as oil ETFs like the USO.

Explaining the effect of futures markets on short-term price shocks is the easy stuff, given how direct the links are between, e.g., TAS, retail traders, and the panic at Cushing. April 20, 2020 was a financial squeeze, pure and simple. Much more complex is the relationship between futures markets and long-term oil price movements. There, one must take more seriously a host of different macro-economic factors (including, to be sure, ex ante changes in supply and demand) as well as much more diffuse and indirect facets of the financialization of the oil industry over the past 30 years. But more on that another time.

Maan Barua (2025) has recently argued for reconceptualizing the critique of political economy from the vantage point of its constituent metabolisms. Of course, as Barua acknowledges, Marx was no stranger to a concept of metabolism, that is, Stoffwechsel, a term which appears in rich passages inspiring much of the work and ongoing debates in eco-Marxism. Moreover, deployment of the metabolism concept has long been a staple of Barua’s own home discipline, urban political ecology (UPE), where it has helped researchers dissolve the so-called ‘nature-society dualism’ and recast the urbanization process as a complex, interpenetrating transformation of human and non-human natures.

Nevertheless, as noted in a provisional research program co-authored by Barua alongside Thomas White and David Nally, such metabolic analyses tend to take place at scales vastly exceeding the ‘literal’, biochemical metabolisms of living, breathing bodies. In turn, the co-authors suggest more conceptual work is still needed to ask and answer questions like: What demands do “racial, colonial and accumulative logics” make on the corporeal metabolisms of the Earth’s creatures? How does capital’s “social metabolic system,” in the words of Mészáros, come to be embodied in the lives of, for instance, broiler chickens? Who benefits from the intensification of such animal metabolisms—e.g., via the homogenization and optimization of diets—and who bears the risks of the ‘effluvia’ of toxicants it generates?

But in recent work, Barua’s aim has not been simply expansion but the reconstruction of the terms of Marxian critique. Drawing primarily on the work of the historian of biology Hannah Landecker (2013, 2023) and the critical animal studies scholar Dinesh Wadiwel (2018, 2019), Barua (2025) has argued that, as a result of its insistence upon the primacy of human labor, Marxism has neglected to consider the extent to which the “industrialization” of metabolism has turned “life itself” into a productive force. For him, this situation demands of the critique of political economy a fundamental reconceptualization of who or what really labors in capitalist socio-natures. In particular, if the intensified metabolism of farmed animals serves to reduce the “growing time” of organic commodity production, then the animal body is as much a source of “relative surplus value” as is human labor (2025: 149).

Although provocative, a number of issues in this argument remain unaddressed by Barua. For one, capital’s modulation of “growing time” is already essential to Marx’s critique, and so it is unclear why one would need a “different set of formulations of staple political economic categories” in order to address it (ibid.). I will return to this issue below, but I think it is first important to rehearse the distinction Marx makes between wealth and value, as this seems to me the source of confusion in Barua’s valorization of non-human ‘labor’.

The Primacy of Human Labor in Marx’s Critique

Marx of course does not fail to account for the contributions of non-human nature to human development. Specifically, he understands nature’s essential role in the social production of wealth. As he famously insists in his Critique of the Gotha Programme, “Labor is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!)”. Now, to be clear, this does not mean that nature is itself productive of use values, which can only express utility if they are incorporated toward human ends, i.e. insofar as nature is socialized. But the point is that human self-development never ceases to depend upon nature as its source.

By contrast, Marx understood value to be a purely social relation—one which, among other things, comes into contradiction with the ‘naturally-sourced’ use values it is supposed to represent. As he famously describes in Capital, this is because the value of a particular thing depends not upon its ability to satisfy a particular human need but upon its relationship to something else. Now, his contemporary and proto-marginalist Samuel Bailey also recognized this, in turn arguing that, because it is relational, value expresses a merely subjective relationship. But for Marx, there was an abstract and objective consistency to the value-relation that appeared to shape every individual exchange.

The whole point of his critique of political economy is to understand under what conditions this is possible, i.e. under what objective conditions do humans come to recognize the value of one thing in terms of another, such that the form of value can serve as the basis for the production and reproduction of society as a whole. And, as Marx eventually discovers in the early parts of Volume I, it is for this reason that human labor is primary, for it is the socially necessary abstract (human) labor-time that enables us to recognize the value of one thing in terms of another. This does not discredit the contributions of non-human animal metabolisms to the production process. Rather, the point is to clarify what the value-relation really consists of.

To his credit, Wadiwel (2019) dwells on this problem much more explicitly than Barua. To get around this apparent exclusivity of human labor in the production of value, Wadiwel contrasts the two different measures of value. One of these measures is the wage, which Marx emphasizes for good reason. Among other things, the wage-form allows him to define the rate of exploitation, i.e. the extent to which the surplus value produced by labor-power is not remunerated to the laborer but appropriated by the capitalist. If this is our frame of reference, Wadiwel concedes, it is “nonsensical to think about extraction of surplus from animals” given they are “not paid a monetary wage” (ibid.: 188).

However, if we think of value in terms of its other measure, i.e. socially necessary labor-time, this, for Wadiwel, can provide us with a more fruitful reconceptualization of the “unique exploitation of animals,” namely, “in relation to the difference between the time required to reproduce their own life and the time required by animals to produce for us” (ibid.). Thus, when the value of labor-power is measured in terms of labor-time, it becomes more reasonable to suggest that animals, too, labor—for we can clearly see there are times when they are not laboring, or at least not laboring for us. In turn, Wadiwel insists the brutalization of animals under capitalism is in part premised on the denial of this, i.e. of the presumption that animals are incapable of free time, and hence that there is “no apparent social limit on the time we demand from animals” (ibid.: 193). And so the expansion of the concept of socially necessary labor-time to include animal labor-time would, according to Wadiwel, allow not only for the recognition of how animals are exploited in the Marxian sense but, moreover, provide a new political orientation from which to defend the dignity of animal life.

From my view, the reconceptualization of the former (socially necessary labor-time) does not seem necessary to recognize the latter (defending the dignity of animal life). In fact, I would suggest that Marx’s theory of exploitation loses its saliency when extended to animals, and simultaneously it smuggles in an even more pernicious (which is to say un-reflexive) anthropocentrism. For the former, it is important to stress that Marx’s lifelong aim, up to and including his mature critique of political economy, is to “show the world what it is really fighting for, and consciousness is something that it has to acquire, even if it does not want to” (emphasis added). In turn, it seems to me that Marx’s theory of exploitation seeks to do more than explain how exploitation is something human laborers must endure under capitalism. Beyond this, it clarifies the means by which workers themselves can (and do) become conscious of this exploitation. And for this, the wage-relation, i.e. the measure of the value of labor-power the form of the wage, is indispensable, for it is through the shared recognition of exploitation, as materialized in the wage, that consciousness of it emerges. While animals undoubtedly resist their brutalization under capitalism, it seems more of a stretch to suggest they are capable of a class-consciousness of exploitation.

This leads to the second point. It is simply the case that non-human animals are not developing arguments against Marx’s anthropocentrism; it is only human animals that are doing this. A minimal anthropocentrism here seems to me inextinguishable, a necessity of our self-consciousness (among other human consciousnesses). Put differently, that livestock are capable of “free time” can be convincingly argued by Wadiwel, but this does not for this reason escape the reflexivity condition of critical self-consciousness (see Ng, 2025). Thus, I agree that “capitalism and exploitative processes corrupt the capacity of labour to contribute to a being’s flourishing” (Wadiwel, 2019: 186), and there is no reason why this sentiment cannot be extended to animals in this broad sense. But liberation of animal “free time” hinges exclusively on the self-negating transformation of human behaviors, desires, and activities—or else we humans wouldn’t be having the conversation in the first place. While this might seem like a cheap point, it is again this self-consciousness of exploitation which remains an indispensable basis for Marx’s theory of praxis.

The Temporal Discrepancy between Production and Work

As mentioned above, it is strange that Barua does not seem to consider how Marx himself understands the effect of capital’s drive to minimize “growing time” on the production of value. I refer here specifically to Volume II of Capital, where Marx makes the important distinction between “working time” and “production time.” The former refers to the duration of (human) labor-time in which the laborer is actively contributing to the production process, whereas the latter refers to the duration of the production process as a whole. As he writes: “Working time is always production time, that is to say, time during which capital is held fast in the sphere of production. But vice versa, not all time during which capital is engaged in the process of production is necessarily working time.”

Now, from Marx’s perspective, the capitalist is concerned with this temporal discrepancy because it means that a significant portion of capital “engaged in the process of production” must sit idle, that is, not actively exploiting (human) labor and therefore (per Marx’s understanding) not producing any surplus value. As a result, Marx makes clear that capital is motivated not only to speed up the (human) labor process but also, as much as possible, reduce to a minimum any “production time” that remains outside of “working time.”

In Volume I, Marx pays close attention to one kind of “interruption” to production time. As he notes there, the “natural limitations of labor-power” impede the limitless production of value. Put plainly, labor cannot be exploited continuously, for it remains in a human body that requires rest, replenishment, and so on. The industrial capitalists of 19th-century England discovered this practically, as they stretched the working day to “unnatural” lengths, stunting the development of the working population and hastening their premature deaths. Another famous workaround was of course the invention of day- and night-shifts, which allowed the capital fixed in machinery to return, as quickly as possible, to circulation via the commodities produced. Hence, here we can already say that, far from unconcerned with corporeal metabolisms, Marx is quite cognizant of how the body both enables and constrains capitalist production (as noticed by Wadiwel, 2018).

Clearly, as Barua would insist, it is not just human bodies that suffer under capitalism. Non-human metabolisms have indeed been grotesquely modified to accommodate the self-valorization of value. Once again, however, Marx seems unwilling to recognize these changes as in-themselves value-producing. But the question is: how does he recognize them?

Let us go back to the discrepancy between working time and production time noted above. In Volume II, Marx identifies another “interruption” to the reduction of the latter to the former: the limits of the “nature of the product and its fabrication, during which the subject of labour is for a longer or shorter time subjected to natural processes.” Here, Marx points to a number of examples: the production of wine, which depends upon the fermentation of grapes; pottery upon the process of drying; and agriculture upon the natural metabolism of the plant with soil, water, and sunlight.

Again, the capitalist has just as much interest in making labor more productive as he does in developing methods dedicated to the “artificial reduction of the production time.” Notably, Marx does not privilege the “growing time” of “life itself” vis-a-vis the numerous other temporalities that exceed “working time.” All non-productive time is rendered equivalent, such that the quickening of a broiler chicken’s metabolism can be seen as motivated by the same impulse as is the improvement of other non-living chemical processes, such as the Bessemer process, wherein the “time of production [of iron] has been brought down tremendously, but the investment of fixed capital has increased in proportion.” Marx of course knows these are qualitatively distinct processes, but from the perspective of capital, what matters is reducing all non-productive time to a minimum regardless of its source.

And so the only pertinent analytical distinction Marx maintains is that between working time and production time, for it is the contradiction between the two (among other things) that mobilizes capital’s development of the ‘productive forces’ on either side. This distinction is critical precisely because it allows Marx to continue to insist that increases in the production of surplus value can only be achieved through modifications to the (human) labor process, either by increasing the amount of time during which labor-power is exploited, or by making it more productive.

By contrast, what Barua calls the “industrialization of metabolism” leads not directly to the generation of more surplus value but, for Marx, a decrease in the turnover time of capital. The shortening of “growing time” allows invested capital to return more quickly both to “working time,” where labor-power is employed and more surplus value produced, and to circulation, where that surplus value can be realized in exchange. In this sense, it makes (human) labor relatively more productive, insofar as it allows, e.g., poultry farm workers to produce more poultry than previously in the same amount of time. To stress, as a purely social relation, value’s production turns on the employment and exploitation of human labor-power—there would be no point to the industrialization of animal metabolisms if it did not mean cheapening the value of the livestock-commodity, which, in turn, means cheapening the value of human labor-power in general.

To end, I will just quickly add that this gets at the importance of grasping “productive forces” as a relational concept. As Derek Sayer (1987) pointed out, Marx’s concept of the productive forces is not synonymous with “technology.” Rather, in Marx uses the concept to refer both to material things insofar as they “take on social characteristics,” such as agricultural land (or the bodies of poultry), and “social phenomena […] in so far as they are materialized in actual production processes,” such as co-operation and scientific knowledge. Critically, then, the development of the productive forces turns on human self-development. If the metabolisms of broiler chickens have become productive forces, it is in other words precisely because they have been socialized, i.e. they have, through their mixture with human labor, taken on distinctly social characteristics.

This is indeed Marx’s “Copernican revolution,” which does not discredit the contribution of non-human nature to social development, but necessarily places “human self-determination at the center of social criticism, such that societies made through human activity can be remade through that same activity” (Ng, 2025: 177).In turn, it is overcoming the specific way in which non-human nature has been socialized under capitalism, namely through the displacement of its “inherent measure” by the limitless drive of capital’s self-valorization, that is at stake in the liberation of both human and non-human natures.

Living inside of a gas plant

At the start of the tracking boom in Appalachia, probably the most egregious practice was the use of “impoundment ponds” to store the wastewater that results from drilling and hydraulic fracturing. Out west, they’re called “evaporation pits,” with the idea being the hot, dry climate could help reduce the total volume of waste and make it easier to both manage and recycle. This is the ideal, but they still can and do overflow and leach into the soil out there. In hilly, wet Appalachia, however, there is no pretense of evaporation, hence the different name. Wastewater would sit in these ponds indefinitely, waiting to either be eventually hauled offsite or else mix with rainwater and spill out into the soil, waterways, and underground water reservoirs. And this was the ordinary course of things—there were of course also many unanticipated impoundment-related “accidents.”

In 2015, new research began to reveal just how disastrous this standard practice really was. An EPA report found elevated chloride levels in samples of water wells near impoundment sites in southwestern PA. While an essential electrolyte, chloride’s ingestion at high concentrations can severely impact respiratory and cardiovascular health. That same year, a Yale-led study of the Marcellus pinpointed surface activities, such as impoundment ponds, as the primary culprit for organic compound contamination of nearby water reservoirs.

While this research was pivotal in getting the DEP to shut down nearly all ponds in the state, it has hardly made public waters immune from the threats posed by fracking. In 2023, for instance, a much-publicized three-year study conducted by the Pennsylvania Department of Health and University of Pittsburgh’s School of Public Health found positive correlations between proximity to a frac wells and heightened risks of lymphoma, asthma, and low birth weights. Researchers at University of Rochester and the Pennsylvania State University have likewise conducted numerous analyses demonstrating statistical correlations between shale gas development and higher risks of heart attacks and, among oil and gas workers, opioid deaths. And, nearly a decade after that initial 2015 Yale study, public drinking water quality near sites of shale gas development continue to be found associated with worsened infant health.

But much of the impact of oil and gas activity cannot be systematically assessed. One of the biggest issues that goes completely undefined, unmeasured, and (officially) unreported concerns the radioactivity of wastewater and the risks of its exposure particularly for oil and gas workers. In brief, oil and gas deposits are typically associated with vast amounts of brackish water, or brine. These waters naturally contain a medley of radioactive elements, in particular radium-226 and radium-228. In a process known as “flowback,” a mix of fracking fluids and brine is brought up to the surface during the extraction of oil and gas. Separation of the latter leads to the rapid piling up of huge volumes of wastewater, as mentioned above.

Unlike the waste discharge of nuclear power plant, oil and gas-related wastewater is not classified as hazardous. This is because, back in the 1980s, the industry successfully lobbied the EPA to have waste generated from oil and gas wells ruled exempt from the Resource Conservation and Recovery Act (1976), which regulates the classification of radioactive waste. And while the industry likes to compare the radioactivity of fracking wastewater to innocuous objects like bananas, investigative journalist Justin Nobel has reported extensively on the testimonies of gas worker who have complained of symptoms akin to radiation poisoning: headaches, nausea, numbness, even skin lesions. DEP studies have likewise confirmed alarming amounts of radium-226 in wastewaters, ranging anywhere from 40.5 to 26,600 picocuries per liter (pCi/L). The Nuclear Regulatory Commission requires all waste discharges remain below 60 pCi/L.

While wastewater transporters are most vulnerable to exposure, a related issue is the difficulty in figuring out where any of this stuff ends up. A 2023 study compared DEP records to the data of wastewater landfills reported receiving from 2010 to 2020, finding that 800,000 tons of wastewater in PA had gone “missing.” Reporting requirements have improved in recent years, but a lot of it is eventually transferred out of state and thus beyond PA jurisdiction. In particular, it is taken to Ohio and West Virginia, whose governments have issued far more “Class II” injection permits than PA, which control the disposal of fracking wastewater.

What is left in state is usually sent to wastewater “treatment” facilities. In years past, this wastewater could be discharged into waterways after “treatment,” but the DEP has since restricted this practice to only conventional (non-fracking) oil and gas wastewater. Given brine coming from conventional oil and gas production is likewise radioactive, however, waterways around treatment plants continue to show high concentrations of radium. And this is despite the fact that “treatment” facilities allegedly are supposed to reduce radium content as part of said “treatment.”

After “treatment,” fracking wastewater is largely recycled back into ongoing oil and gas operations. In PA, it is sometimes used on unpaved roads as a dust-suppressant and de-icer. And, just recently, Texas passed a law that will allow oil and gas operators to sell “treated” wastewater to farmers for crop irrigation.

The unrecyclable, solid fracking waste, e.g. things like drill cuttings, ends up in landfills, where its various toxicants mix with rainwater and form liquid waste, or leachate. DEP requires landfills to capture this leachate and test it for radioactivity. But after this is done, the landfills send the leachate to sewage treatment plants, which are not required to perform these tests. Unsurprisingly, PA waterways near treatment facilities have shown elevated levels of radium as well. And, much like the wastewater trade, the flow of leachate is very murky. In 2020, Public Herald reported that DEP failed to track as much as 66% of radioactive leachate as it made its way out of the landfill.

Lots of bad data

But this is really just scratching the surface. Over the past year, I have become fairly well acquainted with the various oil and gas-related databases maintained by the Pennsylvania Department of Environmental Protection (PADEP). This includes monthly oil and gas production reports, monthly oil and gas waste reports, annual air quality emissions reports, the air quality permit reports, well permit reports, compliance reports, and spud (drill date) data. I have also scripted a variety of eFACTS queries to try to gather data about different static sub-facilities (water withdrawal locations, compressor stations, pigging operations, fractionation, cryogenic facilities, other gas processing facilities, and encroachment permits). Finally, I have familiarized myself with the (nationwide) FracFocus chemical disclosures, as laboriously cleaned up by Greg Alison and hosted at Open-FF.

As a means of assessing the environmental and health impact of the oil and gas industry, most of this is useless. The health studies cited above do not use any of this, in fact, but rely on statistical analyses, or they conducted their own sampling surveys. The industry loves to call the statistical analyses out in particular as invalid because ‘correlation does not mean causation’. But these methods are limited in scope precisely because so much information remains publicly unavailable.

One thing that commonly shows up in DEP compliance reports, for instance, are “temporary water lines,” which producers use to withdraw freshwater into well pad operations. These plastic pipes can snake around properties over several thousand feet. Inspection reports have noted leaks, sinkholes, and erosion associated with these lines, but they remain unregulated by the DEP. Hence, one can only find data about them either when someone complains about them or else through encroachment permits, where required. Noted also in these inspection reports are “development pipelines” that carry wastewater between well pads for reuse or into storage tanks. In the transfer process, they of course can leak, spilling gallons of wastewater into pastures, cropland, roads, streams, and reservoirs. Moreover, DEP simply does not know where all these lines are.

