CounterPunch Exclusives

CounterPunch Exclusives

Oil Wars: Speeding The Transition to Renewable Energy

Wind turbines, Columbia River Gorge. Photo: Jeffrey St. Clair.

One simple observation since the US-Israel attack on Iran on February 28 is that solar panel prices have not risen, staying at around $300 for an off-the-shelf, 400-watt commercial panel (7 cents/W for an industrial solar cell). But oil prices have risen, reaching $116 per barrel in the first week of hostilities, a 65% increase from the pre-war mark of $70/barrel, raising energy prices for everyone including American consumers at the pump.

US gasoline prices are roughly the same as in 2000 (adjusted for inflation), primarily because of an increased domestic supply of petroleum from hydraulic fracturing (the so-called “shale gale”), despite many known dangers (earthquakes, water poisoning, toxic air). But war in the Middle East has once again raised oil prices around the world, similar to the OPEC oil embargo after the Yom Kippur War in 1973 (First Oil Shock) and the 1979 Iranian Islamic Revolution (Second Oil Shock), although long car lines have not yet formed as in the ‘70s.

Attempting to calm the fears about more shocks, Donald Trump stated that higher oil prices “is a very small price to pay for U.S.A., and World, Safety and Peace.” In his usual tone-deaf way, he added “The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money.” Indeed oil companies do, but not consumers.

In purely economic terms, the big winners since the start of the US-Israel attack are American oil companies, such as Exxon, Chevron, and Occidental, seeing increased profits on safe domestic supplies without having to pay a war surcharge. As noted by the Financial Times, oil groups will reap a $63 billion windfall “from Gulf war disruption” if 2026 crude prices average $100/barrel. Companies without holdings in the Middle East, traders without tankers needing to transit the narrow Strait of Hormuz, and global arms dealers also benefit.

Venezuela, which holds the world’s largest petroleum reserve (300 billion barrels), will also benefit as old contracts are renewed, although extraction can’t be ramped up overnight in its rusted industry, while the thicker Orinoco crude requires more refining. Canadian oil sands and US fracking (already at historic highs) will also fill the gap with increased extraction.

Russia may be the biggest winner, able to sell previously sanctioned supplies, mostly to China and India, thanks to a temporary one-month US waiver given to calm energy markets. We will see how temporary. The Russia bump is especially damaging to Ukraine, which will suffer more aggression just as Russia’s war chest was being depleted by sanctions. The floating Russian tanker fleet will also finally be able to dock. Increased Russian sales alone, however, will not lower prices as the........

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