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Empires Of Black Gold


new internationalist
issue 206 - April 1990

[image, unknown] 2. Cut fossil fuels
Carbon, in the form of CO2 released from the combustion of fossil fuels (oil, coal and gas), is responsible for nearly 40 per cent of global warming. Coming to grips with the greenhouse effect will mean drastically reducing our dependence on these fossil fuels and fundamentally changing the world's energy system.

Empires of black gold
They're into coal. They're into chemicals. Once they even bought up
the rights to solar power. But their lifeblood is oil. Dick Russell examines the
handful of corporations that benefit from our addiction to fossil fuels.

Ever since the era of John D Rockefeller, Thomas Edison and Henry Ford, the global economy has been based on petroleum, electricity and automobiles. The transnational corporations that eventually arose from those men's innovations today produce or market about half of the world's oil, coal and natural gas. Nearly 90 per cent of the world's energy is generated from these fossil fuels - and reserves are plentiful.

Equally plentiful, as population and economic output grows, is the carbon dioxide (CO2) emitted from their combustion. In 1988, emissions rose 3.7 per cent - the largest increase in nearly a decade. As a result over 22 billion tons of 'greenhouse gases' seeped into the atmosphere.

In the US, which accounts for one-fourth of the world's CO2 output, a mere glance at the latest 'Fortune 500' listing of the most profitable corporations reveals the obstacles involved in stabilizing, let alone reducing, these damaging emissions. Of the top 14 companies, 12 owe their livelihoods to fossil fuels. Eight of these, led by Exxon with over $7 billion in 1990 sales, are directly involved in the global petroleum industry.

'The modern oil corporation, with assets greater than those of most countries, has functioned as a private government in its global planning and controls,' says Robert Engler, author of The Politics of Oil. 'It has maintained basic surveillance over all energy development... It polices alternative sources of energy to make sure "competing" fuels are made available to the consumer only with its approval and participation.' And it has also been supported at every step by government intervention, in the form of subsidies, tax dodges and tariff protection.

Nor are the tentacles of Exxon, Texaco and Shell confined to North America and Europe. 'American companies are spreading out even farther across the globe in search of new reserves and customers, according to Fortune Magazine. Although US domestic oil production saw its biggest single-year decline ever in 1989, a long-standing arrangement with Arab OPEC nations finds Western transnationals profiting handsomely from their role as refiners and marketers.

The oil giants have also had strong support from government. Once a Texas oil baron himself, George Bush played a key role in derailing federal efforts to reduce US dependence on fossil fuels. He was chair of Ronald Reagan's Task Force on Regulatory Relief which repealed energy standards for buildings, and continually scaled back fuel-efficiency requirements for automobiles - efforts which could have saved billions of barrels of oil.

Despite his campaign promise to be 'the environmental president', George Bush has continued to waffle on the global-warming threat. At Bush's right hand today is White House Chief of Staff John Sununu. 'He's the guy who weakened the Administration's position on the Clean Air Act, under pressure from the oil and auto industries,' says Edwin Rothschild, energy co-ordinator for the Citizen Action Organization. 'And he stopped the White House from moving on global warming, because he doesn't believe in it.'

It is not surprising either that the US Congress has been reluctant to endorse accelerated development of non-gasoline-burning vehicles. The largest lobby in Washington is the American Petroleum Institute, with over 500 employees. It spent $50 million in 1988 to get its point across. A study by the Citizen/Labor Energy Coalition found that oil and gas interests contributed over $4.3 million to congressional candidates in 1982.

While oil companies continued to receive massive government subsidies during the Reagan years ($8.5 billion in 1984, for example), research-and-development money for alternative energy sources has plunged 82 per cent since 1980. Tax credits for both solar and wind power were eliminated altogether. David Goldstein of the Natural Resources Defense Council is blunt: 'There's a lot of talk about the importance of the greenhouse effect and acid rain. But when it comes down to a decision being made, not one penny is being spent to avoid these kinds of impacts.'

During the 1970s 'energy crisis' the oil conglomerates quickly moved in to take control of the solar field. By 1982, a report by the Small Business Administration noted that three firms controlled 79 per cent of the market for photovoltaic cells. All were either wholly or partly owned by oil companies. When cheaper imported oil returned they began to unload their subsidiaries. Exxon, Mobil, and Shell had all eliminated their solar assets by 1987. Most recently ARCO (while leading the charge to open up the Arctic National Wildlife Refuge to oil drilling) sold its solar branch to a West German company. As things stand, renewable-energy plants in operation or scheduled for completion by 1992 will produce only about one per cent of US electricity.

While the Federal budget for solar energy stands at only $32 million, the Bush Administration has simultaneously announced a $5 billion joint venture to develop cleaner, more efficient coal-burning technology. Coal is the dirtiest CO2 producing fuel. 'Now that it's being heavily subsidized, the oil companies are beginning to move into coal,' says Gary Starr, President of the California-based Solar Electric company. What would happen if they spent $5 billion on a solar-electric demonstration plant instead?'