Additionally, most of the gas pipeline network remains untraceable. In particular, thousands of miles of “gathering” pipelines are completely unregulated. These are used to connect product of individual well pads to larger transmission lines (which are regulated). Per the Pipeline and Hazardous Materials Safety Administration (PHMSA), the only gathering lines that require routine (i.e., non-incident) reporting are those in densely populated and developed areas. Given the vast majority of the pipeline network is situated in rural PA, most of the proof of their existence can only come from incident reports (as well as encroachment permit data, but those records are sparse).

Additionally, tens, if not hundreds of thousands of abandoned, or “orphan,” wells remain unaccounted for. Many are decades, even over a century old. And hence they were built during times with far looser regulations and worse materials than the wells drilled today. Slow pressure buildup within these wells has already led to several “blowouts” in West Texas. But they can also become impacted by new drilling activity. In 2023, for instance, EQT operations impacted an orphan well in New Freeport, PA, which caused brackish fluid and noxious gases to start spewing from the abandoned well.

But much of the data that is reported is either severely underrepresented (emissions), wrong (geolocational data for numerous infrastructure locations, particularly compressor stations and pigging operations), or obfuscated to the point of uselessness (frac chemical disclosures).

As for underrepresentation, a 2017 study estimated the industry leaked as much as seven times more methane than what was reported to the DEP. The folks at Earthworks have worked tirelessly to document ongoing, unreported leaks from, among other things, equipment failure, stripper wells, and unlit gas flares. But these are only capturing signatures of gas leaks. Diagnosing pollutant composition requires more sophisticated monitoring equipment, and while some of those stations do exist, the sample size is not nearly large enough to reliably model dispersion, or to corroborate these data with the (undoubtedly underreported) monthly emissions data sent by the industry to the DEP.

As for incorrect locations, numerous compressor stations include spatial data that puts them in the middle of a field or a forest. Pigging operations data are even worse. These facilities are situated on pipeline routes and allow the operator to insert a pipeline inspection gauge, or “pig,” into the line to perform diagnostic tests. They are of particular concern to residents because, through the insertion/retrieval process is loud, releases pollutants into the atmosphere, and is susceptible to blowouts. While many of these operations have sub-facility records associated with them in the DEP database, that list is not exhaustive, as I have personally learned through attempting to corroborate with user-generated maps of pigging operations. Moreover, the spatial data attached to those records is even worse than the compressor station data. Very annoyingly, many records including obviously generic spatial data—a dozen pigging stations, for instance, allegedly stacked on top of one another at 41°N, 79°W.

Finally, as for chemical disclosures, FracFocus does indeed release a trove of data about chemical inputs in fracking operations, and all oil and gas operators in PA are required to report. But the issue is that no one (including probably the operators) has any idea what the vast majority of these chemicals are. Out of the 430 chemical inputs disclosed across fracking operations in PA, only 140 have been assayed by EPA’s Toxicity Forecasting (ToxCast). Without this assay data, it is impossible to determine what kinds of risks are associated with these chemicals, and at what levels of exposure. Additionally, as Gary Allison at Open-FF has revealed, 20% of the FracFocus materials do not even disclose a classifiable structure type and 95% of disclosures have at least one of these non-classifiable inputs. Not knowing the structural nature of the material, i.e. whether it is a polymer or a molecular compound, etc., means its health and environmental impact are much harder to characterize.

“Radical Transparency”

Despite all this, Governor of Pennsylvania Josh Shapiro has prided himself on strides he has ostensibly taken to improve oil and gas-related data disclosures. His administration announced a “historic collaboration” last year, for instance, with the Appalachian gas operator, CNX, to make real-time monitoring data of their activities available to the public. For Shapiro, this would be his first step in making good on a Grand Jury report that he oversaw as Attorney General for PA (2017-2023). The report found “systematic failure by government agencies in overseeing the fracking industry and fulfilling their responsibility to protect Pennsylvanians from the inherent risks of industry operations.” Recommendations included, among other things, requiring public disclosure of frac and drilling chemicals and cumulative air emissions reports.

Through this pilot project, dubbed “Radical Transparency,” CNX has installed air monitoring stations at some of its gas well pads and compressor stations. It has also agreed to disclose all chemicals used in future drilling and hydraulic fracturing processes. And both streams of data have indeed been made available on their website. As of the time of writing, this includes 4 compressor stations and 7 well pads, with 6 “archived” sites no longer reporting.

CNX is considerably less “radically transparent” about the fact that this amounts to a tiny fraction of their owned assets. As Earthworks reported, the independent gas producer owns several thousand wells across PA, including over 100 well pads, and, by my count, at least 32 compressor stations. In addition to this therefore being a very small sample size, all of the locations where monitoring stations have been installed are new facilities. This, of course, severely biases the data, given the risk of equipment failure and leakage increases as components wear down, which in turn would risk an increase in emissions.

Additionally, as FracTracker pointed out, it’s a bit rich for Shapiro to convene a “Radical Transparency” project with the same company that, again as Attorney General, he filed criminal charges against for misreporting emissions. If nothing else, it makes it understandably difficult for residents, who have borne the brunt of hundreds of prior CNX emissions violations, to trust the integrity of these data. It also does not help that CNX has already used this project to make completely outlandish claims about their activities. In particular, after only installing a handful of stations, the company quite eagerly promoted its “initial results” as proof that “CNX natural gas development is safe and poses no health risks.”

Abundance?

Just to briefly add, these reflections have made the national, Abundance-driven spotlight recently cast on “proceduralism” extremely amusing to me. I can of course only speak with any direct knowledge about the oil and gas industry, but I can say with extreme confidence that the problem there is not too many rules. The DEP has been chronically understaffed and underfunded for years. “Abundance” likewise does need any sort of spirited rhetorical defense, as the Shapiro administration has been very actively doing everything in it can to dissolve whatever red tape remains to check oil and gas development—for instance, with the introduction of the Streamlining Permits for Economic Expansion and Development (SPEED) Act, which will offload permit approval work to third-party pools of (definitely not industry shilling) “DEP-approved qualified professionals.”

Again, I am also continuously frustrated with how impossible it is to even make any empirical sense of what is happening given the DEP is not able to adequately track, much less regulate, the oil and gas industry. What is reported, is not reported well, and when it is not reported well, no one affected has the capacity to make the industry do anything about it. Residents are placated with meaningless, inconsequential “public comment periods” and industry-hosted public fora, where, in effect, they are told to shut up and suffer.

Now, to be sure, the Abundists feign support for environmental stewardship, insist that this is entirely compatible with a “liberalism that builds.” And so they are much more concerned with the “burden” of, for example, environmental impact assessments for green tech and decarbonization initiatives than they are for whatever is going on in oil and gas. This is why, in Abundance, Ezra Klein and Derek Thompson talk about how the well-intentioned but ultimately overzealous burdens put in place by environmental legislation starting in 1970s are key to understanding the beleaguered buildout of renewable energy.

There are, of course, numerous other factors that need to be ignored to make this argument—the fragmentation of jurisdiction over transmission lines, the monopolization of electricity grids, low profit margins of renewables discouraging investment—but from my perspective, what I find most mystifying is the blame thus attributed to NIMBY “environmentalists” who have abused this alleged “proceduralism” to make sure no one ever builds anything anymore. If this really were the case, why isn’t the oil and gas industry facing the brunt of this attack? Shouldn’t they be enemy no. 1 for these NEPA-lawsuit-wielding hippie NGOs? Why have they apparently been so successful in stopping renewables but seemingly incapable of doing anything about fossil fuels? They, at best, spend millions of dollars in legal battles at the margins of the industry, attempting to block, e.g., new pipeline construction, and they almost never win.

“It is as easy to obstruct an oil refinery as a wind farm,” Klein and Thompson write. But the thing is, it’s not easy to obstruct an oil refinery! Ask residents in Beaver County who have been trying to close down the Shell polymers plant in Monaca for years, which has been egregiously violating its own air permits since beginning operations in 2022. And for all this clamoring over proceduralism impeding state from Doing Things, it is also worth noting that existing “state capacity” was entirely sufficient to afford Shell a $1.6 billion tax subsidy to locate its ethane cracker in PA, the largest in state history.

The drift of Abundance discourse into Appalachia is thus amusing, but also very bleak. There is no end in sight to oil and gas activity, and it seems to me the last thing needed right now is to stigmatize the already quite impotent environmental legislation failing to protect residents from polluted land, water, and air.

There has never been anything like an “energy transition” in all of human history, and there is no reason to believe we are currently on the precipice of one. This, at least, is the line Jean-Baptise Fressoz takes in his recent book, More and More and More: An All-Consuming History of Energy (2024, English translation of Sans transition: Une nouvelle histoire de l'énergie). If you are familiar with this Substack or my Twitter account, you will know this is a thesis very near and dear to me (for example, here). And, no surprises, I am broadly in agreement with Fressoz’s book. The empirical points he raises are fairly straightforward: for instance, coal mining did not lead to the end of wood consumption but rather expanded its use-value, namely in pit props (Ch. 3); timber markets themselves dramatically expanded in terms of both finding new supply and demand thanks to the adoption of diesel-powered machinery and lorries (Ch. 4); and the ballooning of the oil industry in the early 20th century led to an even greater utilization of wood, as building its infrastructure required massive amounts of steel, which had to be forged in charcoal-burning (and coal-burning) blast furnaces (Ch. 5). Fressoz here manages to offer a great deal of insight simply be being scrupulous with the facts, outlining how an ever-growing, durable, and “symbiotic” matrix of material and energy flows subtends the global economy. And, as I will return to below, precisely this notion of “symbiosis”, otherwise vastly understated in both Marxist and liberal analyses of “green growth,” is the book’s most important contribution.

However, the argument has some significant weaknesses I would like to bring up here, primarily in order to draw some distance between his views and my own (in fact, what follows is probably as much of a self-critique as it is a critique of Fressoz). In particular, I want to touch on:

• The matter-of-fact necessity of “symbiosis”

• The limits of Fressoz’s critique of “technological progress”

• Fressoz’s denouncement, very early on, of “political” histories of energy that leaves his own “all-consuming” one effectively subject-less

These three points are all closely related. Fressoz’s account of the objective necessity of symbiosis (and relative neglect of conflict) leads him to hypostatize “technological progress,” which, in turn, is what begets a subject-less history of energy. Now, to be clear, it is not that he does not identify specific people with ideological influence and decision-making power throughout the book, but what is opaque is the extent of their agency, i.e. their capacity to act otherwise, in producing this objective necessity that characterizes Fressoz’s “symbiosis.” It is for this reason that the argument ultimately relapses into a fatalism within which “humanity” is indicted for producing this catastrophic, ecocidal force called “technological progress.” False consciousness—transition, this spurious projection of a “past that does not exist onto an elusive future” (p. 2)—is replaced with an unhappy one, the deliverance from which demands absolution—a “voluntary” and “enormous energy amputation,” as he describes it (p. 13).

This conclusion is not unfamiliar. It evokes a technological pessimism with a long, contentious history in the humanities. And, to be clear, I am not entirely unsympathetic to this line of thought. Of course, one must acknowledge its innumerable critiques, most prominently in recent years in the repudiation of the specter/scapegoat/bogeyman of the Anthropocene and its same abstract indictment of “the human,” qua Anthropos, for ecological collapse. But there is a cliche that runs unchallenged in this literature—to gloss too quickly, the cliche of difference and/or contingency as ontological safeguards for all past, present, and future socioecological transformation—and, here, I believe Fressoz is right to insist we must face the immense inertia of the world as it really is: cumbersome, complex, thoroughly interdependent, and, most alarmingly, supported by an insatiable, ever-increasing throughput of huge stocks of material and energy. Despite the tumultuousness of climate change, then, what Fressoz correctly notes is how much of the capitalist world system and its material infrastructure are in fact profoundly unchanging.

So, if Fressoz’s book has been particularly generative for me, it is because it raises to the surface what I take to be the fundamental dilemma of climate politics: how do we account for the real stakes of the “climate imperative” without being defeated by its, truly, “all-consuming” nature? I fully agree with Fressoz that “energy transition” fails spectacularly to resolve this dilemma. But, it must be said, Fressoz has no positive answer himself, and he seems to only mock the attempt at one. At the end of his book, he departs us with a scoff: there is “no magic bullet, no ‘real transition’ programme, no emancipating green utopia” to offer (p. 220). A cheap, trite excuse for not engaging with the problem of subject formation that haunts the entire book, and which in turn risks blunting his otherwise very sharp critique.

To emphasize: the book’s premise is, to my mind, irrefutable (as much better put in the French title, Sans transition), and Fressoz is correct to suggest that we often are not dealing with the problem at the scale and scope it demands to be dealt with. What I take issue with is his method of investigation and how it shapes his resulting fatalistic, “all-consuming” history. The latter is just as untenable as “energy transition,” empirically, politically, and ethically. This is all the more ironic given the book emphasis on “material history”; yet, what is presented is precisely the kind of “materialism” that Marx and Engels had derided as “contemplative,” wherein the object of analysis, the history of energy, remains unmediated, matter-of-fact: never grasped subjectively, as a practical activity, a real archive of social struggle, but only one-sidedly, as merely objective necessity. Correction would mean, among other things, returning to this material history its “ideal form” in Evald Ilyenkov’s sense—or, precisely what Fressoz rebukes at the outset as the “political history” of energy.

An All-Consuming Symbiosis

At the outset, Fressoz notes ample evidence that ought to make his thesis self-evident:

• Despite significant growth in renewable energy, the global economy has never burned as much oil and gas as it does today (p. 2).

• Three times more wood fuel is burned today than a century ago, thus refuting the presumption that it had been replaced by coal during the Industrial Revolution (p. 2).

• 95% of coal that has ever been burned has been burned after 1900. The strongest growth in coal consumption in fact occurred from 1980-2010, after the supposed “Coal Age” (p. 3).

• The supposed “decoupling” of GDP growth in Western Europe from carbon emissions is a statistical artifact of offshoring heavy production, and thus the re-allocation of emissions to producing countries rather than consuming ones (p. 4).

• Even more, to the extent that e.g. Switzerland still profits greatly off of housing the headquarters off of global commodity trading companies like Glencore, “decoupling” is a financial mystification more than it is an accurate representation of Europe’s fossil fuel dependency (p. 5).

But what is more difficult to understand is the misalignment between, on the one hand, this preponderance of evidence that no energy transition has ever occurred or is currently in the works and, on the other, the hailing of an imminent “energy transition” by politicians, academics, and even many climate activists. The impropriety of this concept for our current conjuncture is what, in turn, occasions Fressoz’s writing, both to substantiate the historical absence of any “energy transition” over the past 250 years, as well as to conduct an ideology critique to explain why these “obvious” facts have received such scarce acknowledgment.

The first aspect—let us call it the empirico-historical argument—comprises a majority of the text, taking the form of historical reconstruction of the complex, “symbiotic” relationships that have unfolded across economies of wood, coal, and oil. But it is, in my view, this latter aspect—the ideology critique—which more clearly reveals the limits of the prior historiographical study. Thus it is worth recapitulating Fressoz’s ideology critique rather extensively.

Primarily covered in the last third of the book, what Fressoz presents there is a comparative discursive analysis of “energy” as it has mutated across different social contexts. Specifically, he locates the germ of “energy transition” not in the 1970s energy crisis, as has been commonly identified, but four decades prior in the US-based Technocracy Movement. Here, what Fressoz finds significant is the early technocrats’ assessment of the Great Depression as not merely a cyclical economic downturn but something far more chronic and, indeed, fatal. In brief, the technocrats argued that at the root of the crisis was the problem of electrification, which had in turn allowed for the technological substitution of labor, which reduced demand for consumer goods, which forced capitalists to reduce prices, which incentivized further technological substitution, ad infinitum. What this untimely concurrence of mass employment with energy abundance thus revealed was the looming obsolescence of an economy based on the scarcity of labor:

It was physically impossible to reduce unemployment because labour productivity was such that full employment would require staggering quantities of raw materials and energy. The crisis of 1929 was therefore neither financial nor economic: instead, it was both technological and Malthusian, corresponding with the peak of an ultra-productive economy in a finite world. (p. 137)

To further rationalize the necessity of socioeconomic transformation, the technocrats relied heavily upon the predictive power of the “S-curve”, as popularized by Raymond Pearl, a biologist who had inferred it to be regulating the population dynamics of the drosophila flies he was studying. In brief, the S-curve promoted the idea that population growth is not additive but exponential, as Thomas Malthus had argued a century prior, and will flatten only once it exhausts its ultimate, finite possibility, e.g., in food supply. Inspired by this idea, technocratic luminaries like M. King Hubbert began to apply the S-curve to all sorts of social and economic variables. Beyond population growth, rates of consumption of finite resources like coal in particular became subject to the “iron law of the logistic function” (p. 176).

Here is thus where the kernel of “energy transition” first emerges, namely, as a conclusion reached by 1930s technocrats who were applying the S-curve to the rational management of the economy—or perhaps better put, the economic management of society. While the S-curve of this or that variable was deemed unimpeachable, what the technocrats nevertheless also insisted was that individual S-curves could be replaced through the force of “innovation.” Here, of course, they relied heavily on the work of Joseph Schumpeter to demonstrate this possibility of staving off the cataclysmic effects of the stagnant right tail of the S-curve through the continuous “creative destruction” inherent to technological progress.

And indeed, the solution to the 1970s energy crisis and its concomitant ‘stagflation’ came to be interpreted in much the same manner, where historical energy transitions were modeled as a series of successive S-curves (wood → coal, coal → oil), and in turn the question of a future transition concerned replacing the oil S-curve with a new energy source. By far the loudest advocates for this model of “energy transition” were nuclear energy lobbyists, who had been warning of the inevitable depletion of fossil fuels—and, what’s more, the climatological effects of their associated emissions—since the 1950s. But, as Fressoz notes, even those wary of the “atomic technocracy” demanded by nuclear energy, i.e. the necessarily centralized and hierarchical management of its production, likewise adopted the S-curve paradigm. By the 1970s, major environmental organizations like the Sierra Club and the Friends of the Earth began to promote a “solar transition” which, while ostensibly embodying more democratic principles, was nevertheless premised on technological diffusionism, rather than any direct confrontation with the underlying organization of society. And, as Fressoz goes on to show, this technocratic futurology is indeed what informs the “energy transition” of the contemporary period—despite its markedly different context, constraints, and objectives—finding its way all the way to Group III of the IPCC, for whom the diffusion of increasingly exotic negative emissions technology has become essential to addressing global carbon emissions.

But “energy transition” has not simply remained the pet project of technocrats and uncritical climate scientists; for Fressoz, it has been thoroughly redressed in the “lexicon of sociological theories” (p. 12). Bruno Latour is, as one might expect, a central target here: insofar as he praises innovators like Louis Pasteur as being capable of “completely [reconfiguring] society,” Latour inherits this ideological convergence of the Malthusian S-curve with Schumpeterian “creative destruction.” Beyond Latour, however, Fressoz suggests more provocatively that this widespread fixation on the contingent and improvisational aspects of technoscience, a hallmark of social constructionism, has done “little to help us understand the nature of the climate challenge, which is characterized, on the contrary, by a high degree of certainty and is caused by the terrible inflexibility of old techniques” (p. 178).

Here is thus where we can see Fressoz’s notion of “symbiosis” plays its most polemical role. Not only, in other words, is it provided as a means of critiquing the Marxist and liberal emphases on competition as ultimate driver of capitalist development. Simultaneously, “symbiosis” is provided as antidote to the poststructuralist affinity for contingency, uncertainty, and flux, which, for Fressoz, had obfuscated, wittingly or unwittingly, the profound inertia of our global energy infrastructure.

