Nature's Evil

On the global scale, the era of high prices led to the diversification of supply. New sources of energy are always more expensive than the old ones, but people prefer them for non-economic reasons. Solar panels and wind farms produce electricity increasingly cheaply, but the distribution and storage of this energy require rare and expensive metals and other materials. Bituminous sand remains expensive and its processing is harmful to the environment. Shale oil has better prospects: regardless of automation, its extraction is labour-intensive and requires local knowledge. Unlike boreholes, which are as difficult to cap as it was hard to stop a waterwheel, hydraulic fracturing works on demand. Extraction is diffused – maps of shale oil extraction look more like the widely spaced clusters in which coal mines were grouped than the topical structures characteristic of oilfields. And, finally, American sites of shale oil remain in private hands. The extraction of coal from open pit mines makes it similar to traditional oil; the extraction of energy from shale marks a return, on a new technological level, to the political economy of the coal mines. Liquefying gas emancipates its trading from the pipelines which were so attractive to planned economies. Do these new technologies revise or even reverse the Mitchell thesis?

In different eras of history, land, gold and oil played the roles of the universal equivalents of exchange value. This role will soon be played by carbon. The air belongs to everyone; those who are the biggest polluters should pay the highest prices, and only the state can collect these payments. As climate catastrophe approaches, energy policy – prices, taxes, subsidies, phases and goals – will become an increasingly important mechanism for regulating emissions. So far, carbon emissions have grown in tandem with the production and consumption of energy; but it is the emissions, rather than demand or supply, that should be limited in the first place. This approach makes emissions a major factor of regulation. Ricardo’s classical economics posits three factors of production – land, labour and capital (it assumes that every raw material is connected with land). Carbon emissions make up a fourth factor, independent of the three classic ones. Labour is inexhaustible, capital is relational, and only land is finite; but now we realise that the atmosphere will expire first. Any business plan should take emissions into account and pay for them in the same way that businesses pay for using land, labour and capital. As people switch from ancient accounting traditions, based on the value of fertile land, to new practices which add in the cost of clear skies, the relations between the rich and the poor will also change. The first step is to eliminate the tax privileges that the producers of fossil fuels – and thus of carbon emissions – still enjoy today; in the USA alone this will yield $1.5 trillion, which can be spent on the Green New Deal. A carbon standard would be a more radical measure: the price of any goods or services would be defined by the emissions which their production creates. A distant heir of the gold standard, the carbon standard would not change the market economy too radically: the consumer price of our goods and services already correlates with their energy cost. All the same, introducing a single principle which will link any act of economic exchange with its contribution to the salvation or the destruction of the planet would be pivotal. Every act of work or exchange would find the meaning and justification which they have lost since the dawn of time.

Oil into food

As we saw, John Maynard Keynes predicted that the population growth in America and Russia would prevent grain supplies to Europe, threatening the old continent with hunger. 38 This didn’t happen. Innovations made by chemists, engineers and plant breeders have resulted in grain that is no longer a product of earth, sun and labour, as it was in the time of Malthus: barrels of fossil fuel go into the production of every ton of grain. Arable farming and cattle breeding have become branches of petrofarming – the conversion of oil into food with a little help from earth, sun and labour.