Combatting the entrenched power of the transnationals will doubtless be the strongest challenge in the fight for a habitable planet. Over the past decade, the largest companies have consolidated their hammerlock on energy. Chevron has absorbed Gulf, Texaco has bought Getty, Du Pont (the world's largest petrochemical manufacturer) has swallowed Conoco.

'The simple fact is, the oil companies are the institutional force trying to slow down any kind of change,' says Citizen Action's Rothschild. 'When you look at the culprits in destroying the environment, you've got the oil industry over and over again. toxic wastes, air pollution, CFCs, oil spills like the Exxon Valdez.'

In the Third World, the debt burden remains so high that most countries can't purchase much oil. But, if and when developing countries overcome their economic problems, the potential for growth in fossil-fuel use is enormous.

The transnationals, of course, are poised to garner huge profits in the developing world. Exxon has centralized its overseas operations into a single international oil and gas company. Chevron has reserve properties in 98 foreign countries; ARCO is increasing its oil development in regions like Indonesia. In China, where vast coal reserves are viewed as the key to continuing industrialization, Occidental Petroleum holds 25 per cent of a 30-year joint venture on a huge open-pit coal mine, while General Electric is helping build more coal-powered electric plants.

All of which bodes ill for the future of the earth's climate. If the Third World is not provided with assistance towards energy alternatives, then no matter what the industrialized countries do, fossil-fuel consumption will continue to escalate.

The key to challenging petro-culture in every part of the world lies in controlling those corporations that have shaped our dependence on fossil fuels. To do that, says US environmental eminence Barry Commoner, 'politicians will have to rise above the parochial interests that often motivate them, and companies and individuals will have to focus on the real bottom line...' And the real bottom line is survival.

Dick Russell is a peripatetic US journalist who specializes in environmental issues.


Gas guzzlers
The 70-mile-per-gallon car is ready - but the big
companies are loath to start it up. Richard Kazis reports.

Here are four cars you haven't seen on the road yet: the General Motors TPC, Volkswagen VW-E80, Volvo LCP and the Renault VESTA2. Can you name three things they have in common?

First, each one gets over 60 miles a galIon in city traffic and well over 70 miles a gallon on the highway. Second, these cars are prototypes that already exist and could be on the road by the end of the century. Third, the auto companies that developed them have no plans to build any of them commercially in the near future.

According to Deborah Bleviss, executive director of the International Institute for Energy Conservation in Washington DC, the obstacles facing the VESTA2 and these other prototypes are not technical. 'Technology is no longer the limiting factor in producing fuel-efficient cars,' she says.

So why won't these cars be mass-produced soon? The answer lies somewhere between the resistance of car companies to retool for fuel efficiency, the preferences of consumers and the refusal of national governments to pass new legislation that would alter market signals significantly.

This is the way General Motors - in classic corporatese - explains it: 'Such vehicles do not have many of the utility and performance characteristics demanded by an overwhelming majority of consumers.'

Translation: consumers don't want fuel efficiency at the cost of acceleration, power and other things they have learned to like. And General Motors isn't about to invest a few billion dollars in developing a new car model they think people won't buy.

There is some truth to this. When oil prices soared in the 1970s, drivers got interested in fuel economy. For a short time Honda Accords sold for a premium above eight-miles-to-the-gallon Cadillacs. But that interest gave way in the relatively cheap-energy 1980s to broad indifference to fuel efficiency. Now consumers are buying cars with more power, equipped with fuel-consuming options like air conditioning.

All these trends make it more difficult for car makers to continue in the direction of the late 1970s: smaller, lighter and less powerful cars that gave more miles to the gallon. In fact, since 1973 US producers have gone into reverse. Ford, which had reduced the average weight of its passenger-car fleet by 1200 lbs between 1975 and 1983, added 300 lbs to the average vehicle between 1983 and 1986.

If consumers aren't demanding fuel economy and producers don't have any incentive to produce fuel-efficient cars, then governments will need to step into the market. That is what happened in 1975 when the Energy Policy and Conservation Act required annual improvements in average fuel efficiency and imposed a 'gas guzzler' tax on inefficient cars.

But that was the 1970s. During the Reagan years, the Departments of Transportation and Energy joined the car makers in fighting and eviscerating fuel-efficiency standards. Enforcement of the gas-guzzler tax was all but abandoned. Countries that had followed the US lead in the 1970s did the same in the 1980s: improvements in fuel-efficiency came to a halt.

Today, with the new concern over global warming there has been a flurry of legislative proposals for new fuel-efficiency standards. This is a significant political change. According to Deborah Bleviss: 'Two years ago, no one in the industry thought there would be new standards. Now, it may take two or three more years but there certainly will be legislation.'

In the meantime there is still room for improvement. Only about 15 per cent of the energy contained in a gallon of gas is used to propel the vehicle forward. Some of the less radical innovations could easily be incorporated into existing models.

Critics believe it shouldn't be difficult for new national car fleets to average 45 miles a gallon and small truck fleets 35 miles a gallon within ten years. If these standards were met worldwide, fuel consumption by cars and small trucks could drop below 1980 levels by the year 2000.

Richard Kazis works at the Massachusetts Institute of Technology in Cambridge.

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