While I find this critique compelling on its face, the problem, once again, is with how Fressoz historically reconstructs the “necessity” of these symbiotic relationships earlier in the book. Keeping the above ideology critique in mind, let us thus now turn to his prior discussion of wood fuel: against the common presumption that coal mines in Great Britain replaced wood as a source of energy, Fressoz notes that wood consumption within the energy industry actually increased in the country over the course of the 19th century. Hidden in the commonly cited statistics of wood fuel vs. coal consumption is the fact that wood became an indispensable material for coal mining, namely, in the construction of pit props. The invention of a new use-value for wood, beyond its use as fuel, thus led to a voracious new source of demand, such that Great Britain would end up consuming six to seven times more woodland “to produce energy in 1900 as it had a century and a half earlier” (p. 46).

And, as Fressoz will note later on in the text, even this should not lead the reader to believe that this old use-value for wood as fuel has disappeared, for at the global scale charcoal is used to produce more metallurgical heat now than ever (p. 59). Fressoz offers a powerful example: the French company Vallourec, one of the largest charcoal producers in the world, “probably” harvests more wood in a single year (~3 million cubic meters) than the “consumption of the world oil industry at the end of the nineteenth century, when derricks, barrels and tanks were all made of wood” (p. 100). Even more: while open-pit mines may have “broken free” from the dependency of coal production on wood, their deployment of diesel-powered machinery has only guaranteed their consumption of huge amounts of refined petroleum products, themselves reliant upon oilfield infrastructure made of steel, which is, once again, forged in coal- and charcoal-burning blast furnaces around the world (p. 55).

These historical observations of the interlinking interdependencies of energy and material flows are what give flesh to Fressoz’s concept of symbiosis. But these ‘facts’ are taken entirely one-sidedly, such that they can cleanly prefigure his subsequent critique of “technological progress,” as noted above. This cannot help but lead Fressoz to exasperation by the end of the book—noting how there are as many elements within a tire in 2020 as a whole car contained a century earlier, he muses:

By increasing the material complexity of objects, technological progress reinforces the symbiotic nature of the economy […] Over time, the material world has become an increasingly vast and complex matrix, entangling a greater variety of materials, each consumed in greater quantities. These few historical observations do not derive from an irrefutable law of thermodynamics: they merely illustrate the enormity of the challenge ahead—or the scale of the disaster to come. (p. 218)

Here, it is as if he indeed senses the impending critique (“these few historical observations do not derive from an irrefutable law of thermodynamics”) and thus intends to leave the possibility of transformation is open, perhaps—but for who, and by what means? Answers are absent, for the book builds toward a “symbiosis” that is “all-consuming,” its output a “material complexity of objects” that is not just daunting but insurmountable, save for the aforementioned “energy amputation” that would be, let us be honest with ourselves, just as apocalyptic as the harrowing visions of the right tail of an S-curve promoted by the 1930s technocrats. Cocooned in this “symbiosis” he has reconstructed in the history of energy, Fressoz can only mock the “nebulous group of neo-Keynesian experts, the NGOs and foundations thriving in the shadow of COPs” who idly assess the “cost of transition […] without any indication of how this fortune would change the chemistry of cement, steel or nitrogen oxides, or how it would convince producing countries to close their oil and gas wells” (p. 219).

But where is Fressoz’s indication? This is not to my mind a question of providing “magic bullets,” as Fressoz glibly retorts. It is fundamentally a question of being able to articulate “objective necessity” not simply in terms of “technological progress” but as the very shape of social struggle, as the necessary content of this “all-consuming” “symbiosis” of material and energy.

The Matter of Facts

In Endnotes’ essay “Error,” a point very similar to Fressoz’s trepidation about tires is raised: “What are we to make of the micro-component that is useless in abstraction from elaborate global supply-chains, such as, for example, the old iMac’s 922-9884 Screw, T10, WH, DLTA, PT3X24MM?” (p. 146). Commodity production is thus recognized by the authors not only as implying a profoundly “complex materiality” but also as signaling how little utility there is in any given individual component outside of the capitalist relationships it presupposes. So much of the “material world” is, in other words, designed and made for purposes (i.e., profit-making) at odds with a de-commodified life shared in common. Technology is thus here plainly recognized to be not some neutral substrate, easily adaptable toward new ends, but, echoing Fressoz, already determining our capacities and limits of action in the world. Though the example of the iMac screw is trivial, in this way the authors’ concern extends to a more general dilemma for communist politics: what is being appropriated when, in their struggle against the existing state of things, the proletariat turns to appropriate the “productive forces” of capitalist society (displacing for a moment the crucial distinction between technology and productive forces)?

For the authors of Endnotes, this is a difficult problem, but it is not an unanswerable one. First, they write, accepting that the capitalist world does indeed provision the parameters of our “action and behavior” does not necessitate conceding the impetus of the struggle against the former to an “ineffable negativity” (p. 117; on this point see an analogous critique I make of Wainwright and Mann’s Climate Leviathan). It is precisely the task of the critical theorist not to resign oneself to the cold matter of facts but to find their transcendence already given in the “shape of the world as it is” (p. 135). With this in mind, we can re-read Fressoz’s insistence on addressing the climate crisis at the scale it deserves by saying that it, indeed, has already made this demand of us: it is already determining our subjectivity at the scale of the planetary, and what is at stake for the theorist is articulating the shape this subjectivity not only must take but is already taking.

But this is also to say that the “shape of the world” is not and cannot be homologous with this smoothly “symbiotic” space of capitalist development as envisioned by Fressoz. For one, there are countless vulnerabilities that present themselves as local opportunities for struggle and thus the rejuvenation of class antagonism: pipelines, ports, terminals, all sorts of of chokepoints that can be and are leveraged in the struggle against capital. Here, citing the work of Timothy Mitchell and Andreas Malm (and indeed just those two), Fressoz insists that the best attempts to “inject politics” into the “economic history of energy” have merely repeated the “standard transitionist story” (p. 7). In turn, the only sustained engagement Fressoz makes with the history of labor throughout the book is in Chapter 6, but only in order to refute Mitchell’s Carbon Democracy—not for its oft-criticized ‘technological determinism’ but for failing to take into account the fact that oil never replaced coal and, hence, Mitchell missed the “energy coordination” that powers our global technological infrastructure. In contrast to this, however, the irreducibly “political” task of writing a materialist history of energy would entail connecting past and present struggles into a broader image of resistance, one which has already been at work negating the “transistionist narrative” Fressoz rightly critiques. More generally, it would entail grounding the very possibility of “symbiosis” in the presence and indeed persistence of countless divisions already sewn into the supply chains of the global economy.

In this way, neither “energy transition” nor “energy amputation” but the possibility of socioecological transformation is to be recognized as immanent to the world as it already is—albeit a “future” often, and necessarily, only speculatively retrieved. This is precisely what the Endnotes authors mean by “error” in the engineering sense of the term, as the “objective gulf between the unavoidable abstractions of the revolutionary imaginary and the real conditions of any actual revolution” (p. 159). Already given in the world is not merely the interlocking interdependencies of the “symbiotic nature of the economy,” as Fressoz has it, but also the “negative specification of the space of affordances in which particular ends may be pursued” (p. 160).

David Noble had recognized how, in its “very concreteness, people tend to confront technology as an irreducible brute fact, a given, a first cause, rather than as hardened history, frozen fragments of human and social endeavor” (2011, p. xiii). In his one-sided promotion of the notion of symbiosis, Fressoz’s history of energy continuously risks the same positivistic assessment of the “complex materiality of objects.” Renouncing previous attempts at the “injection of politics” into the history of energy, Fressoz’s own reconstruction remains, at best, half-finished. Its real completion could not hold such a one-sided, flattening “symbiosis” as telos of an irreducibly social history so riven with conflict; or, better put, it is precisely the telos of labor that is missing from Fressoz’s narrative of all-consuming symbiosis.

Here is a link to Part 1.

The Introduction of Oil Pipelines and the First Petroleum Exchanges

Pipelines helped greatly to insulate the transportation of oil against environmental hazards. When they were first introduced in 1865, one of the most important consequences for the oil trade was the coincident introduction of sturdy cast iron storage tanks, likewise designed to withstand the vagaries of the weather. Their advantage, however, was double-edged: while standardization allowed oil going into the tanks to be much more easily measurable than before, once the oil went inside, it “lost its identity by absorption into the general stocks” (Boyle, 1915, p. 8). Relief from the “bickerings” over an “honest barrel” was thus exchanged for a new problem of the anonymity of oil after its purchase.

Being already off the books and in circulation as far as producers were concerned, this anonymity led to new risks for pipeline companies, who found it difficult to enforce storage or pipeage fees, to say nothing of the removal of idle unsold oil back to its original producers. Unwittingly, the pipelines became a physical hedge for producers, as it was now the line companies that took on the risk of holding oil until it could be sold to a shipper, who then had to be trusted to pay the bills. Desiring to return this risk back to the producers, line companies quickly introduced a new contractual arrangement between themselves and producers where, instead of paying for oil in cash at the storage tank, pipers issued producers “pipeline certificates.” These certificates required routine verification at the office of the pipeline company for payment of storage charges, regardless of who the current holder of the certificate was, else they could be voided. This, in turn, not only offset the risk back to producers but obligated the latter to become more proactive in finding a shipper, as the pipeline company could now refuse to honor the certificate until fees were paid.1

“The system was simple; when producers placed oil in a pipeline, they were said to have a ‘credit balance’ in the pipeline company’s books, and could receive certificates in denomination equal to their balance” (Weiner, 2003, p. 5). By the late 1860s, three different types of certificates had already been standardized, quite reminiscent of modern futures exchanges: “spot” contracts for same-day delivery; “regular” contracts for delivery within a 10-day window of issuance; and “futures” contracts with monthly expiries. As stated above, a charge was typically also incurred for this service, payable in oil, which covered leaks, evaporation, and other risks associated with storage. Conversely, while the pipeline company never held title to the oil, the certificate system rendered them liable for on-demand delivery at request of the buyer; hence, this compelled the pipeline companies to always keep in storage an “amount of merchantable crude petroleum, equal to its credit balances” (Bell, 1890, p. 510).

The “high-class” creditworthiness of pipeline companies—especially once all of the pipelines in Pennsylvanian oil country had been consolidated under United Pipe Lines, a Standard Oil company, in the 1870s2—made these certificates as ‘good as gold’ in serving as a medium for the circulation of value. Thus, functioning “similar in all respects, to a deposit in a bank” (ibid., p. 510), it quickly became possible to use the certificates not merely as a representation of the value of the underlying oil commodity but as a bona fide and fungible financial product.

At the same time, rather than find a buyer directly, producers began to sell their certificates for cash to those willing to take on the risk of future price changes (Brown and Partridge, 1998, p. 571). This motivation, in turn, became the real basis for the financialization of oil in the early days of the industry. Formal exchanges quickly emerged for the trading of pipeline certificates, first in Titusville in January 1871, then Oil City shortly after (albeit both were abruptly closed for reason of lack of trading volume and reorganized in the coming years), and then across numerous major American cities, with Cleveland, Chicago, Cincinnati, New York, Philadelphia, and Pittsburgh at one point or another all having petroleum exchanges.

Robert Weiner provides a concise description of how trading became formalized during this period:

The exchanges had formal rules similar in many ways to those of today. Conferences of exchanges were held to standardize these rules, to negotiate with the pipeline companies, and to verify their assets. Self-regulation was enforced by inter alia, maintaining an arbitration committee and limiting membership. Members were forbidden to trade outside of the exchanges (known as “curbsome trading”), and could be fined by the exchange for doing so. Such trading flourished, however, often outside of exchange hours […] (2003, p. 11).

The proliferation of information was a crucial means by which exchanges sought to regulate prices. The use of private wires set up between trading houses, for instance, enabled inter-exchange arbitrage (Barbour, 1928, p. 131). Brokers would also post Bulletin Boards in front of their offices with prices updated every half hour during the trading day (10 AM to 12 PM and 1PM to 4PM Monday through Friday, except holidays). In the effort to preempt reckless speculation, the early exchanges limited membership, primarily to elite men of known business stature, and slowed down trading through the charging of high commission fees (ibid., pp. 130-131).

New Ways to Speculate

However, despite these information control and anti-speculation measures, market manipulation was rampant. In 1869, even before formal exchanges emerged, a “ring” had purportedly bought up enough futures for later in the year that they constructed a successful and lucrative corner on the market (Weiner, 2003, p. 7). As the exchanges emerged, more sophisticated “syndicates” began to form. There was, for instance, the “Penn Bank Syndicate,” organized in 1883, which conspired to raise the price of oil to $1.50 per barrel by manufacturing buying pressure between members in tandem with the public release of reports of favorable market conditions (Barbour, 1928, p. 138). Once trading momentum swelled to pull a sufficient mass of smaller traders into the corner, the Syndicate planned to then pull the rug and dump its positions.

Notably, however, Standard Oil stood strongly against the price raise. Having caught wind of this collusion, Standard simply withdrew its deposits from the participating banks. Being one of their central depositors, this all but forced the dissolution of the Syndicate. More generally, speculation became increasingly pronounced as competition between exchanges compelled them to lower barriers to entry, particularly by reducing brokerage fees.

Although producers themselves often used the exchanges to speculate, they also actively organized against the effect of exchanges on oil prices. The Petroleum Producers’ Union, for instance, formed in 1878 with the aim of combatting the low prices which they claimed were caused, in part, by the “manipulation of the stocks by speculators and buyers to depress price to suit their purposes” (qtd. in Weiner, 2003, p. 20, note 54). Such producers’ cartels were hard to maintain, however. Tasked with voluntary output restraints, members frequently “succumbed to the temptation to cheat as hordes of new drillers, eager to strike it rich, continued discovering new gushers” (McNally, 2017, pp. 18-19).

Thus, efforts among producers to rein in the pricing power of the markets ultimately failed. By 1874, the oil exchange was already “accepted at home and abroad as a price-making factor to the exclusion of economic principles of supply and demand” (Boyle, 1915, p. 9). Even further, by the 1880s the total flow of oil through pipelines superseded railroad transportation, precisely as margin trading on the exchanges had superseded cash “almost entirely” (Tennent, 1915, p. 13). This, in turn, meant volume on the exchange greatly increased over the decade and, with the loosening of commission fees and the proliferation of brokers, included a new class of traders, the public, which now fueled speculation not only indirectly through oil company stocks (as mentioned in Part 1) but in a much more direct way through the futures trade. “If a person sat down to have his shoes blackened, the bootblack was either a bull or a bear and in some way speculating in oil. He would tell of the different things that he had heard on his side. The dining room girls, the clerks, the cashier, the president of the bank, everyone would be speculating” (ibid., 1915, p. 14). It seemed “as if every fellow who could raise $100 or more was in the market” (Barbour, 1928, p. 133). As August Giebelhaus (1977) notes, even Joseph Pew, founder of Sun Oil, had purportedly been caught up in the paper trade as a young oil man, losing thousands of dollars while speculating on pipeline certificates (pp. 26-27).

That said, the public were mere “lambs for the slaughter” when pitted against the wolves of the market, i.e. professional traders (Boyle, 1915, p. 9). There are two main reasons for the structural vulnerability of the former to the latter. For one, professional speculators had much larger pools of funds with which to influence the paper trade, particularly when they were part of larger syndicates. More capital allowed them to draw smaller hands into the momentum of swing trading essentially at their discretion. Secondly, the ‘price indicators’ for speculators had less to do with earnest assessments of the “general situation” than with the construction of “rumor factories […] to fool the public” (Boyle, 1915, p. 9). As is common to other exchanges (then and now), these rumor factories were split between two departments, one for the “bulls” and the other for the “bears.” Whereas the former wanted the price of oil to rise, the latter wanted it to fall. To realize these price movements, the bulls and bears became masters of financial ill-advisement: the bears attempted to convince other market participants that oil production rates had skyrocketed; in reply, the bulls argued that, e.g., Standard Oil’s purchases were clear indications of favorable market conditions. But rumors went well beyond general market analyses: speculators would also promote at best unsubstantiated and at worse deliberately false claims about recent, highly watched wells having been proven to be dry holes or gushers. And such hearsay did not only involve events in the oil patch but national news items as well: the assassination of President James Garfield in 1881, for instance, was interpreted by traders to have an imminent, destabilizing effect on the oil trade. Prices subsequently rose, despite millions of barrels of oil already in excess capacity accrued that year (Barbour, 1928, p. 134).

While producers were at risk of getting caught underneath the rumor mill and realizing low or non-existing rates of profit, contestation of misinformation was often not worth sacrificing details about their actual oilfield successes and failures. Indeed sometimes they used this insider information to take advantage of exchange prices when they believed them to be above or below oil’s real value: “The size of discoveries [was] often concealed by producers (referred to as ‘mystifying’ or ‘making a mystery of’ a well), in order to take advantage of superior information by buying or selling on the exchanges” (Weiner, 2003, pp. 21-22; see also Brown and Partridge, 1998, p. 572).

The Scouts

In response to this concealment of production information, and with the futures exchange an unreliable indicator of market conditions, shippers hired scouts to gather intelligence in the oil patch. These “Night Riders” developed an array of tactics to subvert the secrecy of producers, who often employed armed guards to establish perimeters around their prospects.

A former scout, James Tennent, recalls his first appointment in the Cherry Grove field, where he gathered information about the depth of a “mystery” well by measuring with a level the height of the hill upon which it sat and comparing it to the known depth of a well lower in the valley (sometime later, he procured an aneroid from John Franklin Carll, a Pennsylvanian state geologist, which would allow him to do the same much more quickly and covertly). To better observe drilling activity, he also exploited the surrounding physical geography, hiding “under a shelving rock” situated on a higher hillside “where I could look down and had a good view of what they were doing” (Tennent, 1915, p. 17).

Scouts would also gather intelligence around town, eavesdropping on oil men, intercepting telegraph messages, or simply talking with townsfolk who were likely to have heard a thing or two about recent oil discoveries. Being acquainted with contractors also helped: tank builders, for instance, often worked close to the wellhead and hence passively gathered information from operators about flow rates, drilling depth, and so on. Tennent recalls one time paying a tank builder $5 to procure a sample of oil from a mystery well in order to compare it to known samples of other nearby fields (ibid., p. 22). If they managed direct observation of the well, scouts could make even more refined assessments of drilling activity: drill depth, for example, could be inferred by watching the resetting of tools at the wellhead and knowing the length of the grits of the derrick against which the drill cable passed. To know whether drilling had proved successful, scouts would observe the gas which accompanied oil as it escaped out of nearby vents and varied with changes to the flow and volume of oil. Sometimes, they could even make it directly to the well, either because it was abandoned as a dry hole or because the armed guards loosened their defenses, particularly at night—for instance, by casually watching the field while “in a shanty playing cards” (ibid., p. 19). Access to the well allowed for direct verification of their field observations, e.g. of well depth, and also more reliable measurements of flow and pressure, viz. by listening to the pipes feeding into the tank house.

Despite the purportedly noble service they provided to the oil trade, tasked with keeping all of its participants honest, scouts themselves apparently had few qualms about profiting off of the privileged information they procured. Indeed, realizing the value they provided, brokers and speculators “were willing to handle oil for them without margins or charging any commission” (ibid., p. 43; see also pp. 57-61). Insider trading was not particularly stigmatized among scouts, who thus not only disseminated production information but at times actively obstructed it. Indeed, they objected to open information about oil wells precisely because they “wanted a mystery. That was their business—to solve the mysteries, for where the information was free and open to everybody they could get but little advantage over the public” (ibid., p. 45).

