In the fall of 2017, as China announced its dramatic new regulations pushing electric cars, the price of lithium and cobalt went through the roof. The two minerals, essential in the production of batteries for ‘New Energy Vehicles’, were highly sought. The Democratic Republic of the Congo, Australia and other countries that are source of rare minerals sped forward, expanding extraction to meet rising demand.
However, the price of these two prized commodities is now decreasing, amid a glutted market. The Wall Street Journal reports: “Cobalt prices have fallen more than 30% in 2019 to their lowest level in two years” and “a lithium price index published by Benchmark Mineral Intelligence dropped for the 10th consecutive month in January.”
Even though New Energy Vehicles have been selling at a much higher rate, with sales increasing by 64% in 2018, the demand for minerals has dropped. The trade war between the USA and China, with constant renegotiation and complicating factors, has made investors worried, and those who produce electric cars have put their purchases on hold, waiting with baited breathe to see what happens.
This comes after Lawrence Kudlow of the White House National Economic Council announced on December 3rd that it was rescinding Obama-era subsidies for the production of electric cars by American automakers.
The Chinese Communist Party sees electric cars as essential, not just for ecological sustainability but also as a mechanism for securing China’s industrial growth in a world market where oil dependency makes them quite vulnerable to foreign pressure. However, certain forces that are well embedded in the White House, have a very different material interest. They see electric cars as a threat to the global order from which their power flows.
The Wall Street-London Global Oil Trap
The four supermajor oil monopolies, Chevron, BP, Shell, and the top dog Exxon-Mobile, are almost synonymous with the elite entities on Wall Street and the London Stock Exchange. British Petroleum is closely tied to the HSBC bank. Exxon-Mobile is closely tied to Chase Bank. Longstanding oligarchical families like the Rockefellers, Carnegies, Morgans, Rothschilds, Vanderbilts, Gettys, and Duponts dominate, directly or indirectly, the global financial system as a kind of oil banking aristocracy with unprecedented power.
The control of the oil in the Middle East, via Saudi Arabia and a slew of satellite kingdoms like Bahrain and Kuwait, has been key in keeping the western financial elites at the top of the world market. Nigeria remains deeply impoverished, with its oil under the control of the four supermajors.
The fight of countries across the globe to break out of this economic prison almost defined the 20th century. Britain sent troops to Azerbaijan after the 1917 Bolshevik revolution, when the Red Army seized the oil fields owned by the Rothschilds in Baku. Control of Middle Eastern oil was key in securing the Allies’ victory during the Second World War. As the war was ending, the Rockefeller’s Standard Oil moved to set up shop on the Arabian Peninsula, in close collaboration with the House of Saud. The Baathist and Arab socialist revolutions of the Middle East, Gaddafi’s rise in Libya, and the Islamic Revolution of Iran were all driven by a struggle for economic independence, namely domestic control of oil resources.
As the 20th Century drew to its close, talk of a “peak oil” scarcity of fossil fuels filled the lips of doomsayers and ecological pessimists. But a game changer came along with hydraulic fracking, and suddenly the market was flooded with oil and gas pulled from the shale.
Following the financial crisis of 2007-2008, a rivalry between the four supermajors and the smaller “fracking cowboy” entities who emerged to compete with them seemed to define US politics. Obama, who embraced climate change concerns and presided over a Saudi-spawned oil price drop, seemed to be a friend of the big four, while the Koch brothers rallied against him, calling global warming a leftist myth and demanding a more libertarian economic model.
But now oil prices are stable, hovering above $50 per barrel. Trump has opened up offshore drilling, approved the Dakota Access Pipeline, and cooperated with the big four monopolists while ending the siege conditions facing the frackers. Russian President Vladimir Putin and the Crown Prince of Saudi Arabia continue to negotiate in order to ensure a stable price based on consistent OPEC production rates.
It seems like an uneasy truce in an ongoing war of attrition, but China’s call to break the shackles of oil dependency with new technology is a game changer that scares both Wall Street supermajors and their fracking competitors alike.
China’s View of Scientific Optimism
While theories that climate change is a hoax are certainly fashionable in some circles, the big four supermajors have realized that they are not crowd pleasers, especially beyond US borders.
Instead, the big four have doubled down on the idea that climate change is caused by economic growth. The Climate Accord and the regulations of various countries have been written in such a way, that the intention is for Exxon-Mobil, BP, Chevron and Shell to keep growing, while competitors must simply give up and go under, for the sake of “mother nature.”
Trump’s withdrawal from the Climate Accord was a big salute to the frackers, and also a harsh attack on countries with oil-based economies like Russia, Venezuela and Iran who swallowed the restrictions of the Climate Accords like a sour pill.
Among leftists, various forecasts of a climate apocalypse are projected. Books with titles like “We’re Doomed, Now What?” and “A Farewell to Ice” line the shelves predicting that the refusal of the world to give up technology and live more frugally will ultimately result in an inevitable ‘doomsday.’
However, China leads the world in producing green technology and is vigorously reducing its own dependency on fossil fuels. The Chinese Communist Party sticks to the Marxist narrative of historical progress and argues that the way out of the climate change catastrophe is rationally controlling the economy while pushing innovation to bring about new, sustainable fuel sources.
The fact that China’s political leaders have jump started non-fossil fuel cars in ways that environmentalists in the USA could only dream of, points toward a real ability to solve world problems. The Wall Street Journal wrote that “China has created the world’s largest electric car market by sheer force of will.” ()
The fact that a government with a clear agenda has the ability to override corporate profits and pressure, and force its vision “by sheer force of will” points toward the difference between western capitalism and the Chinese economic system called “Socialism with Chinese Characteristics.” China’s push for production and transportation without fossil fuels is especially threatening to the world’s most powerful forces.
In a world no longer restrained by fossil fuels, there will be no more reason for Wall Street and London to stay on top. The resource market they have cornered would be rendered obsolete. China’s “sheer force of will” may give it the ability to do more than jump-start New Energy Vehicle production, but ultimately to point toward the way out of the global trap of an oil-based system of production.
Caleb Maupin is a political analyst and activist based in New York. He studied political science at Baldwin-Wallace College and was inspired and involved in the Occupy Wall Street movement, especially for the online magazine “New Eastern Outlook”.