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Ryan Smith

The Real Oil Shock: How Oil Transformed Money, Debt, and Finance

By R.C. Smith - PhD Dissertation, September 1, 2022

Oil and finance have long played central roles in defining how the global economy has developed and this is especially true of the modern neoliberal economic system. One factor of their relationship that is often unexamined is how oil industry profits and liquid capital influence the developments of finance. Understanding their relationship during the modern period first requires understanding this petrocapital cycle, how it influences economic development, and the ways that its rise to prominence in the 1970s transformed the global capitalist financial system.

We are living in a world that has been shaped by the demands of oil and finance. Under the neoliberal capitalist order these two sectors enjoyed central roles in setting the pace of the global economy. Shocks in the price of oil, as recent events like the record-high oil prices experienced following Russia’s 2022 invasion of Ukraine have reminded us, tend not to stay confined to the fuel pump and radiate throughout our economic system. One particular avenue of influence that is often not seen but is widely felt is the reinvestment of oil profits in global financial markets. This question was first thoroughly examined in Mahmoud el-Gamal and Amy Myers Jaffe’s Oil, Dollars, Debt, and Crises: The Global Curse of Black Gold which traced the relationships that formed the endogenous petrocapital cycle, which is the reinvestment of the profits reaped by oil exporters in financial markets and how this changed global credit and financial markets. The Real Oil Shock builds on their earlier work by digging deeper into the birth of this process in the Oil Shocks of the 1970s. It will do this by examining how OPEC’s windfall capital fundamentally changed financial markets, practices, and the creation of money.

What The Real Oil Shock is examining is not a new phenomenon in economic history. The human experience abounds with instances where dramatic redistributions of wealth and resources created significant changes in the existing social and economic order. An excellent example comes from the Spanish colonization of the Americas. Exploitation of gold, silver, and other precious metals in the Americas provided the Spanish monarchy with an enormous windfall of liquid capital. This was spent by the Spanish monarchy on projects of the state, fighting wars, and expanding their influence in Europe. This put increasing quantities of Spanish doubloons in circulation outside of domestic markets. Spanish gold had become the capital for Dutch, English, and French merchants for financing their own commercial, industrial, and colonial enterprises whose activities were the foundation of early modern capitalism in Europe.

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The Green New Deal Isn’t Just Affordable, It’s Necessary Now

By Ryan Smith - Broke Ass Stuart, February 27, 2019

Editor's Note: the IWW has not taken a position on the Green New Deal; the author is a cofounder of the IWW EUC; the image is from the Intercept.

The Green New Deal resolution Rep. Alexandra Ocasio-Cortez (D-NY) and Senator Ed Markey (D-MA) have proposed has captured the attention of the American public like nothing else. The deal presents a sweeping vision for meeting the challenge of climate change by creating a more just, equitable and equal society — in the weeks since its introduction, the Green New Deal has stirred up enormous controversy. It’s been co-sponsored by five Democratic presidential candidates and panned by others like Senator Diane Feinstein (D-CA) and former Rep. John Delaney (D-MD) as unrealistic with Delaney going so far as to say:

The Green New Deal as it has been proposed is about as realistic as Trump saying that Mexico is going to pay for the wall. Let’s focus on what’s possible, not what’s impossible.

Donald Trump easily takes the cake when he said, “I really don’t like their policy of taking away your car, of taking away your airplane rights, of ‘let’s hop a train to California,’ of you’re not allowed to own cows anymore!”  In fairness, you have to be impressed by Trump topping former President George HW Bush’s ranting that environmental regulations would leave everyone jobless, “and up to our necks in owls!”

Regardless of the criticism, some of which is couched in more reasonable language than others, there’s strong evidence that the Green New Deal is not only desirable but actually very feasible.

Doing Away With Private Utilities Is a Matter of Life and Death

By Ryan Smith - Broke Ass Stuart, January 16, 2019

The toll of this year’s wildfires is the second in as many years to break entirely too many state records, increasing the call to hold private utility companies like Pacific Gas & Electric to the flames of their own making. When the last embers cooled there was no question that the Camp Fire that ravaged Butte County, along with the devastating fires that tore through Malibu and Ventura, were among the most destructive in California history inflicting an estimated $10 billion in property damage. This was only topped, in dollar value, by last year’s devastation where the state suffered an unprecedented $12 billion in direct property damage. From a purely economic standpoint these figures don’t consider the secondary impacts such as loss of tourism, rebuilding and the opportunity cost of once thriving communities no longer capable of any sort of economic activity.

These numbers, already adding up to a truly staggering cost, don’t even touch on the immeasurable human cost. 2017 set a grim toll of 43 confirmed dead, a total that was already greater than all loss of life from the previous decade of California wildfires combined. This past season is on track to double that with a confirmed 89 dead so far. One can only imagine how many more will join them in the coming months and years thanks to the long-term damage from noxious fumes released by this year’s fires. The sheer quantity of toxic particulates in the air during the height of the blaze made Butte County’s air the most hazardous on the planet.

There is little doubt who is responsible for this blaze. The most recent investigations have all but concluded the cause of the fires was due to improperly maintained wiring, property of PG&E, setting a deadly inferno ablaze. In the face of an estimated $30 billion in liability for the Camp Fire, PG&E, earlier this week, filed bankruptcy. They are not alone in such negligence, with SoCal Edison suspected of similarly irresponsible practices in Southern California. Such a failure to perform such basic, fundamental tasks – maintenance of consistent power flow and safety of California’s communities – is astonishing all by itself. Unfortunately this is far from the first time PG&E has screwed up this badly.

In the wake of the 2017 wildfires investigators concluded the most likely cause of an already horrific disaster was PG&E’s inability to do their jobs. Gerald Singleton, an attorney specializing in wildfire cases, argued PG&E’s history shows this was no surprise as the privately-owned utility company has a history of disregarding basic maintenance necessary both for community safety and delivering power. In 2010 PG&E’s lax management piled up until one of their natural gas pipelines exploded, snuffing out the lives of eight San Bruno residents. Their cost-cutting is so extreme that, only two years after the San Bruno disaster, PG&E found they didn’t have enough staff to properly mark all of their gas lines so the company hid the mistake by filing false claims stating they had. This reckless culture even extends to data management as shown by reports from earlier this year where PG&E managed to lose 30,000 people’s personal information in a single data breach.

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