Tennent recounts a notable instance where, in exchange for handling 25,000 barrels of produced oil, he and a few other scouts colluded with a drilling contractor to delay drilling for a prospect which was expected by many traders to yield a gusher. To make a convincing case for the delay, the driller deliberately sabotaged his own equipment and sent it to the tool dresser for repair. At night, after the other scouts had departed, Tennent and his team commenced drilling with the contractor and discovered that the well was dry. This, Tennent reckoned, would “create a panic on the Exchanges when it became generally known, for the reason that there had been so much short oil sold on the strength of this well being a gusher” (ibid., p. 46). As the team had journeyed back to the exchange in the morning, they crossed paths with friendly scouts headed out to the well. They managed to convince some of them to turn around in exchange for “some information regarding the well, provided they allowed [Tennent and his team] 20 minutes time after the opening of the Exchanges.” At market open, Tennent promptly bought 25,000 barrels of oil, releasing information about the dry well half an hour later. To further reward those scouts who turned around, they arranged with the drilling contractor to not commence drilling until an hour into the trading day. “This was one of the best scoops the scouts ever made” (ibid., p. 47).

Standard Oil Ends the Petroleum Exchanges

While Rockefeller would have preferred stable prices, Standard Oil tolerated the wild speculation of the petroleum exchanges insofar as the company could always adjust its storage costs in order to insulate it from price swings. In 1887, however, a bill was introduced by James K. Billingsly in the Pennsylvania State Legislature to regulate the charges pipelines made for storage and transportation of oil “at the demand of the holder” (Barbour, 1928, p. 142). Although the bill never passed, the associated scrutiny lawmakers placed on the oil trade put pressure on Standard Oil, now the sole owner of all of the state’s pipelines, to come to a compromise with regional producers, who had long been protesting the variable fees associated with storage. Eventually, Standard Oil agreed to a fixed reduction of storage charges from $0.4123 to $0.25 a day, per 1000 barrels.

However, being therefore less able to adjust costs, Standard now took on more risk of market price fluctuations from the pipeline certificates than it was willing to bear. Fortunate for Standard, its monopsony power allowed it to go back to paying producers for oil directly in cash without any risk of delivery, as the company now controlled 90% of the country’s refining capacity. This deemed the petroleum exchanges useless, and Standard proceeded to promptly purchased and canceled “all the certificates they could get” (Tennent, 1915, p. 15). With the futures market becoming increasingly illiquid, short selling became very dangerous, and brokers began to flee the business.

On January 23, 1895, Standard made the final blow to the oil futures market: its Pennsylvania purchasing wing Seep Agency, headquartered in Oil City, issued a memorandum to producers which stated that the “small amount of dealing in certificate oil on the exchanges”—illiquidity Standard Oil effectively guaranteed by canceling its own contracts—made “transactions there no longer a reliable indication of the value of the product” (reprinted in The Derrick’s Hand-Book, 1898, p. 775). Therefore, Standard would instead pay the “price as high as the markets of the world will justify, but not necessarily be the price bid on the exchange for certificate oil” (ibid.). Although some oil exchanges remained and diversified into other commodities (e.g. Pittsburgh Petroleum Exchange became Pittsburgh Petroleum, Stock, and Metal Exchange), this announcement from Standard Oil effectively took all pricing power for crude oil away from the exchanges and into its own “posted price” system. This, in turn, would dramatically stabilize US crude oil prices for the next several decades, until the Supreme Court-ordered breakup of Standard Oil in 1911, after which the “gusher years” would return again and dramatically increase oil price volatility.

Concluding…

One of the reasons I find this period of the oil industry so interesting is because of how it troubles our periodization of “financialization.” More specifically, Costas Lapvitsas (2013) has stressed that, although finance has been an essential moment in the circuit of capital since the Industrial Revolution, what is for him unique about the past 50 or so years is the increasing financialization of funds that were not rooted in surplus value and, in particular, the financialization of household income. As I have tried to show through this two-part post, “household income” was in fact a significant source of cashflow for oil financiers since the beginning, first, given the important of joint-stock companies and, second, given the participation of retail investors in the petroleum exchanges. Indeed, all of the kinds of market behaviors we tend to associate with the more recent futures market were already evident in this period: bears and bulls, ‘selling the news’, and even the avoidance of physical delivery by offsetting of equal and opposite paper trades.

Of course, crop futures trading exhibited the same behaviors, and “bucket shops” of the late 19th century had in turn likewise “brought futures to the masses” (Levy, 2006, p. 316). In both cases, then, the enrollment of household income into circuits finance capital since at least the 19th century ought to force a wholesale reconsideration of the history of financialization, as not only rooted in the buildup of idle capital but also, evidently, directly within wages.

References

American Transfer Co. n.d. Notes. Volume 2.207, Box J97a. ExxonMobil Historical Collection. Briscoe Center, University of Texas-Austin, Austin, Texas.

Barbour, John B. 1928. “Sketch of the Pittsburgh oil exchanges.” Western Pennsylvania Historical Magazine 11(3), pp. 127-143.

Bell, Herbert Charles. 1890. History of Venango Country, Pennsylvania, and Incidentally of Petroleum, together with Accounts of the Early Settlements and Progress of Each Township, Borough and Village, with Personal and Biographical Sketches of the Early Settlers, Representative Men, Family Records, Etc. Chicago, Brown, Runk & Co, Publishers.

Boyle, P.C. 1915. “Publisher’s Announcement.” In Tennent, James C. The Oil Scouts: Reminiscences of the Night Riders of the Hemlocks. Derrick Publishing Company, pp. 7-12.

Brown, John Howard, and Mark Partridge. 1998. “The death of a market: Standard Oil and the demise of 19^th century crude oil exchanges.” Review of Industrial Organization 13, pp. 569-587. https://doi.org/10.1023/A:1007795128137

Derrick’s Hand-Book of Petroleum, The (Volume 1). 1898. Derrick Publishing Company, Oil City, PA.

Giebelhaus, August. 1977. The Rise of an Independent Major: The Sun Oil Company, 1876-1945. Dissertation, University of Delaware.

Helfman, Harold M. 1950. “Twenty-nine hectic days: Public opinion and the oil war of 1872.” Pennsylvania History 17(2), pp. 121-138. https://www.jstor.org/stable/27769103

Lapavitsas, Costas. 2013. Profiting without Producing: How Finance Exploits Us All. London & New York, Verso.

Levy, Jonathan Ira. 2006. “Contemplating delivery: Futures trading and the problem of commodity exchange in the United States, 1875-1905.” The American Historical Review 111(2), pp. 307-335. https://doi.org/10.1086/ahr.111.2.307

McNally, Robert. 2017. Crude Volatility: The History and the Future of Boom-Bust Oil Prices. New York, Columbia University Press.

Tennent, James C. 1915. The Oil Scouts: Reminiscences of the Night Riders of the Hemlocks. Derrick Publishing Company.

Weiner, Robert J. 2003. “Financial innovation in an emerging market: Petroleum derivatives in the 19^th century.” Accessed at https://users.nber.org/~confer/2003/URCDAE03/weiner.pdf

For an American oil industry to emerge in the 1860s, a number of factors had to already be in place. First, there had to be an existing and substantial demand for oil. While petroleum has been exploited by humans for millennia, prior to the mid-19th century its utility was limited, primarily for things like ship caulking, waterproofing, and medicine. All of these end uses were able to satisfied with marginal quantities of oil; hence, there was little need for its industrialization. In the early 1850s, however, Samuel Kier of Pittsburgh managed to refine “rock oil” into kerosene. As a light, odorless illuminant that burned brightly and consistently, kerosene was quickly recognized as a desirable replacement for whale oil, the stocks of which were in rapidly decline as a result of overfishing in the preceding decades.

So, with this new end use, sufficient demand existed for industrialization; however, in the 1850s there was still no reliable method of extracting commercial quantities of oil. Crude oil was either collected as an accidental byproduct of brine well drilling, or else it was skimmed by hand and rag off the surface of waterways that petroleum seeps sometimes fed into—a common sight, for instance, in the Oil Creek of northwestern Pennsylvania. Both of these methods were too labor-intensive to compete with camphene, a pungent but nevertheless much cheaper illuminant distilled from turpentine which served as the other major alternative to whale oil available at the time. After several years of attempts, however, “Colonel” Edwin Drake finally managed to develop a structurally sound cast iron oil well in 1869, successfully extracting crude oil from 69.5 feet below the banks of Oil Creek near Titusville, Pennsylvania.

Thus, we have at the beginning of the 1860s both the sufficient demand and the technological means to industrialize the production of oil. As conventional oil books have it, the rest was history. But of course you do not just need means and want to make an oil industry; you also need idle capital to finance oilfield development and you need labor available to work on oil lands. Here, it is important to remember that northwestern Pennsylvania, the site of the first American oil boom, is hundreds of miles away from major East Coast cities like New York, Philadelphia, and Baltimore, where labor and capital were much more highly concentrated. How and why, then, did labor and capital migrate westward into the oil patch?

Free Labor and Idle Capital Flood into the Oil Region

For one, laborers were not simply compelled to travel to oil country because they inherently realized its value as an illuminant. Though a common theme in newspapers of the time, fantasies of common folk getting rich off ‘black gold’ presumes rather than explains their precarity. People, in other words, weren’t just drawn toward northwestern Pennsylvania because they thought they could become wealthy but, perhaps more importantly, because they were already poor. Edmund Morris, an early traveler to Pennsylvanian oil country, evocatively characterizes the laboring population that existed there:

Broken-down merchants from the north, young men without means, are often content to come here and accept the lowest situations, in order to watch for chances. A floating population of from forty to fifty thousand people wanders through the territory in sleighs, wagons, horseback and on foot, carrying carpet-bags, keeping their ears and eyes open, and ready at any moment for a ‘flyer.’ (1865, pp. 264-265)

Hence, the flooding of labor into the Oil Region was the result of processes of dispossession which were already well in force in the mid-19th century. In addition to Morris’ “broken-down merchants,” this reserve army of labor roaming across oil country included thousands of decommissioned soldiers who had become free laborers after the end of the Civil War, and who had little interest or luck readjusting to urban life. This is important to bear in mind, as it is a very understated aspect of the emergence of the American oil industry: by and large, it is not greed that motivates people to uproot their livelihoods and travel to the hinterlands. Rather, such livelihoods were much more often already uprooted.

As for capital’s march into the oil patch, Civil War-era policies—again independent of the dynamics developing in the Oil Region—played a key albeit underemphasized role. For one, the US Treasury’s minting of $400 million greenbacks to finance the war effort fueled land speculation after the war, and especially across Pennsylvania, Ohio, and West Virginia in the earliest days of the oil boom. “Prices for oil lands rose to dizzying heights; speculators often transacted business in cash to the tune of $50,000 or $100,000” (Lucier, 2008, p. 246). But what had really turned the country’s first oil boom into an “unparalleled, commercial epidemic” was the introduction of interstate joint-stock companies. Prior to the Civil War, most states in the Union required a lengthy and cumbersome chartering process for the incorporation of businesses, and Pennsylvania in particular prohibited out-of-state firms from owning any property in-state. In the early 1860s, however, laws passed in Pennsylvania both allowed out-of-state residents to own land and also simplified the process of business chartering. This, in turn, opened up new financial channels for capital to flow from East Coast cities into the inchoate oil country.

William Culp Darrah provides an illuminating account of the frenzy of oil capital that had been facilitated by this rush toward joint-stock incorporation: “In a single week in March, 1865 in New York, Boston, Baltimore and Philadelphia,” he writes, “twenty new oil companies were organized with an aggregate capital of $12,500,000” (1972, p. 16). By the end of that year, at least $326 million had been invested by Northern cities into the oil industry, with the vast bulk of that money coming from Philadelphia ($163.7 million) and New York ($134 million) (Morris, 1865, p. 258).[1] Notably, stock issuing made it possible for such funds to not only be provided by wealthy financiers but also working and middle class urbanites, whose interest in capitalizing on the oil industry had been fomented by the “ceaseless sensationalism” being sold by the press, running story after story of the excitingly topsy-turvy contours of oil country, where men of no social status could become millionaires overnight (see also Lucier, 2008, p. 247). In order to assist urban families of lesser means live vicariously through these same fantasies from hundreds of miles away, oil companies deliberately inflated stock volumes such that the shares could be sold at prices working class families could afford, as low as twenty-five cents: “The cook and chambermaid who had only ten dollars to invest, had now the opportunity of becoming rich” (Morris, 1865, p. 253).

While these funds, both those from financiers and those drawn from worker incomes, certainly served as fresh sources of productive capital, it is important to note that many of these joint-stock oil companies had little to no interest in actually developing oilfields. Instead, they raised capital purely for the purpose of speculating on leases. A notable example of an oil company capitalizing on leases was the United States Petroleum Company, which had once disposed in a single day sixty of its eighty owned leases upon discovery of oil on a single tract. The company sold for an average price of $3,000 per lease and netted more than $176,000. The organizers, as Darrah writes, “cared little about finding oil. They were selling stock. Oil or not made no difference. What they had to do was drill a well to satisfy stockholders” (1972, p. 10). Hence, the sheer liquidity of land markets only further exacerbated ‘oil fever’, insofar as every new oil strike would raise the market price of leases not merely because of the possibility of finding oil in bordering parcels but also as a result of the latter’s ‘investment demand’, i.e. the lease became, in itself, an appreciating asset.

Another, less risky way in which oil companies kept their funds in circulation—that is, rather than invest it in oil production—was by being the first mover into a new prospect, assembling large tracts of land, and then subleasing parcels to operators, thereby “recovering almost at once their investments and in many cases reaping fortunes merely by speculating in leases” (Darrah, 1972, pp. 16-17). Hence, the strategy here was to siphon rent from the original landowner while deferring the risks of both lease holding and oilfield development onto the forward counterparty, typically a wildcatter or small-scale producer.

In all, land speculation greatly increased the overall velocity of money: “Land bought one day has sometimes realized five, ten, twenty times the amount paid for it within a day or a week following” (Morris, 1865, p. 256). Indeed, speculative activity in land markets made leases so expensive that small investors could not afford to develop their own leases even if they wanted to. Instead, they were forced to resort to acquiring “fractions of an interest” in a single well, “which might be flowing, pumping, going down, getting started, or none of the above” (Lucier, 2008, p. 247).

And, as the relationship between land markets and the ‘real’ supply and demand of oil was loosened, swindling became all that much easier. Lease traders, for instance, took great advantage of the fact that the price of acreage would rise not just because of a definitive new discovery of oil nearby but purely on account of market activity, i.e. leases being bought and sold, such that ‘pump and dump’ schemes became a standard part of doing business: Edmund Morris writes of a “known case” where a speculator would rapidly buy up productive lands only in order to sell nearby less productive land for “ten times the sum which he had given for ten times the quantity, being thousand per cent advance” (1865, p. 261).

Joint-stock companies became an ideal vessel for such sleights of hand, insofar as the nationwide hype around the oil industry in the 1860s allowed companies to accrue great magnitudes of liquidity without any prospect or even intent of paying dividends. Indeed, many of these joint-stock companies

had no real value. Their lands, where any title to land really exists, have no indication of the presence of oil in quantities to warrant boring. The only object of their existence was the creation of shares to be sold at a profit by the sharp-witted projectors. The originators of such companies are moral swindlers, and only evade the legal responsibilities of actual swindling by the ingenuity with which their ‘prospectuses’ are framed. (Bone, 1865, pp. 146-147)

Attempting to remedy this situation, lawyers from New York and Philadelphia were often recruited by wealthier stockholders to investigate the legality of their holdings. When lawyers went to investigate, however, they often found that the company issuing the stock not only did not have any legal claim to oil interests but did not even exist: “There are no doubt many other stocks that are really worth all, and more than they bring in the market, if the price of oil continues as it now is. But it takes great knowledge and experience of the innermost matters of these companies, to know what is good and what is fraudulent” (Morris, 1865, p. 261). “As in other things,” a contemporary had written, in oil companies “there is the good and the evil—the true and the false” (Eaton, 1866, p. 245).

Ironically, then, lowering the barriers to entry by simplifying the process of incorporation, allowing out-of-state landownership, and encouraging public investment via stock offerings did not ‘democratize’ oil markets so much as further exacerbate economic inequality—not only within the Oil Region but across the northern United States. Unsurprisingly, the press tended to blame economic hardship on the imprudent financial decisions of individual investors: “It is astonishing to see,” reads one news article, “how many persons will come boldly up and invest hundreds and thousands of dollars in oil-stocks, without any positive knowledge of the value of the property in which they invest” (qtd. in Morris, 1865, p. 264). But, once again, it was not only wealthy financiers who got caught up in the frenzy. Enticed by both the “sensationalist” press and countless fake joint-stock oil companies, thousands of working class families were sold fantasies of quick riches that could and would never materialize.

Infrastructural Limits to the Financialization of the Early Oil Markets

Beyond land markets, the incentive to financialize the commodity itself—that is, barrels of oil—was also realized from very early on, indeed essentially since the inception of the modern American oil industry. The problem was fairly straightforward: “Since the first discovery of oil in 1859, U.S. crude oil output and prices followed cycles with prices falling as new fields were discovered and drained and then rising as supplies again became tight” (Libecap, 1989, p. 835). Hence, productive capital faced immense price risk in the oil patch, as month-to-month it was extremely difficult to tell if the return on investment would be profitable. Further, and precisely because of the predominance of joint-stock companies in the oil industry, oil prices and stock prices tended to move in tandem. The steep downturn in oil prices in April 1865, for instance, was mirrored in an oil stock crash reported to have “destroyed $2,000,000 of property in Oil City alone” (Morris, 1865, p. 276). Such risks were intolerable to wealthy financiers, and new financial mechanisms to secure investments were therefore quickly pursued.

But the central issue was that, unlike the stock market, the oil market was at the outset extremely illiquid, and this made financial instruments for the securitization of the oil trade very difficult to implement. Indeed, the first oil “market” was not so much a market at all but a “simple matter of barter between the producer and the refiner or his agent, and the price and terms were arrived at by mutual agreement” (Boyle, 1915, p. 8). In such informal, bilateral exchanges, oil barrels were not even standardized—in the earliest days, oil was transported in spare old whiskey or wine barrels (McNally, 2017, p. 15)—such that many had “excess gallonage over the registered capacity, resulting in bickerings and a demand for an honest barrel” (Boyle, 1915, p. 8). The construction of the Oil Creek and Framers railroad in 1866 saw somewhat more orderliness and formalization of a market, as specially designated passenger cars became a place where oil men congregated to trade. “Strictly speaking,” this was “the first oil exchange in the region. There were no officers nor governing rules; but in those days the word of an oil man was considered as good as his bond” (Bell, 1890, p. 519).

A more formal, centralized commodity exchange would emerge only after the introduction of a more standardized means of transportation. Indeed, in addition to the price risk associated with the boom and bust cycle of oil discoveries, early oil markets were highly vulnerable to the physical precarity of the methods available to transport oil (Barbour, 1928, p. 127). Oil Creek, after all, is situated in the backwoods of northwestern Pennsylvania, with the first railroads servicing Titusville only being built in the mid-1860s (Bell, 1890, p. 508). Before this, oil extracted along Oil Creek had to be carted out by teamsters on horseback. Most often, the teamsters took oil to Titusville, where it was then shipped down Oil Creek (Darrah, 1972, p. 100). At the meeting point of Oil Creek and the Allegheny River rests Oil City, where oil was placed onto larger barges which navigated down the Allegheny and delivered the oil to refineries in Pittsburgh and Cleveland.

Inclement weather could greatly restrict this lengthy chain of oil transportation, with winters freezing creeks and rivers and rainstorms muddying the roads to the point of impassability for the teamsters’ horses. To this point, Hebert Bell recounts three illustrative disasters, all of which occurred in the 1860s. First, on Sunday, December 7^th, 1862, there was the deluge of a great “ice-gorge” (1890, pp. 511-512). In the weeks prior, an extraordinarily large number of barges were stationed at the Oil City wharf, carrying barrels of oil which had been purchased earlier in the year. They had been waiting for the first flood rise to be able to make it back to Pittsburgh. On the Friday before December 7^th, snow began to fall, and a subsequent cold snap on Saturday morning froze the rivers, which closed down all water traffic. In defiant insubordination, however, renegade ice blocks congregated along the Allegheny River upstream of Oil City, forming a dam which backed up the river until at one point built up pressure gave way to a massive torrent. An “ice-gorge” befell Oil City, destroying 200 boats and emptying tens of thousands of barrels of oil into the river.

A second disaster occurred on Tuesday, May 31^st, 1864, when a traffic jam on Oil Creek resulted in a crash which tipped over fifteen thousand barrels of oil. The water became so thick with oil that it gave some entrepreneurially minded oil men a ‘new’ idea: skimming oil off the surface of the creek, just like the olden days. Some managed to do so quite lucratively, selling 50 to 100 barrels per day. Even still, the spill led to fears of scarcity on the market, pushing the price of oil in Oil City up from $7.75/bbl to $17/bbl (ibid., p. 513). Last but not least, there was the “great flood” of March 1865. Days of heavy rain led to a flash flood in Oil City which dragged trees, tanks, boilers, houses, and oil boats along with it. In the end, at least one man had been killed, dozens of houses destroyed, innumerable wells on the riverbank lost, and sixty thousand barrels of oil spilled out into the creek (ibid., p. 514).

In Part II, I will show how it was precisely the development of the first pipelines in the Oil Region which made possible the financialization of the early oil trade. Namely, what this new infrastructure allowed for was 1) protection of oil’s physical circulation against the uncertainties of weather, and 2) the standardization of oil contracts through financial instruments known as “pipeline certificates,” which were issued by the pipeline companies. That said, I will also show how the subsequent emergence of oil futures markets, dubbed “petroleum exchanges,” became the basis not for a reduction of price risk but itself introduced even more rampant speculation, market gaming, and, in turn, price volatility. Finally, I will explain how Standard Oil’s monopolization of the refining industry allowed the company to unilaterally squash these first petroleum exchanges by the 1890s. In 1869, John D. Rockefeller had reportedly said, “the oil business is mine” (qtd. in Klein, 1914, p. 12). By the end of the century, this was beyond dispute, at least in the United States.

[1] Morris notes that these figures do not include an addition of at least another $100 million coming from private enterprises which were not publicly traded (1865, p.258).

References

Barbour, John B. 1928. “Sketch of the Pittsburgh oil exchanges.” Western Pennsylvania Historical Magazine 11(3), pp. 127-143.

Bell, Herbert Charles. 1890. History of Venango Country, Pennsylvania, and Incidentally of Petroleum, together with Accounts of the Early Settlements and Progress of Each Township, Borough and Village, with Personal and Biographical Sketches of the Early Settlers, Representative Men, Family Records, Etc. Chicago, Brown, Runk & Co, Publishers.

Bone, J.H.A. 1865. Petroleum and Petroleum Wells. What Petroleum Is, Where It Is Found, and What It Is Used for; Where to Sink Petroleum Wells, and How to Sink Them. With a Complete Guide Book and Descriptions of the Oil Regions of Pennsylvania, West Virgnia, Kentucky and Ohio (2^nd edition). Philadelphia, J.B. Lippincott & Co.

Boyle, P.C. 1915. “Publisher’s Announcement.” In Tennent, James C. The Oil Scouts: Reminiscences of the Night Riders of the Hemlocks. Derrick Publishing Company, pp. 7-12.

Darrah, William Culp. 1972. Pithole, the Vanished City: A Story of the Early Days of the Petroleum Industry. Self-published.

Eaton, S.J.M. 1866. Petroleum: A History of the Oil Region of Venango County, Pennsylvania. Its Resources, Mode of Development, and Value: Embracing a Discussion of Ancient Oil Operations; with a Map, and Illustrations of Oil Science and Boring Implements. Philadelphia, J.P. Skelly & Co.

Klein, Henry H. 1914. Standard Oil or the People. New York, self-published.

Libecap, Gary D. 1989. “The political economy of crude oil cartelization in the United States, 1933-1972.” The Journal of Economic History 49 (4), pp. 833-855. https://doi.org/10.1017/S0022050700009463

Lucier, P. 2008. Scientists and Swindlers: Consulting on Coal and Oil in America, 1820-1890. Baltimore, The Johns Hopkins University Press. https://doi.org/10.1353/book.3500

McNally, Robert. 2017. Crude Volatility: The History and the Future of Boom-Bust Oil Prices. New York, Columbia University Press.

Morris, Edmund. 1865. Derrick and Drill, or an Insight into the Discovery, Development, and Present Condition and Future Prospects of Petroleum, in New York, Pennsylvania, Ohio, West Verginia, &c. New York, James Miller.

Mantle plume modeling, from: https://earthsciences.anu.edu.au/research/research-projects/pulsing-mantle-plumes-causes-and-geological-consequences

In the succession of the economic categories, as in any other historical, social science, it must not be forgotten that their subject—here, modern bourgeois society—is always what is given, in the head as well as in reality, and that these categories therefore express the forms of being, the characteristics of existence, and often only individual sides of this specific society, this subject, and that therefore this society by no means begins only at the point where one can speak of it as such; this holds for science as well.

-Marx, 1973 [1858], p. 106

Oreskes, Shrader-Frechette, and Belitz (1994) have provided a landmark critique of epistemology in earth science. At the center of the co-authors’ contention is the problem of the verification of numerical models against empirical observations, which, they argue, is impossible. Defined as the correlation of a given model with the “truth” of “real world” phenomena, the semblance of any “verification”, the authors claim, obscures an underlying category error which conflates two very different kinds of systems: closed systems, such as those of logic and mathematics, and open systems, such as that of the earth. (NB: We will have reason to refuse this dichotomy below.)

Unlike closed systems, which they take to be defined axiomatically, the input parameters of the ‘earth system’ are, first, never completely known and, second, always subject to “extenuating circumstances.” This distinction, in turn, alters the respective criteria for the verification of truth claims of these different types of models in a fundamentally irreconcilable way. To illustrate, the co-authors provide the following example:

I say, ‘If it rains tomorrow, I will stay home and revise this paper.’ The next day it rains, but you find that I am not home. Your verification has failed. You conclude that my original statement was false. But in fact, it was my intention to stay home and work on my paper. The formulation was a true statement of my intent. Later, you find that I left the house because my mother died, and you realize that my original formulation was not false, but incomplete. It did not allow for the possibility of extenuating circumstances. Your attempt at verification failed because the system was not closed. (Oreskes, Shrader-Frechette, and Belitz, 1994, p. 641)

The truth content of closed systems is, in other words, qualitatively distinct from the truth content of open ones, and different criteria follows from different content. Most importantly, the truth content of open systems can never be deduced from a priori justifications alone: it can only ever be inferred through observation, no matter how ‘objective’ (read: impartial) those conclusions may seem (ibid., p. 642). Further, because these parameters always remain inferential, closed models inferred from the observation of open systems can never be definitively proven to be unique in their correspondence with the latter. If, as indeed often happens in earth science, two models can both produce outputs consistent with the same observation, forging any criterion that might verify one against the other takes us beyond empirical nature and depends instead upon non-scientific assertions of “symmetry, simplicity, and elegance, or personal, political, or metaphysical preferences” (ibid., p. 642).

In all, then, unverifiable, nonunique closed models of open systems cannot make any permanent claim to the truth content of the latter. They are at best heuristic guides: “Legitimately, all we can talk about is the relative performance of a model with respect to observational data, other models of the same site, and our own expectations based on theoretical preconceptions and experience of modeling other sites” (ibid., pp. 643-644). Only provisionally consistent with the ‘real world’, then, the authors conclude that models are “most useful when they are used to challenge existing formulations, rather than to validate or verify them” (ibid., p. 644).

The peculiarity of this argument rests in the fact that, while verification is thus deemed categorically impossible, the ontological status of models vis-a-vis facts remains obscure. In short: where do these ‘closed’ models come from, if not ‘open’ material existence? With this inquiry in mind, the paper can be seen as a rather mundane rehearsal of Kant’s critique of epistemology, this time among earth scientists. Indeed, when pressed to give further characterization to this distinction between models and facts, the former end up appearing timeless—explicitly, they say models do not exist, likening them to a “novel” which “may resonate with nature” but is “not a ‘real’ thing” (ibid., p. 644). Hence, models from this vantage point appear to be formal and idealist abstractions with a permanently underspecified relationship to the reality they are supposed to represent. While direct observations of reality can confirm them provisionally, the former can never “demonstrate the veracity of a model or hypothesis, they only support its probability” (ibid., p. 643).

But this epistemological critique cannot help but provide an impoverished explanation of the relationship between model and fact, and hence cognition and reality. The central issue is that the limitations imposed here—within which thought restricts its “models,” qua forms of cognition, from the possibility of verification against ‘true’ reality—already and inexplicably depend upon a veritable claim about the world: in this case, the transhistorical, objective reality of the earth as an open system (and, conversely, logic as a closed one). How can one suggest the inadequacy of numerical models without already presupposing a truth about the reality of earth systems against which this inadequacy measures itself? And, in turn, by what criteria is this inadequacy ‘modeled’, and hence known and verified? The authors have no answer to this question, for its absence is what silently conditions the saliency of the argument: it is the impossibility of the verifying “numerical models” which verifies, albeit only negatively, the openness of earth systems.

Now, this criticism need not lead us to any relapse into the vulgar scientism which Oreskes, Shrader-Frechette, and Belitz sufficiently critique. But it does reveal the inadequacy of their (non-)explanation of the ontological status of numerical models. In other words, it reveals how the co-authors cannot grasp how categories of thought are not simply “fictions” but “forms of being, the characteristics of existence” (Marx, 1973 [1858], p. 106). It is trivially true that models can only ever approximate empirical observations (insofar as the former is always an abstract expression of the latter), hence that they do not maintain any permanent, fixed identity with them. And, no doubt, there is great confusion on this point in the history of earth science. Indeed, the earliest exploration geophysicists often treated geophysical maps as if they offered definitive, ‘exact’ accounts of the subsurface. This “unfortunate attitude,” as Wyckoff had lamented, led to the condemnation of entire prospecting regions should they not readily reveal the signatures of oil-bearing structures which prospectors were prepared to recognize (1944, p. 296).1 But, to stress, this “unfortunate attitude” does not simply denote that conflating model with fact is a routine, mundane affair within the practice of earth science. It also evinces how all earth models are historically specific forms of consciousness.

As Lukács stresses in The Ontology of Social Being, critical recognition of the lack of any necessary correspondence between models and facts can easily fall back into neo-Kantianism, a la Oreskes, Shrader-Frechette, and Belitz (1994). But this is precisely why the Hungarian Marxist finds Hegel’s logic superior, by contrast, because it is “not a formal logic, but rather an inseparable intellectual union of logic and ontology” (1978, p. 20). Logic, in other words, is not a ‘closed system’ radically separated from the ‘open system’ of the earth. For Hegel, logical categories are “dynamic components of reality, as stages or steps along the road towards the self-attainment of Mind […] the movement in thought, in notion, judgment and syllogism is only the mental side of the intensive infinity of any object, relation or process” (ibid. pp. 21-22).2 In contrast, Oreskes, Shrader-Frechette, and Belitz neglect any discussion of the history of the relationship between models and reality, in turn falling back into a methodological dualism.3 Indeed, history does not come up once in their article. Their critique of verificationism for open systems is presented merely as a proof of the logical fallacy of “affirming the consequent.”

However, Lukács also writes that Hegel falters insofar as he can be said to ignore the contradictory reality of social being (whether this is a fair criticism I will leave to the side). In turn, for the late Lukács (as well as Marx), while, on the one hand, Hegel’s “intellectual union” of logic and ontology progresses beyond Kant’s transcendental deduction, it also serves to mask the “genuine ontology” of social being Hegel had simultaneously proposed, one which does “not just grasp reality as dialectical but is itself dialectical in its structure and development” (Browne, 1990, p. 196). It is instead Marx who recognizes this “genuine ontology” from its necessary standpoint of labor, for it is only from this perspective (according to Lukács) that the recognition of the real dialectical structure of social being is possible, and wherein the apparent “hiatus between form and matter which bedevilled Kantianism” is both affirmed and negated (ibid., pp. 207-208). On the one hand, as Marx had insisted, labor “confronts nature as one of her own forces,” hence labor, as ‘form-giving fire,’ emerges from the matter to which it gives form (1977 [1857], p. 173). On the other hand, the “teleological positing” of labor, i.e. its self-conscious capacity to take up its own means and transform them into new ends, “determines a portion of existing reality as matter within the medium of a new labor process, thus creating a discontinuity implying a rupture or heterogeneity between form and matter” (Browne, 1990, p. 208). At once, then, labor exists in unity with nature while also being a particular differentiation of nature. There can in turn never be an ultimate coincidence between form and matter, and hence no pure identity between logic and ontology, but rather, these terms cohere only within a dialectical unity. What unfolds at the base of the metabolism of society and nature, in other words, is the continuous and contradictory process of labor objectifying itself, contradictorily, in things and thoughts.

To develop the stunted argument of Oreskes, Shrader-Frechette, and Belitz: from the vantage point of the dialectic of history, the logic of ‘closed systems’, even of universal mathematics, is thus objective and real only insofar as its becoming remains essential to its being.4 If and when this recognition fails, mathematics loses its correspondence to reality ‘as such’ (here, confirming Oreskes, Shrader-Frechette, and Belitz) and, instead, turns to represent a ‘closed system’, a “reality cocooned” by a universalizing, rational system of thought (Lukács, 1971 [1923], p. 129)—one quite different, we should add, from the “rich totality of many determinations and relations” which comprises the dialectical reproduction of the concrete in thought (Marx, 1973 [1858], p. 100). In either case, what is important to stress is that this cocooned reality is neither natural (in the sense of immediate) nor merely fictitious; it is a historical product. Indeed, the capacity of mathematized science to grasp so much of ‘objective reality’ represents a remarkable achievement in the concrete objectification of modern rationalism.

To be sure, this situation does not prevent the scientist from recognizing “objectively and correctly an objective partial cohesion in reality,” but the point is that this is not the same as “being in a position to say anything true and dialectical about the reality of that ‘world of appearance’ whose parts [the scientist] researches correctly” (Lukács, 2002, p. 125). The mathematized science scrutinized by Oreskes, Shrader-Frechette, and Belitz, in other words, can certainly arrive at correct, dependable claims about reality without for this reason being able to offer any justification of the grounds on which it is able to do so. This is because, while it perceives the immediate appearance of isolated ‘facts’ reduced to their “purely quantitative essence, to their expression in numbers and numerical relations,” it never turns to regard these facts from the standpoint of the “concrete unity of the whole” (Lukács, 1971 [1919], p. 6). For as long as “we are not in a position to demonstrate concretely the historical genesis of the emergence of our perceptions out of their material basis, i.e. not only that they are, but what they are, and how, etc.,” as Lukács writes, “our mode of looking is lacking an important objective moment of the dialectic: history” (1971 [1923], p. 117).

It is indeed precisely the tendency toward formalism within modern science (up to and including its critique, as is well articulated by Oreskes, Shrader-Frechette, and Belitz above) which ought to signal to us the obfuscation of the “historical genesis” of modern science. Through the reification of bourgeois consciousness, history comes to appear accidental to science rather than an “essential, objective moment of the dialectic.” Against this elision of history, we ought to follow Lukács in insisting that scientific advancement is reflective of and historically mediated by the ontology of social being.

With all this in mind, it seems to me we can say something much more interesting about the relationship between the proliferation of ‘closed’ numerical models in earth science and the notion of ‘open’ natural systems than what is argued by Oreskes, Shrader-Frechette, and Belitz. Rather than treating the two as external to and independent of one another, I want to leave here with the suggestion that they intimately imply one another and, further, that the existing form of their dialectical relationship is grounded in technological transformations which took place over the course of the 20^th-century. Put bluntly, the open-system/closed-model dialectic is essential to the midcentury emergence of systems theory and describes how problems of statistical analysis have been framed ever since.

One too brief example: in the second part of his two-volume autobiography, I Am a Mathematician (1956), Norbert Wiener describes this predicament with great clairvoyance as he recounts his enjoyment gazing upon the Charles River while strolling along its banks at MIT. While the “moods” of the waters were “always delightful to watch,” he writes, they had “another meaning” to the mathematician and physicist (ibid., p. 33). This is because any adequate mathematical description of the motion of the surface of the Charles, with its waves ranging wildly and continuously across spectra of frequency, strength, and length, appeared to be so brilliantly irreducible to any closed algebraic function. In response, Wiener asks:

How could one bring to a mathematical regularity the study of the mass of ever shifting ripples and waves, for was not the highest density of mathematics the discovery of order among disorder? […] What descriptive language could I use that would portray these clearly visible facts without involving me in the inextricable complexity of a complete description of the water surface? This problem of the waves was clearly one for averaging and statistics […] (ibid., p. 33)

Citing our “limited measuring instruments,” the determinism which characterizes the “great physical tradition of Newton” is therefore ruled by Wiener to be an inadmissible starting point in describing something as complex and chaotic as the surface of the Charles (ibid., p. 34). Perfect knowledge of its motion being unattainable, the “working physicist” has no choice but to assume a “physics of probability” which keeps open “many different universes simultaneously,” in turn attempting to describe the movement of the water’s turbulence as a statistical formalization of fundamentally stochastic and interminably complex processes. Of course, the statistical mechanics Wiener is drawing on here precedes modern computing by a century, and very complex earth models had in turn been theoretically devised for some time. Their application was stunted, however, because, as Enders Robinson had once put it bluntly, “the solutions were impossible” (qtd. in Goldstein, 2021). An “open-system” mathematics was too complex for manual computational processes.

Yet, again during middle decades of the 20^th-century, “more realistically complex, even chaotic, views” of the deep structure of the Earth emerged (Brown, 2013, p. 253). Early oil prospectors had an outspoken influence on this epistemological transformation (Anduaga, 2016)—as did changes to the technological mediation of the subsurface. Indeed, the very recognition of complexity was not independent of but conditioned by the advancement of techniques for statistical modeling which informed the design of modern computers for oil exploration. Formalization of geostatistics, however, was not feasible until there was, first, technical means of producing, processing, and interpreting sufficient amounts of observational data and, second, the economic imperative to do so. Modern computing gave rise to precisely this possibility, not, pace Wiener, by mirroring some complexity ‘found in nature’ but by giving a concrete, objective form to the idealist notion of mathematical complexity—which, in turn, allowed for the translation of classical problems of integral calculus into discrete problems of time series analysis and, moreover, digital computer programming.

References

Anduaga, A., 2016. Geophysics, Realism, and Industry: How Commercial Interests Shaped Geophysical Conceptions, 1900-1960. Oxford University Press, Oxford. https://doi.org/10.1093/acprof:oso/9780198755159.001.0001

Brown, Larry D., 2013. “From layer cake to complexity: 50 years of geophysical investigations of the Earth.” Geological Society of America. Special paper 500: The Web of Geological Sciences: Advances, Impacts, and Interactions. Edited by Bickford, M.E., pp. 233-258. https://doi.org/10.1130/2013.2500(07)

Browne, Paul. 1990. “Lukács’ later ontology.” Science & Society 54 (2), pp. 193-218. https://www.jstor.org/stable/40403069

Goldstein, A., 2021. Enders Robinson: an interview conducted by Andrew Goldstein.” Interview #326 for the Center for the History of Electrical Engineering, The Institute of Electrical and Electronics Engineers, Inc. Available at https://ethw.org/Oral-History:Enders_Robinson

Lukács, Georg. 1971 (1923). History and Class Consciousness: Studies in Marxist Dialectics. Translated by Rodney Livingstone. Cambridge, MIT Press.

Lukács, Georg. 1978. The Ontology of Social Being: Hegel’s False and His Genuine Ontology. Translated by David Fernbach. London, Merlin Press.

Marx, Karl. 1973 (1857). Grundrisse. Translated by Martin Nicolaus. New York, Vintage Books.

Oreskes, Naomi, Shrader-Frechette, Kristin, Belitz, Kenneth. 1994. “Verification, validation, and confirmation of numerical models in the earth sciences.” Science 263(5147), pp. 641-646. https://doi.org/10.1126/science.263.5147.641

Wiener, Norbert. 1956. I Am a Mathematician: The Later Life of a Prodigy. Cambridge, MIT Press.

Wyckoff, R.D. 1944. “Geophysics looks forward.” Geophysics 9(3), pp. 287-298. https://doi.org/10.1190/1.1445080

Matter, however, is never without an essential form, and it is only by virtue of this form that it is something. The more I appropriate this form, the more I come into actual possession of the thing.

-G.W.F. Hegel, Philosophy of Right (1991 [1820], §52)

In A Geology of Media, Jussi Parikka suggests that “media materialism refers to the necessity to analyze media technologies as something that are irreducible to what we think of them or even how we use them” (2014, p. 1). This is a perfectly incoherent formulation for an intellectual inquiry. Surely, in making the unintelligibility of the object the center of our analysis, we are already thinking a great deal about what we claim exceeds our ability to think about. I don’t mean to be coy; of course, I know what Parikka is trying to say: materiality in some way precedes or remains independent to thought, and that, further, this excessiveness is often obscured insofar as materiality is only ever received in forms imposed by thought. It is an old philosophical problem, much older than media studies. But the conceptual privilege apparently owed to materiality is simply posited by Parikka rather than justified. This, then, is what leads to incoherency: the excess of materiality is posited from the limited perspective of a consciousness which is, from the outset, denounced as failing to account for its own alterity. Who is thinking here, then? Who, in other words, is in a position to announce the irreducibility of materiality to its thoughtful mediations?

Before proceeding to answer that question—one left entirely unexplored in A Geology of Media—the first thing we must clarify is the ontological status of materiality. Given the incoherency of the research program, I suggest that this status remains confused in Parikka’s account. On one hand, Parikka writes of lithium as a “premediatic media material,” his point being that “mineral durations” are essential for the functioning of media apparatuses, yet in-themselves do not remain forever pliable to human ends (2014, p. 4). A radio will slowly degrade and break down; form will give way to the ‘raw’ materiality which preceded it and which will outlast its social forms. This Parikka characterizes as the “materiality of the uncontained” which runs “constantly in tension with the operations of framing” (ibid., p. 13). Once again, however, we have no criteria with which to verify this uncontained-ness of materiality. The breakdown of an apparatus does not somehow leave it unformed by consciousness; it simply takes on a different form with respect to that consciousness. If it is thought at all, it does not ever escape its cognitive mediation, definitionally.

So, this “materiality of the uncontained” explains nothing about the materiality in question; it only further mystifies the dependency of its positing on (human) consciousness. Notably, at other points in the book, Parikka appears to recognize this. His subsequent invocation of “medianatures,” for instance, belies precisely this suggestion of any ontological apriority of materiality, insofar as the term denotes some inextricable entanglement of media and nature in the emergence of “material-discursive events” (ibid., p. 14). Here, materiality is not a priori at all but instead serves as something far more heuristic, a conceptual crutch to scramble the “restriction” of thinking in “already formed human subjects;” hence, to repeat the new materialist mantra that action is not isolated to subjects but distributed in networks of human and nonhuman “agents” (ibid., p. 21).

Thus, in Parikka’s account, matter is or can be “premediatic,” yet it can also apparently be “co-constituted” with media. This is not simply a “double bind,” as he wants to insist, but a logical paradox which is simply left hanging throughout the book. At times, he will seek to highlight the “nonmediatic matter that contributes to the assemblages and durations of media as technology,” the “materiality of media” which “starts much before media become media” (ibid., pp. 36-37). Yet, again, the “co-constitutive” dynamic of “medianatures” would seem to suggest this apriority has been undermined. Consequently, at other moments in the book, the entanglement of media and nature thwart this posited independence or apriority of materiality, for instance in the discussion of e-waste in Chapter 4, the point here being to excavate the oft-neglected “afterlives” of our digital media apparatuses.

Now, one might suggest here that “medianatures” is a limited and thus not universal condition of materiality—as appears to be Parikka’s point, e.g. when emphasizing its deployment in defining the specifically technical dimension of media cultures. Certain materials may, in other words, be caught up with media, but this does not revoke the ontological status of the former from being prior and hence external to media. But even in his reference to lithium as “premediatic,” it is worth asking: in what sense? From my vantage point—indeed from any conscious vantage point—it seems a thoroughly mediated entity, both practically and conceptually. Practically, its interaction with social being is predicated upon extremely elaborate techniques for its refinement. Conceptually, its ‘social form’ is clearly cathected with all sorts of techno-optimism about green energy which push it to the center of Parikka’s ‘materialist’ critique. But even in the more traditional sense of medium (i.e. as scrutinized by Parikka, concerning semiotics), extraction regimes are highly mediated: complex processes are coordinated remotely through computers displaying field data collected by massive networks of in situ sensors in the form of highly sophisticated models to engineers and other end users.

The point, to be sure, is not to say materiality is reducible to its social mediations, but to be able to find means to justify this irreducibility, which Parikka simply does not and cannot do. He shuts himself off from the possibility of establishing any criteria for judging the objectivity of materiality precisely as he forecloses it as something wholly in-itself, beyond consciousness. Once again: who is in a position to declare lithium to be “premediatic”? Without a clarification of the relation between subject and object, thought and its content, the “materiality of the uncontained” remains merely metaphysics.

In their retort of Ludwig Feuerbach’s naive materialism, Marx and Engels had reason to ask in The German Ideology: “Where would natural science be without industry and commerce?” This proposed purity of natural science, disclosed “only to the eye of the physicist and the chemist” is in truth provided “only through trade and industry, through the sensuous activity of men”:

So much is this activity, this unceasing sensuous labour and creation, this production, the foundation of the whole sensuous world as it now exists that, were it interrupted only for a year, Feuerbach would not only find an enormous change in the natural world, but would very soon find that the whole world of men and his own perceptive faculty, nay his own existence, were missing. (1998 [1846], p. 46)

The purported purity of natural science thus has its precondition in a certain history of social development. This, Marx and Engels insist, is not to deny the externality of nature which “remains unassailed,” but to insist that this “differentiation has meaning only insofar as man is considered to be distinct from nature.” Put differently, to reckon with the externality of nature necessitates reckoning with its historical positing by (human, social) thought. To this end, in The Concept of Nature in Marx, Alfred Schmidt is likewise careful to distinguish the dialectical materialism of Marx from the naive realism which preceded him and culminated in Feuerbach. There is a difference, in other words, between positing that matter historically precedes consciousness and positing that “materiality” is some “final ontological principle” (Schmidt, 1971, p. 29).

The nature that preceded human history—the “literal deep times and deep places of media in mines and rare earth minerals” which capture so much of Parikka’s attention (2014, p. 5)—no longer exists. Consequently, we do not need media theorists to become “pseudogeologists” (Parikka). There is little value in the simple, mundane recognition that iPhones contain minerals, or that industrial processes produce waste. And producing such insights isn’t even what geology does as a scientific field of inquiry anyway. In turn, it seems to me that much more appropriate for a media scholar to conduct than a geology of media would be a study of the media of geology—that is, an inquiry into the technological mediations deployed to produce knowledge about the earth.

References

Hegel, Georg Wilhelm Friedrich. 2001 (1820). Philosophy of Right. Translated by S.W. Dyde. Kitchener, Batoche Books.

Marx, Karl, and Friedrich Engels. 1998 (1846). The German Ideology. Prometheus Books, Amherst, NY.

Parikka, Jussi. 2016. A Geology of Media. Minneapolis and London, University of Minnesota Press.

Schmidt, Alfred. 1971. The Concept of Nature in Marx. Translated by Ben Fowkes. Verso, London and New York.

Confidence about our progress toward Paris Agreement pledges rests on the reliability of data embodied in projections depicting what the world economy will look like 10, 20, 30 years into the future. Bloomberg, for instance, predicted in its New Energy Outlook 2022 that the astronomical growth in wind and solar farms seen in the 2010s would continue through the 2030s and, in turn, lead to effective replacement of coal and gas in heavy industry and power generation by 2050. Oil production, while admitted to be a more difficult predicament, is also supposed to taper off as its primary source of demand, transportation, is increasingly met by electric vehicles. Agreeing in its Global EV 2023 Outlook, the IEA anticipates under its “Stated Policies Scenario” (STEPS) that the share of EVs relative to total light-duty vehicles sold per annum will increase to 35% by 2030. In anticipation of this rapid scaling up of EVs, global oil demand is expected by the Agency to peak in that same year and, in turn, sink down to a steady ~100 million b/d by midcentury.

It should go without saying that economists and other market analysts are very bad at predicting the future, and especially the future of energy markets. Even in the immediate term, all of the above forecasts are dubious, if not wittingly fraudulent. As the IEA itself reported, wind and solar developers are already experiencing “financial headwinds” as a result of higher interest rates, pulling financiers away from less “bankable” projects. This cooling off of investment in renewables is especially pronounced in developing countries, where renewable buildout is already quite meager and where borrowing costs are two- or threefold higher than in the Global North. As for electric vehicles, consumer interest had already tapered off by the end of 2023 and new models have already become delayed or entirely canceled as the market sees the end of the ‘early adopter’ stage much sooner than anticipated. Once again, interest rates are a commonly cited source of blame for this setback. Finally, US oil is seeing yet another boom—and this one is actually profitable. In turn, the country is producing more oil than ever under the helm of the most climate-conscious president in its history.

Now, it would be one thing if analysts made these bullshit forecasts without much consequence, but most of these people retain very high degrees of influence among policymakers, becoming speakers at government-sponsored summits, consultants for things like the Office of Fossil Energy and Carbon Management, and authors of DOE-funded research reports. Hence, their impact in shaping discourse of mainstream climate politics is monumental.

It is precisely for this reason that poking holes in their projections ought to be a priority for anyone seriously committed to the end of fossil fuels. For, beyond keeping busy the otherwise soft, idle hands of wonks, these reports are intended to underwrite confidence in climate policies advertised to the public and, in turn, undermine any justification for more radical alternatives. There is no greater example of this than the brain trust of progressive liberals which converged during the passage of the Inflation Reduction Act in 2022. Shortly following news of is imminent success in the Senate, numerous research groups quickly released highly publicized assessment reports speculating on how the climate-related policies embedded in the IRA were putting the United States on a surefire energy transition pathway. The Center for American Progress touted the bill as putting the US on track to “reclaiming the mantle of global climate leadership.” Rhodium Group’s assessment hailed the bill as a “Turning Point for US Climate Progress.” Josh Bivens at the Economic Policy Institute wrote that, while “far from perfect,” the IRA “finally gave the the U.S. a real climate change policy.”

Perhaps most praised was the “Preliminary Report” of the REPEAT Project, a product of the crack team at Princeton University’s Zero Lab. Led by Jesse Jenkins, an assistant professor of engineering at Princeton, the Report came to the conclusion that the IRA bill had brought the United states to “within ~0.5 billion tons [of CO2-equivalent emissions per annum] of the 2030 climate target,” that is, to 50% of 2005 US emissions levels by 2030 (p. 6).

As provided in the Report, the above figure depicts the impact of the IRA bill in comparison with other economic scenarios, including the Infrastructure Investment and Jobs Act (IIJA), signed into law by President Biden in November 2021, and the House-passed Build Back Better Act (BBA), which, while collapsing in the Senate after Senator Joe Manchin (D-WV) broke away from majority support, became the basis of the renegotiated terms of the IRA. Considered against the “Frozen Policies” baseline, one can clearly see that, according to the Report, the IRA is expected to dramatically impact the downward slope of the country’s annual greenhouse gas emissions. In quantitative terms, it amounts to an annual emissions cut against the baseline of an additional ~1 billion metric tons of CO2-equivalent per annum.

To understand the tenuous nature of this projection—and, more importantly, its reliability as a proxy for decarbonization—it is worth pausing to reflect on the historical decline in emissions also depicted in the above graph. Why did this happen? Many will quickly point out the impact of the Obama administration’s much-touted fuel efficiency standards program. No doubt this was significant, at least early on, but it had an important and much less advertised side effect: footprint-based efficiency standards incentivized the manufacturing of more profitable, larger, gas-guzzling vehicles, such as trucks and SUVs, over lighter passenger cars. In addition to being a primary cause of rising pedestrian fatalities, this has also flattened the growth of gains in fuel efficiency.

The other significant source of decline in US emissions was, of course, the fracking boom. Infamously, President Obama had congratulated himself for this glowing achievement in the name of America’s ‘energy independence’. While the key effect of this with respect to emissions was the decommissioning of more carbon-intensive coal plants, it would be absurd to suggest that the 2010s downward slope will continue at the same rate for the next three decades. For, while relatively ‘cleaner’ than coal, gas-fueled plants still emit carbon dioxide and hence, still add fresh supplies of greenhouse gases into the atmosphere. More than this, in fact, the proliferation of natural gas in the United States has led to extraordinary and largely unchecked pipeline and facility leakages of its predominant compound, methane, which is capable of trapping 28 times more heat than carbon dioxide over a 100-year period (and 80 times more heat over a 20-year period).

All of this is just to give you a sober, down-to-earth sense of the political economic conditions within which the IRA is being introduced, conditions which are completely ignored by such optimistic projections as outlined by Zero Lab’s Report. The idea that anybody could be confident about the bill’s facilitation of an energy transition is truly beyond my comprehension. There is nothing to be relieved about here, nor with the nominally ‘green’ economic pathway being blazed by the Biden administration.

And indeed, continuing on with Zero Lab’s Report, we see a slew of other slick charts accompanied with a basic line of naive economic reasoning, the gist of which goes something like: tax credits, rebates, and federal investments for renewables = cheaper, more efficient, and low-carbon electricity = less demand for fossil fuels = drawdown of greenhouse gas emissions. Thus, packaged in such projections is a nice, tidy story of the perfect mixture of market-friendly incentives gently guiding the US economy through its energy transition.

One year out, what do we see? In addition to the country producing more oil (and gas) than ever, the domestic LNG industry is absolutely booming, exporting an all-time monthly high of 8.6 million tons in December 2023. And although the IRA bill has certainly seen significant planned expansion for the country’s solar and wind capacity, a yearslong interconnection queue persists. While many blame this on regulatory overhead, the more fundamental economic issue is that the grid cannot handle the capacity being supplied by these new projects. In turn, when assessments demonstrate how expensive the cost of upgrading transmission lines will be, prospective generators end up pulling their applications. Beyond this, the country’s irrational private property regime requires organizing agreements across hundreds if not thousands of landowners for the construction of new high capacity lines. The bemoaned burden of environmental regulation is, in turn, largely a red herring: there is already plenty of overhead and lengthy, cumbersome negotiations going on in the ‘free market’ to slow down the energy transition.

Moreover, the above economic narrative proposed in the Zero Lab report is simply more bullshit. Brett Christophers’ new book has plainly revealed, the idea that markets move to the cheapest inputs presents a fundamental misunderstanding of the economic drivers of any supposed energy transition under capitalism. What matters is not cheapness but profitability. While there is no doubt that ‘green’ capitalists have been able to reduce costs of solar and wind energy over the past 20 years, this fact alone does not tell us anything about whether or not it is more profitable to do so. Under many circumstances, a switch to cheaper inputs is not, in fact, desirable on strictly economic grounds.

One of the key factors here, as Christophers explains, is that the cost profile of renewables steeply contrasts with that of conventional fossil fuels: while the former incurs most of their costs during construction—whereas costs of generation are virtually zero—the latter has its costs spread more evenly over the lifespan of its facilities. Hence, while conventional generators can price their output against the costs of inputs incurred during generation (fuel, labor), renewables price their output primarily against the (fixed) debts remaining to be serviced. This makes renewables much more vulnerable to increasingly volatile energy prices, as the static costs of renewables present a severe investment risk to renewable energy’s much-touted ‘green’ investors. Conversely, rates of profit are far more reliable with conventional generators because their primary input, fuel, remains a key driver of electricity prices. Hence, their costs adjust dynamically to fluctuating market conditions.

Added to this is the fact that the marketization of electricity generation has driven renewables costs down so low that independent producers have been racing each other to the bottom in European markets, skimming ever-thinning margins off of cratering prices during peak load times. In truth, the only thing stabilizing the revenues of renewable generators is government support, namely, in the form of feed-in tariffs, mandatory renewable energy purchasing, and purchasing power agreements. It should thus come as no surprise that, when the UK removed its renewables purchasing obligation scheme for onshore wind development in 2017, ‘green’ capitalists did not champion the good tidings of a more efficient electricity market. Rather, they left the sector: that same year, UK investments in green energy fell by 56%.

But I have saved the best of the bullshit energy transition projections for last: to make it to “net-zero,” the aforementioned “Preliminary Report” notoriously added additional emphasis on how the bill incentivizes carbon capture, namely through the “enhanced 45Q tax credit,” discussed in a previous post of mine. As the Report suggests, these tax credits purportedly make “carbon capture a viable economic option” (p. 13). This is despite a footnote on this same page quietly providing the caveat that “CO2 injection capacity in storage basins is likely to constrain the pace of carbon capture deployment.” This absolutely massive “constraint” apparently did not give the authors sufficient reason to challenge “expert input,” which suggested a possible “maximum annual CO2 injections increase to 200 Mt CO2/y by 2030,” or roughly 10 times current capacity. There is no current infrastructure (e.g. CO2 pipelines), let alone approved geological storage sites, which can handle this upscale in capacity.

Also left unmentioned in the Report is that the carbon captured through existing infrastructure is almost entirely used for enhanced oil recovery which, while touted as a means of lowering “carbon intensity,” does not attenuate but in fact exacerbates the problem of the net stock of carbon emissions in the atmosphere, which is what actually matters in assessing the impact of emissions on climate change. Unfortunately, the atmosphere will not reward us for more efficient exploitation of ecological collapse.

But in truth all of this gives far too much credit to the technical viability of utility-scale carbon capture than is actually deserved. Despite what some gullible socialists might have guilt-tripped you into believing, carbon capture is not a serious attempt to draw down the stock of carbon in the atmosphere. It is, on the one hand, a cash grab for venture capitalists and, on the other, a ruse for large carbon emitters to play with numbers in the aim of convincing regulators, stockholders, and the public that they have reduced carbon intensity of their internal operations. One only needs to check in with carbon credit markets, well-established now for decades, to get a sense of the trustworthiness of these accounting tricks. As The Guardian reported last month, more than 80% of rainforest carbon offset credits certified by Verra, the world’s largest carbon standard organization, are “worthless.”

It is maddening that we are even having to seriously entertain another round of these ridiculous schemes; and unconscionable that so many ‘socialists’ today are properly shilling for them. Truly, I see absolutely no reason to believe any of this. It is all premised on misunderstandings of the economic drivers for capital accumulation, the deleterious knock-on effects of organizing society around profit-making, and incredibly selective and disingenuous data farming.

The first issue of the Society of Exploration Geophysicists’ flagship journal Geophysics, published in 1936, contains three entangled, interfering faces of geophysical reason. The first is the much derided but persistent informal reason, as showcased in the issue’s opening article, “Black Magic in Geophysical Prospecting.” In a tone both jovial and bitter, the author Ludwig Blau (Humble Oil) recollects a series of anecdotes about superstitious devices which had been deployed across the country to prospect for oil, mocked as “doodle bugs.” Such apparatuses came in all forms, from the humble divining rod to elaborate steam-powered machines adorned with bells, whistles, and buttons which the operator would ride in as he roamed around the oil patch. Although these devices were of dubious validity—this is precisely what made them doodle bugs—Blau insisted that it was nevertheless crucial to document them so as to more efficiently explain to lay oil men the unscientific foundations of their purported functionality.

Now, I describe this mode of geophysical reasoning as informal in order to emphasize its localized, improvisational character. Further, while there is precedent for these superstitious devices dating back to the early days of the oil industry, I specifically refer to this as a geophysical mode of reasoning, precisely because, at the time of Blau’s writing, many of these practitioners had adopted their justifications to ape extant geophysical theory. Indeed, “divining rods” had long been thought by their practitioners to be premised on naturally occurring phenomena, such as the purported physical correspondence between the ‘electrical field’ of the rod and that of hidden underground deposits of minerals, water, and oil. In turn, as scientific understanding of such phenomena improved, geophysical principles were increasingly cited as justification for the functioning of doodle bugs. The primary example referenced by Blau, in fact, was a device built by a “young man who discovered that the short electromagnetic waves emanating from oil and gas sands could be caused to modulate the wave of a radio transmitter” (1936, p. 7). And, as I investigate further in my dissertation, industry archives are populated with numerous letters from doodle buggers ‘talking scientifically’ in the attempt to convince formal prospectors to collaborate in what the latter understood as mutually compatible commercial endeavors. No doubt, both the preponderance and similitude of doodle bugs during the 1920s and 1930s is one important reason why Blau’s article inaugurates Geophysics.

But what is important to understand is that these informal geophysical methods remained, precisely, non-formalizable—that is, they were unable to be decontextualized and reconfigured into abstract scientific principles. Consistently, in other words, a condition of their functioning was that their operations could not efficiently be communicated from person to person, save through arcane methods of apprenticeship. In addition to their geophysical justification, their success demanded an occult knowledge of their practitioners, whose bodies and knowhow were an indispensable feature of the validity of the doodle bug.

By contrast, the second face which appears in the first issue of Geophysics is that of formal reason. This is by far the dominant mode of reasoning expressed in nearly every other article: M.M. Slotnick charts velocity spreads in order to provide a better method for determining the depth of seismic records, C.O. Swanson calibrates dip needle readouts to map the geometry of magnetic formations in the subsurface. Such reasoning, indeed, grounds the motivation of the Society of Exploration Geophysicists for starting Geophysics: to formally communicate research across geologists and geophysicists, most of whom either consulted for or directly worked in the industry. Instructed by their employers to keep their findings secret, announcements of developments in exploration methods, e.g. in trade journals, remained remarkably vague through the 1920s heyday of exploration geophysics. At the same time, there were no exploration geophysics textbooks or formal training courses, and, until the 1940s, there were only two American schools granting degrees in exploration geophysics: St. Louis University and the Colorado School of Mines. Hence, Geophysics emerged to correct for the dearth of publicly available research in exploration geophysics at the time.

In contrast to informal reasoning, formal reasoning relies on what Geoffrey Bowker calls in Science on the Run (1994) the “destruction of historical context.” Precisely the validity of geophysical reasoning, on its formal face, becomes the removal from view of its origins in contingency. This is what makes its claims not only communicable across space and time but also proprietary, that is, patentable. Key to defending one’s originality against competing researchers is to demonstrate that the contingencies of the new discovery or method didn’t matter, that one or the other was a novel finding of “pure science.” The destruction of historical context thus moves in a contradictory fashion: on the one hand, it provides a common language of geophysical science across its practitioners as it simultaneously intensifies its privation. Formal reasoning, in turn, can be characterized as the governance of empirical observation by these abstract and communicable forms which, cleansed of their original context, have become simultaneously a priori scientific principles and the wellspring of privatized scientific discoveries.

Now, to stress, these faces of geophysical reason are not dichotomous; once again, they are and remain entangled: just as the doodle bugger mimics a more formal geophysical reason in the attempt to ground the scientific legitimacy of his devices, the properly scientific prospector by no means ascends to some Archimedean point in the formalization of geophysical reason, even if that is what is ultimately claimed. In hailing the primacy of formal reason, the discipline of geophysical science will strive to minimize the importance of contingency but it will always fail to do so. Any geophysicist working in the industry today will tell you there is much still owed to hunches and dumb luck in the art of subsurface exploration. Contingency is not eliminated, only mediated differently.

But there is one more face of reason to discuss, one which mediates contingency in an entirely different way than either informal or formal reason. For lack of a better term, I will refer to this face of reason as informatic reason. Like the first two faces, it pervades the entire history of oil prospecting. But it is best crystallized in the issue’s fifth article, “A New Reflection System with Controlled Directional Sensitivity,” written by the idiosyncratic prospector and serial inventor Frank Rieber. Now, what is interesting to me here is how Rieber opens with a rejection of the “idealized reflection system” upon which formal seismological reason and existing seismic instrumentation are based, precisely in light of the absence of any field encounter with such “ideal conditions” (1936, p. 97). Thus, what is recognized here is that the concrete geological conditions corresponding to the success or failure of a reflection seismographic survey do not correspond to existing conceptual abstractions.

In particular, what Rieber is concerned with is the problem of overlapping “wave trains,” or portions of the seismic wave (i.e. the shock wave emitted by a detonation of dynamite) which arrive at the recording device from different directions simultaneously. Given the existing method of reflection seismic interpretation, which associates amplitude peaks with interfaces between rock beds, overlapping wave trains will lead to interference, distorting amplitude magnitudes and hence obscuring the true signal of the geometry of the subsurface. A variety of geological conditions could result in this occurrence—the one Rieber is especially concerned with, as shown below, is faulting.

Now, none of this is news to practicing geophysicists of the day, but what is different, and what will prove Rieber to be so controversial within the discipline, is the method he proposed to interpret earth-wave interactions. At the center of this “new reflection method” was a machine he dubbed the Geo-Sonograph. The novelty of this machine was that it parsed seismic traces—that is, amplitude readouts recorded by seismometers—for incoming angle of direction, namely, by passing the traces underneath a slit filter and compounding the resulting values. As he discovered, setting a different angle for the slit filter across the traces will yield different resulting compounded amplitudes, and the task for Rieber was to find experimentally the slit filter which corresponded with the highest peak amplitude to, from there, determine the incoming direction. If there were two local peak amplitudes, this according to Rieber pointed to the presence of two overlapping wave trains arriving at different incoming angles. Thus, from recordings of amplitude magnitude alone, it appeared as if the Geo-Sonograph was able to infer the paths of seismic traces.

At the annual Society for Exploration Geophysicists meeting in Los Angeles on March 18, 1937, Lewis Morton Mott-Smith, a physicist at Rice University, strongly rebuked Rieber’s invention. Among other damning criticisms, Mott-Smith insisted the intended results were physically impossible, as the wave diffracted at the edge of a fault could not possibly have the requisite energy to affect a recording at the surface, which was hundreds of feet above the interface. In response, Rieber lambasts Mott-Smith for his mistaken appeal to “classical physics.” The most important point, for Rieber, was that his method worked, regardless of its purported geophysical impossibility: he had discovered faults, subsequently verified through drilling, and he had been able to interpreted overlapping wave trains to discover the depth of interfaces underground. (Decades later, Rieber’s solution would, in fact, be vindicated: the method of slant stacking he pioneered is a fundamental component of seismic interpretation to this day.)

All of this is foundational stuff in the history of science, no doubt: a classic, even stereotypical standoff between pure and industrial science, deductive and inductive reasoning. However, what I want to stress in the notion of informatic reason is the difference in Rieber’s process of experimentation versus either the doodle buggers or other formal scientific prospectors of his time. Unlike formal reason, the justifications underlying Rieber’s Geo-Sonograph are clearly dependent upon the contingencies and contradictions of field experience, e.g. the fault lines he probes in California’s San Joaquin Valley. Paradoxically, however, and quite unlike informal reason, Rieber’s justifications are entirely abstract from the subsurface; they are conditioned by the possibility of data manipulation within his machine. This, in fact, is precisely what Mott-Smith found so off-putting: he warned that all of these distortions amounted to “machine noise” which did nothing but remove the signal further and further from any meaningful correspondence with its geological origin.

In one sense, Mott-Smith is entirely correct. The synthetic signals produced by Rieber’s Geo-Sonograph are composite, technological artifacts. In another sense, however, what Mott-Smith overlooks is that technological mediation is one component of an entirely novel “reflection system” proposed by Rieber which spans ‘real’ and virtual worlds. He is not, in other words, just providing a new analyzer to interpret seismic signals in the same way as before; he is presupposing a completely different, far more variable, contingent, and even chaotic conceptual model of the subsurface than the one to which Mott-Smith adheres. It is indeed a different spatial ontology entirely: no longer the empty Cartesian space of oscillating harmonic waves but a spatiality which recognizes and procedurally reflects upon its own artifactuality. Indeed, in my view, Rieber here backs up against something quite like the data space of modern computing, and hence of modern machine learning algorithms, which provide thoroughly relational and inferential answers when tasked with solving ‘real-world’ problems.

To that end, it is worth noting that throughout his life Rieber had stressed the importance of mass data collection for the advancement of exploration seismography. When the seismic method seemed to be reaching the end of its utility as US oilfield discovery rates began to decline in the 1940s, Rieber had insisted the issue was not at all that there was a lack of oil left to be found. Rather, underlying the declining rates of discovery was a purely technical-quantitative challenge: sampling rates were too sparse to yield the resolution necessary to develop more sophisticated techniques of seismic prospecting. To find more oil, the industry needed more data—and better means of interpreting it. It is my belief that it is precisely this burgeoning strength of informatic reason recognized by Rieber quite early on, indeed prior to the introduction of modern computers, which carries oil prospecting into the “Information Age.”

A preface: I understand the work of Niklas Luhmann to represent the culmination of the contribution of cybernetics to social theory. While cybernetics, of course, originated in Norbert Wiener’s study of information systems, it had been subsequently advanced toward the sociological, cultural, and psychological study of the self-observation of such systems, broadly conceived, by the likes of Margaret Mead, Gregory Bateson, and Heinz von Foerster, among others. While these latter figures present remarkable theoretical developments in their own right, it is in my view Luhmann who most capaciously tries to bring the insights of “second-order cybernetics” into a new “universal sociology” in order to overcome the “crisis of theory” of his time.

Accordingly, I believe Luhmann’s work is most useful for illuminating both the great aspirations of cybernetics to become a universal science of social control, as well as its ultimate conceptual limitations. Certainly, this post is not meant to be an exhaustive critique of Luhmann’s work, and only implicitly is it even about cybernetics. Here, I only want to highlight some aspects of Luhmann’s work which can help sharpen the Marxist critique of science and technology which I have tried to develop in previous posts. After an overview of his “systems-theoretical approach,” then, I will move quickly to the importance of the “environment” and the “medium of meaning” in Luhmann’s thought, two concepts which, I believe, best illuminate the shortcomings of his overarching project, and, implicitly, reveal the means to overcome them, namely, through a restoration of the dialectical concept of mediation.

A second note: what follows is a critique still in formulation, one which will undoubtedly be better clarified (to myself) once I get to actually writing about what is at stake for a dialectical concept of mediation in the Marxist critique of science and technology. One thing that I know is clearly absent here is any review of Luhmann’s fixation on the concept of “autopoeisis,” which would have warranted several thousand more words in conjunction with the question of the ‘missing subject’ in his systems-theoretical approach (see below). I hope to get to that in a subsequent post.

Luhmann Contra Sociology

To understand Luhmann’s project, it is first useful to provide some historical context for his discipline, sociology, which he rebukes for having failed to “produce anything approaching an adequate theory of society” (1998, p. 17). Luhmann’s central complaint is that the ‘science of social facts’ cannot justify its own observations on the basis of what it observes. That is to say, sociology does not consider itself a social artifact but instead habitually adopts a view from nowhere whence its “object matter” can be abstracted into principles of social organization, or laws, which, whenever actually compared against the empirical dynamics of existing society, prove to be “no longer convincing” (ibid., p. 6). In my view, these obstacles amount to the same as those Gillian Rose diagnosed in Hegel Contra Sociology (1995), and thus the latter can provide a sketch of the problematic which Luhmann attempts to overcome and, moreover, may help us pinpoint precisely where he fails to do so.

For Rose, the founders of modern sociology, Émile Durkheim (1858-1917) and Max Weber (1864-1920), had, despite their differences, together worked to entrench a transcendental epistemological structure into the discipline. For Durkheim, society in-itself was sui generis; hence, rather straightforwardly, Durkheim retains in the very notion of society the a priori validity of social facts. For Weber, however, the analysis of society is somewhat more complicated. He did not privilege facts but values, which were the products of the ultimately arbitrary choices of a historical culture.

To mitigate the relativism which follows from this theoretical position, Weber proposed the “ideal-type” as a “conceptual construct (Gedankenbild) which is neither historical reality nor even the ‘true reality’ but instead a ‘heuristic device’” (Weber, 1949, p. 93). Rather then rooting the relationship between social values and empirical reality in an a priori social structure, then, the ideal-type denotes mere “objective possibility,” a “regulative Idea” by which the adequacy of values to their social content may be judged (Rose, 1995, p. 20). Thus, against Durkheim, Weber’s science of society attempted not to confer objectivity to social values but rather to assess through the “heuristic” of ideal-types the relationship between empirical reality and subjective belief. As Rose summarizes:

The neo-Kantian paradigm of validity and values founded two kinds of ‘socio-logy’, two logics of the social: a logic of constitutive principles for the sociology based on the priority of validity, and a logic of regulative postulates for the sociology based on the priority of values. The former identifies social reality by a critique of consciousness; the latter locates social reality within the realm of consciousness and its oppositions. (ibid., p. 21)

Identification of a shared neo-Kantian tradition between them is what is most important for Rose (and implicitly also for Luhmann): Durkheim’s structuralism and Weber’s interpretivism both postulate a “precondition and a conditioned; though their perspectives are opposite, neither can grasp the transition between spheres” (Fuller, 2017, p. 5). Neither Weber nor Durkheim can in other words justify the validity of the knowledge they produce about their object of analysis, given both impose quasi-transcendentally underivable determinations which cannot be further explicated.

For Luhmann, such “epistemological obstacles” irreparably mystify the science of society, once again, leading sociologists to oppose their conceptual constructions to the content of their analysis. Hence, what Luhmann seeks to provide, first of all, is a justification for the conditions of possibility of sociological observation which necessarily originate within the object the sociologist is observing—precisely, then, a justification for the “transition between spheres” of social theory and social fact.

Most remarkably, this leads Luhmann not to any repudiation of the “critique of métarécit” of his anti-foundationalist contemporaries but a concession to its consequences (Lyotard, 1984 [1979]). That is to say, Luhmann’s “systems-theoretical approach” starts from the vantage point that the validation of knowledge, objectivity, and truth is indeed troubled by the contingency of their historical appearance. Thus, Luhmann does not avoid the “crisis of theory” but seeks to wade directly through it, embracing the contention that any descriptive claim about society cannot be rendered independent from but is irreparably a part of society—thus, sociological claims are necessarily produced and always open to transformation, that is, to history.

And here is where Luhmann makes his first move against neo-Kantianism: the possibility for the sociological observation of society can therefore not be deduced transcendentally. His “systems-theoretical approach” turns away from “critique”—in the sense of a deduction of the a priori forms which organize the content of thought—and toward an immanent study of “the function of such descriptions for the operations of systems” (Nassehi, 2005, p. 179). Put differently, sociological description is only justified for Luhmann insofar as it is not independent from but a self-differentiation of the social system it describes, a differentiation which does not simply “cut reality into two parts”—which would merely repeat the division between noumenon and phenomenon—but is the “correlative to the operation of observation, which introduces this distinction (as well as others) into reality” (1995a, p. 178). Sociology attains its perspective, hence its possibility of observation, within the indication of the difference between itself and the social system—an indication which is nothing other than the self-differentiation of that social system realized in the process of observing itself.

It is worth dwelling on this notion of indication and its relationship to the self-differentiation of system, as it is the most important relationship in Luhmann’s systems-theoretical approach. Luhmann borrows this correlation from the “calculus of indications” developed by the British mathematician George Spencer-Brown in Laws of Form (1979). For Spencer-Brown, no distinction is made without also being indicated as a distinction, and, moreover, its indication is made always from the interiority of that distinction. Put another way, a distinction can indicate what it is not, but it can only do so in reference to itself. This is what Luhmann calls the “guiding difference” which marks the possibility of a system against its “environment,” that is, the “unmarked state” indicated in the “self-referential closure” of the self-differentiation of a system:

[…] we can conceive of system differentiation as a replication, within a system, of the difference between a system and its environment. Differentiation is thus understood as a reflexive and recursive form of system building. It repeats the same mechanism, using it to amplify its own results. In differentiated systems, as a result, we find two kinds of environment: the external environment common to all subsystems and a separate internal environment for each subsystem. This conception implies that each subsystem reconstructs and, in a sense, is the whole system in the special form of a difference between the subsystem and its environment. Differentiation thus reproduces the system in itself, multiplying specializes versions of the original system’s identity by splitting it into a number of internal systems and affiliated environments. (Luhmann, 1982, p. 230-231)

This, to be clear, is not to say that the “affiliated environments” cannot change in themselves or that they have no effect on a system but rather that, from the perspective of system, these changes are “adapting effects, which [always] appear in conjunction with the system itself” (Nassehi, 2005, p. 180). Systems are thus not determined by the environment against which they differentiate themselves but rather “procure causality for themselves,” such that they can no longer be “‘causally explained’ […] They presuppose themselves as the production of their self-production” (Luhmann, 1995a, p. 41).

Thus, in Luhmann’s account, to suggest that the environment (or contingency) contains the possibility of system leaves the analysis of society at the stage of the social system reacting “to an unclear picture of itself” (ibid., p. 28). At this stage of observation, the ‘in-itself’ is, in a word, a bad abstraction. It is only with greater self-clarification that the environment can be seen to be “neither ontologically nor analytically more important” than system or vice versa: “both are what they are only in reference to each other” (ibid., p. 177).

Luhmann Pro Kant

Even as Luhmann therefore succeeds in rationalizing the necessity of contingency (qua environment) in the self-differentiation of system—a decidedly Hegelian formulation (see also Kjaer [2006])—ultimately, he will conclude that there is an ‘environment of environments’, as it were, which serves as the absolute “precondition” to the system-environment differentiation. In a rather revealing passage in Social Systems, Luhmann writes that the rationality once presumed to inhere in the scientific object was abandoned “by transcendental philosophy” and replaced, “in correlation with the inclusion of self-reference in the ‘subject,’ by the hypothesis that reality is unknowable ‘in itself’” (1995a, p. 101). The “re-objectivation of self-referential systems,” i.e. Luhmann’s “systems-theoretical approach,” does not

falsify this thesis, but rather generalizes it: every self-referential system has only the environmental contact it itself makes possible, and no environment 'in itself.' But this 'itself makes possible' is not possible in a structureless, arbitrary, and chaotic environment, because within such an environment it is impossible to carry out 'internally' satisfactory proofs of worth and, from the perspective of evolution, to acquire permanence. With this, one does not return to the postulate of a corresponding rationality or a lawfulness in nature; but knowledge in particular and system behavior in general presuppose structured and in sufficient measure graspable complexity. (1995a, p. 101)

Thus, even in Luhmann’s sophisticated account of social systems, we are ultimately forced to appeal to the unintelligible chasm between system-environment and the pure contingency of the thing-in-itself. Backgrounded and unable to be explained is that which potentiates this “evolutionary” relationship between system and environment. Incapable of being explicated, the space between projection and thing projected remains, in the last instance, “dark and void” (Lukács, 1971, p. 119).

But there is another limit Luhmann runs into with the “special case” of “meaning systems,” namely, social and psychic systems (1995a, p. 102). Luhmann had long stressed that meaningful systems are uniquely capable of self-observation. This is because the categories of being which comprise its “frame” subsist in the “medium of meaning,” which is “the same on both sides of the frame, on its inside and on its outside” (1995b, p. 41). Meaning, in other words, bears not only what is “framed” as being but all manner of paradox, non-sense, and logical interdiction in excess to that frame: “every possible use of this medium called ‘meaning’ will itself reproduce meaning, and even an attempt to cross the boundary of meaning into an unmarked space will be a meaningful operation” (1995b, p. 41). Thus, this “evolutionary universal” of meaning, as Luhmann remarks elsewhere, is an “unnegatable category” precisely because its negation, non-meaning, also has meaning. It is “a category devoid of difference. In the strictest sense, its sublation would be ‘annihilation’—and that could only be the matter of an unimaginable instance” (1995a, p. 62).

Not only does this medium allow self-observation by subsisting on both sides of the frame, then, but precisely because of this topology, meaning can always “re-enter” itself, guaranteeing that whatever is actual is always open to future possibility—“continuing actuality with different operations, actualizing different possibilities” (1995b, p. 42). Indeed, the development of psychic and social systems is “based” on the possibility of re-entry (ibid., p. 42). Meaning, Luhmann writes, is coextensive with the “form of the world” overlapping the “difference between system and environment” (1995a, p. 61). Situated at the interstice of the point of actuality and the “horizon of possibilities,” meaning thus serves to “redifferentiate differences among open potentialities: to grasp them, to standardize them, to schematize them, and to acquire informational value from the ensuing actualization” (ibid., p. 75).

It is only in this way that the medium of meaning can subvert the distinctions it had previously indicated. That is, it is through this torus-like topology that both sides of meaningful distinctions can “re-enter the space they distinguish, turning up in their own forms, thus capable of developing some kind of contact with themselves,” in this way slipping between “what it is indicating” and “what it uses to make indications” (Schiltz, 2004, pp. 17-18). Once again, as Michael Schiltz insists, this possibility of re-entrance, of the medium of meaning referencing itself, is the condition of possibility of the self-development of all meaningful systems, as well as the guarantee of their incompleteness: “Meaning as our phenomenology of this world can only be partial, as the difference between form/medium can only be actualized as a form” (2009, p. 173).

The Missing Subject in the “Systems-Theoretical Approach”

But here, precisely what is curious to me in Luhmann’s account of the self-development of meaningful systems is how this substratum of meaning is completely cleansed of its subjective conditions of possibility. Indeed, the subjective process of signification appears to be ruled out from the very beginning: Subjects do not constitute a system but are merely illusory means by which meaningful systems cover up the underlying “paradox” of self-reference: put differently, subjects are “mechanisms which release social systems from the danger of losing themselves in their own self-reference” (Nassehi, 2005, p. 182). As we have seen above, the ultimate precondition of pure contingency also serves this role; but it remains ‘in itself’, unintelligible to system; hence, Luhmann’s recourse to the “undifferentiated” and “unnegatable” medium of meaning in the justification of self-observation.

What does Luhmann lose in excising subjects from the “medium of meaning,” in turn positing the latter as not product but precondition of the evolution of social (and psychic) systems? First, it impoverishes the nature of social action. Luhmann, in other words, succumbs to the same condition Georg Lukács diagnoses in context of the reification of bourgeois thought, where action is rendered a purely contemplative reflection of the ‘objective’ system of laws within which it insulates itself. As reality becomes rationalized in systems theory, ‘action’—rendered idle with respect to system transformation—comes to concern only those actions validated by system, such that the more action approximates itself to this reality, “the more the subject will be transformed into a receptive organ ready to pounce on opportunities created by the system of laws and his ‘activity’ will narrow itself down to the adoption of a vantage point from which these laws function in his best interests” (1971 [1923], p. 130).

Moreover, without a subject, or else with the subject posited merely as an illusory “mechanism,” society remains opaque to itself. That is to say, the removal of the subject from the object of society results in the unknowability of ourselves, both as concrete subjects of social experience and as moral agents capable of transforming that ‘social system’ to which we are subject. In turn, the opacity of the subject in the “systems-theoretical approach” makes completely unintelligible the course of real historical development. As István Mészáros remarks,

The only way to make dialectically intelligible the course of historical development is by adopting as the theoretically necessary point of departure the dynamic transformations of objectively existing need and necessity […] with reference to the progressive self-constitution and potentially emancipatory self-mediation of the human agency. That is to say, by accounting in historical theory for structurally meaningful change through the intervention of the actual human subject of history not as fictitiously inflated ‘sovereign maker’ of historical change—to the arbitrary exclusion of the immense weighty objective conditions, found by the social individuals at their point of arrival, and in a partially modified form left to the next generation both to live with and to modify—but as a vital and genuinely active part (and only a part, no matter how important) of the overall process.

In this sense the challenging problem of dialectical intelligibility in historical theory requires focusing on the actual process of the human being becoming the subject of history in a properly defined sense. (2011, p. 303)

In the Grundrisse, Marx critiques how the bourgeois system of thought obfuscates its own historical genesis: “new forces of production and relations of production do not develop out of nothing, nor drop from the sky, nor from the womb of the self-positing Idea.” The mystique of the “completed bourgeois system” is precisely that it nevertheless gives the appearance of ‘objectively’ presupposing itself—“everything posited is thus also a presupposition”—a system of totality subordinating “all elements of society to itself […] The process of becoming this totality forms a moment of its process, of its development” (1973 [1857], p. 278). As itself the culmination of what cybernetics brings to bear on social theory, Luhmann’s “systems-theoretical approach” is, in my view, the apotheosis of this tendency in bourgeois thought.

Conclusion: Toward a Notion of Dialectical Mediation

In History and Class Consciousness, Lukács remaks that, in its attempt to unversalize itself, bourgeois rationality extricates itself from its own givenness, such that the “ultimate substance of knowledge” becomes indeterminable. Reason remains, in other words, dependent upon the relation of its own contents to contingency it cannot rationalize: “Thus, the attempt to universalise rationalism necessarily issues in the demand for a system but, at the same time, as soon as one reflects upon the conditions in which a universal system is possible, i.e. as soon as the question of the system is consciously posed, it is seen that such a demand is incapable of fulfilment” (Lukács, 1971 [1971[1923], p. 117). The issue, as I see it, is that every proposal for a universal system, including Luhmann’s “universal sociology,” depends upon an actually given content which cannot be derived from its own principles—the pure contingency beyond the “guiding difference” of system and environment; the missing subject in the “medium of meaning.” For Lukács, this means that either the content of the system of thought in question must be assumed to be non-existent in spite of its immediate sensuous experience, or else one must concede “that actuality, content, matter reaches right into the form, the structures of the forms and their interrelations and thus into the structure of the system itself” (ibid., p. 118). While the former is simply to ignore the problem of contingency, the latter abandons the notion of thought as self-systematizing and hence turns ourselves blind to the objective necessity of its determinations.

The notion of labor as “sensuous productive activity” grounding all production, even the “most complex and mediated intellectual production,” is how Lukács (and Marx) resolves this antinomy (Mészáros, 2011, p. 36). At the ground of the “social system”—in Lukács’ terms, social being—is, in other words the “dynamic material/intellectual telos of labor: both as self-production and as the production of the conditions of emancipatory social transformation in the direction of the ‘realm of freedom’” (ibid., p. 36). Telos is here thus not “theological” or “naturalized” but immanently social, concerning the “way in which the human being—this unique ‘self-mediating being of nature’—creates and develops itself through its purposeful productive activity” (ibid., p. 70).

The uniqueness of labor is that it “always causally determined but the causes are posited by the subject, and are thus transformed” immanently in the process of labor (Browne, 1990, p. 205). Thus, precisely by changing its own objective determinations, labor changes itself. This is the dialectical mediation missing in Luhmann’s “medium of meaning” which, despite his best efforts, exists as some underivable, quasi-transcendental apriority to the transformation of social systems. He therefore takes as immediate and given what is historically mediated by labor—a metabolic relation between society and nature which is not “foisted on to the objects from outside,” nor attached as a “value-judgment,” but the “manifestation of their authentic objective structure” (Lukács,  1971 [1923], p. 162).

By contrast, in the absence of the subject and the “one-sidedness” of the operation of indication, what we are left with in Luhmann’s “systems-theroetical approach” is a profoundly conservative reflective judgment. Sociology thus remains, even in Luhmann, mired in neo-Kantianism, failing to advance conceptually from this hypostatized notion of the “medium of meaning” toward a dialectical notion of mediation. While my post on Hans-Dieter Bahr should already give hint at the stakes of dialectical mediation for a Marxist critique of technology, I will concretize these connections in a subsequent post.

Works Cited

Browne, Paul. 1990. “Lukács’ later ontology.” Science & Society 54 (2), pp. 193-218. https://www.jstor.org/stable/40403069

Kjaer, Poul. 2006. “Systems in Context: On the Outcome of the Habermas/Luhmann-Debate.” Ancilla Iuris: 66-77.

Lee, Daniel. 2000. “The Society of Society: The Grand Finale of Niklas Luhmann.” Sociological Theory 18(2), pp. 320-330. https://doi.org/10.1111/0735-2751.00102

Luhmann, Niklas. 1982. The Differentiation of Society. Translated by Stephen Holmes and Charles Larmore. Columbia UP, New York.

Luhmann, Niklas. 1995a. Social Systems. Translated by John Bednarz, Jr., with Dirk Baecker. Stanford UP, Stanfrod.

Luhmann, Niklas. 1995b. “The paradoxy of observing systems.” Cultural Critique 31, The Politics of Systems and Environments, Part II, pp. 37-55.

Luhmann, Niklas. 1998. Theory of Society, Volume I. Translated by Rhodes Barrett. Stanford UP, Stanford.

Lukács, Georg. 1971 (1923). History and Class Consciousness: Studies in Marxist Dialectics. Translated by Rodney Livingstone. MIT Press, Cambridge.

Lyotard, Jean-François. (1984) 1979. The Postmodern Condition: A Report on Knowledge. Translated by Geoff Bennington and Brian Massumi. University of Minnesota Press, Minneapolis.

Marx, Karl. 1973 (1857). Grundrisse. Translated by Martin Nicolaus. Vintage Books, New York.

Mészáros, István. 2011. Social Structure and Forms of Consciousness, Volume II: The Dialectic of Structure and History. Monthly Review Press, New York

Nassehi, Armin. 2005. “Organizations as decision machines: Niklas Luhmann’s Theory of Organized Social Systems.” The Sociological Review 53(1), pp. 178-191. https://doi.org/10.1111/j.1467-954X.2005.00549.x

Rose, Gillian. 1995. Hegel Contra Sociology. Athlone, London and Atlantic Highlands.

Schlitz, Michael. 2003. “Form and medium: A mathematical reconstruction.” Image & Narrative 6, pp.

Schlitz, Michael. 2009. “Space is the Place: The Laws of Form and Social Systems.” In: Emergece and Embodiment. Edited by Bruce Clarke, Mark N.B. Hansen, Barbara Herrnstein Smith, and E. Roy Weintraub, pp. 157-178. https://doi.org/10.1177/0725513607072452

Spencer-Brown, George. 1979. Laws of Form. E.P. Dutton, New York.

Weber, Max. 1949. The Methodology of the Social Sciences. Translated and edited by Edward A. Shils and Henry A. Finch. The Free Press, Glencoe, IL.

The Inflation Reduction Act (IRA) has been heralded as a “turning point” in US climate politics, ushering in a new era of “industrial policy” and putting the national economy on track toward “net zero” carbon emissions by 2050. As the signature climate legislation of the Biden administration, the IRA bill is no doubt substantial in terms of the breadth of public funds earmarked to stimulate the burgeoning renewable and ‘low carbon’ industries. This includes nearly $400 billion in federal climate-related funding, as well as the creation of a massive $250 billion loan program under the Department of Energy to upgrade, repurpose, and replace energy infrastructure.

While, as the White House has recently touted, the IRA bill may represent dollar for dollar the “largest investment in clean energy and climate action ever,” the extent to which this “turning point” contributes to an energy transition in any meaningful sense is far less clear. Things are certainly happening—major new buildouts of solar and wind farms, the 45Q-boosted “gold rush” of carbon capture proposals, and the slow but significant electrification of the US fleet. But, in sheer quantitative terms, an ‘energy transition’ worthy of the name is not equivalent to simply the expansion of green investments but denotes an aggregate line: the drawing down of the ever-increasing stock of carbon in the atmosphere. A number of different vectors, at a variety of different scales, contribute to this aggregate, many of which remain downplayed or entirely ignored in rosy declarations that we are finally moving toward decarbonizing the national economy.

As seemingly obvious as it is consistently under-analyzed, this includes the most important and most directly countervailing force pitted against ‘energy transition’—ongoing oil and gas extraction. Of course, after its passing, there were many questions raised, mostly by environmentalists, about fossil fuel-favorable contingencies buried in the IRA bill. In particular, there is the 45Q tax credit boost, which subsidizes the recycling of captured carbon into “enhanced oil recovery” at $60 per captured metric ton of carbon (and $85 per metric ton for permanent storage). While I have already written about the glaring limits to an effective, national CCS buildout (and especially direct air capture), I will have more reason to return to this very important policy change below. But first, a brief note must be made about the other notorious mandate, included at the behest of Senator Joe Manchin, that federal oil and gas leasing must be offered prior to solar and wind leasing.

Amidst worries last year that the IRA bill “[handcuffed] renewable energy development to massive new oil and gas extraction,” much of the guffawing of such “apocalypticism” amounted to misleading and frankly irresponsible speculation about years-off conditions of oil and gas markets. Oil historian Gregory Brew, for instance, was quoted in a Slate article reminding us that “investment in new offshore projects has been declining over the last five years.” This neglects to note that, 1.) extrapolation of any long-term trend in offshore exploration beguiles the very erratic, volatile nature of oil and gas investments, and 2.) the rider in question, § 50265, does not just include the mandate for offshore oil and gas leasing but also guarantees priority for oil and gas leasing onshore as well. It is also worth noting that this claim echoes similar ones made by industry and market analysts, that the North American upstream oil and gas sector was afflicted by “chronic underinvestment.”

One year out, what is the status of this supposed underinvestment in oil and gas? Well, at present, the United States currently leads the world in upcoming oil and gas projects, including fresh new investments by BP and Shell in the Gulf of Mexico, and is expected to produce more oil by the end of 2023 than ever. Hence, whether the IRA bill is effective in actually scaling down emissions at all still remains to be seen. More importantly, what also escapes assessments like that of Dr. Brew is that federal leasing has more than one function in the oil and gas industry. Leases, in particular onshore leases, are not bought solely for the purpose of direct exploration and production but are often retained as options to hedge oilfield development elsewhere. Portfolio diversification, particularly in proved undeveloped (PUD) reserves, plays well with investors and can help boost a firm’s market value and borrowing base. Depending on the overall capital costs of a given firm, productive utilization of new lines of credit can more than offset the cost of holding an undeveloped lease, while entirely avoiding royalty payouts—new increased, as also included in the IRA bill—which would flow from oilfield development in federal lands or waters.

Federal leases thus do not need to be actually utilized; they simply need to be auctioned to boost the ‘financial health’ of the industry. Even still, the prioritization which §50265 affords oil and gas interests over renewables is still supposed to be eclipsed by two ostensibly more positive and powerful features of the IRA bill. First, there are the billions of dollars in subsidies earmarked for carbon dioxide removal, in particular the aforementioned 45Q tax credit boost for carbon capture. Obviously, the idea here is to address ongoing emissions sourced in fossil fuel consumption not directly by curbing them or by managing end user demand but by counteracting them with the expansion of finance for ‘negative emissions’ technologies. Speaking once again in terms of the vectoral components involved, it is not clear at all that this will be sufficient to net positively toward energy transition. Rather, the IRA bill seems to me to be a tax-based framework designed to mask the swell of carbon stock driving climate change in an increasingly convoluted carbon accounting regime.

Now, ‘energy transition’ proper—that is, again, a drawdown in the rate of increase of atmospheric carbon stock—is supposed to be proven in the amplification of this first vector by a second one: the release of new subsidies for green and low-carbon technology which, it is said, will render the latter more and more competitive with fossil fuel-based products and eventually replace them. However, as a very important paper by Richard York, “Why Petroleum Did Not Save the Whales,” ought to remind us, technological pathways, particularly those mediated by capital, are never so predictable. As he vividly demonstrates, the replacement of blubber with petroleum as an illuminant at the turn of the 20th-century did not kill off the whaling industry but in fact led to its acceleration. Modern whaling techniques were developed on the basis of the use of fossil fuels, in particular faster steamships and fossil-fuel powered air compressors to keep large whale carcasses floating long enough to hull onshore. The most whales that were ever killed in one year occurred during the 20th-century, after the rise to market dominance of fossil fuel substitutes. It was not the market but the political imposition of an antimarket moratorium which ended the whaling industry—one which only arrived after whale populations had been driven to the brink of extinction, hence after the industry had already lost much of its prospect for future profits.

The lesson here should be clear: as a component of the world economy as dynamic and relational as any other, the oil and gas industry is by no means simply keeling over in light of policy support for competing energy sources. It is getting more technologically innovative and more financially resilient in order to remain competitive with its potential substitutes. More than this, in fact, the IRA bill is quite explicitly designed not for the phaseout of oil and gas but to bring them on board to the discourse and politics of ‘energy transition’. Again, I refer to the 45Q tax credit boost, with which industry figures have been positively elated to endorse, as the sort of ‘policy support’ it needs to ‘lower its carbon intensity’. The result of this boost to 45Q, alongside new subsidies for blue hydrogen production, does not at all present a restriction on future fossil fuel extraction. Quite the opposite, it massages the impact which increased competition from renewables will likely have on the industry.

Short of any compulsion to do otherwise, it seems obvious to me that the oil industry will continue to pursue its own interests. This means not only expanding its ‘core business’, as it has always done, but also, now with the “policy support” of the IRA bill, carving out a place for itself within the dynamic contours and expectations of energy transition. Indeed, the oil industry has in recent years hastened to adopt ‘climate solutions’ as if they were always its own flesh and blood (‘we have been capturing carbon for 50 years!’). At industry events, they now ape the basic demands made of energy transition advocates: the need for energy abundance, the need for the rapid deployment of negative emissions technology, the need for governmental action (qua “policy support”). And I can tell you they are quickly learning to deploy the language of “just transition,” a “circular economy,” and “inclusive capitalism.”

Of course, the exploitation of progressive rhetoric in the name of conserving deleterious social and ecological conditions is nothing new. Inherent to the self-expansion of capital is not only the transcendence of its barriers—be them political, economic, cultural, or ecological—but also their valorization. However, this particular co-optation points us to something novel regarding our ‘current conjuncture’. Industry figures have grown to recognize themselves as key, indispensable accomplices in ‘energy transition’, as wielding, exclusively, the requisite resources, expertise, and economic power to bring it about. After decades of denial of climate change, the fossil fuel industry is now assuming the paradoxical role of mediating a ‘transition’ away from itself.

In turn, precisely as contemporaneous with this about face, we see conjured the appearance of a “turning point” in US climate politics. Underpinning romantic recollections of the IRA bill as the curtailed if authentic culmination of over a decade of struggle waged by progressives, we can see, at the very same time, the deepening and strengthening of the oil industry as grand mediator of the ‘energy transition’. If the IRA bill seems ‘progressive,’ it does so only from one side—only, that is, if one ignores the growing negativity of the ‘vector’ of oil and gas interests. Far from a “turning point,” then, the IRA bill represents an increase in the ‘implied volatility’ inherent to this precarious equilibrium mystifyingly called ‘energy transition’. Not a circle but a spiral; not a transition but a swelling stasis.