Why Nationalize the Extractive Industry? We Have No Choice.

We are examining policies and initiatives that collectively could build a transition to a “new, better normal.” Nationalizing the fossil fuel industry is a bold initiative that could make a just transition possible. So today we examine a new report from The Next System Project, “The Case for Nationalizing the Fossil Fuel Industry.”

Nationalize the Fossil Fuel Industry

For five decades the oil industry has understood that gas and oil extraction is killing the planet, but rather than being candid about this and shifting their business model to sustainable forms of energy, they lied and dissembled. And here we are, with very little time to make an abrupt and just transition. The industry has had abundant time to do the right thing and has failed. And from all reports, they have no intention of suddenly seeing the light.

“Fossil fuel executives have known about global warming and the role their firms play in the impending catastrophe for close to half a century. Rather than diversifying their businesses and investing in the green energy of the future, they have decided to double down, extract more, and intentionally lie to the public in order to sow seeds of doubt in what they themselves knew, and continue to know, to be the truth; all with the end goal of maximizing power and short-term profits through a continued harmful business as usual model.”

The Next System Project: “The Case for Nationalizing the Fossil Fuel Industry.”

Shell’s chief economist summarizes their current thinking as follows: “we’re going to get as much out of [oil and gas] for as long as we can.” With wells being abandoned and left for states to clean up and with oil prices wavering between $35-$40/barrel, continued extraction is a losing operation. In this economic context, it might seem ludicrous that the industry isn’t looking for another business model. But for a decade, the industry has been playing a Ponzi scheme, and they are now heavily in debt underwriting the expensive infrastructure required to extract, process, and transport fossil fuels, as explained by The Next System Project:

“They [oil & gas industry] are constrained by their own carbon lock-in: even if fossil fuel companies wanted to pivot their operations, their heavy investments in fossil fuel reserves, extraction, and transport means that they need to keep extracting and selling to the market for decades to come to recoup the costs of the capital-intensive infrastructure.”

The Next System Project: “The Case for Nationalizing the Fossil Fuel Industry.”

We don’t have decades and it is abundantly clear that the industry has no intention of doing what is needed at this time. What’s more, as The Next System Project points out, it just may be that industries like this have such a singular purpose that to deviate from that purpose may not be realistic. And certainly to achieve a swift transition requires a coordinated national strategy, something that the gas and oil industry would only undermine, not support.

“Markets, for their part, are incapable of managing such a sizable transition, particularly since they’ve been manipulated in the industry’s favor through things like subsidies and bailouts. A transition will be fought tooth and nail by existing fossil capital. And importantly, phasing out fossil fuels requires a plan, which the country sorely lacks at this time.”

The Next System Project: “The Case for Nationalizing the Fossil Fuel Industry.”

But what is involved in “nationalizing” the industry? How can this be accomplished realistically. I think one thing that we have all learned in the past three months is that our nation is able to invest trillions to rescue our economy. We now must try to rescue our planet. And, as reported by The Next System, due to the plunge in oil prices, the cost for nationalizing the industry has been reduced significantly.

“While a few years ago taking over just the top 25 oil, gas, and coal companies would have required over $1.15 trillion, today a takeover could cost just $550–$700 billion (or half of that if the Fed were to acquire only majority control—51 percent—of companies). That’s a small price to pay to neutralize fossil fuel industry power once and for all.”

The Next System Project: “The Case for Nationalizing the Fossil Fuel Industry.”

Laying out the various mechanisms of how nationalization of an industry can be achieved is beyond the scope of this post, but The Next System Project has developed a detailed report and will be the first source we examine in trying to describe how this is possible. Click here to read the full report.

If this kind of work interests you, Retake has formed a Transformation Study Group to examine a range of potential initiatives and policies that could contribute to creating a just transition to a sustainable, sane future in New Mexico. We have held one Zoom meeting and have another coming soon. If you’d like to join the group, write to RetakeResponse@gmail.com and tell us a bit about why you’re interested.

In solidarity and hope,

Paul & Roxanne

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3 replies

  1. If we would have the national will to nationalize the oil extraction industry, then we should have the will to put in place polices that will drive them out of business. There’s no reason to waste all that money on buying the companies, further lining the pockets of their corrupt investors. Let’s finally force them to pony up for well shutdown & remediation costs now, not putting it off into the distant future. We’ll also need claw-back laws so they can’t shelter their profits. We can require disclosure of the fracking chemicals…

    And when I say drive them out of business, I mean common sense laws that will finally protect people and our planet. Prioritizing survival and life on Earth over profit. In an “environment” where the industry has to deal fairly, I don’t see how they survive!

    Besides all that there is a good chance that the electrification of our transportation system and other factors will bring about peak oil, bringing to and end the fracking rush we have seen.

    Let’s think this through.

  2. The idea of nationalizing the fossil fuel industry is very attractive. But before going ahead with it we may want to ask ourselves if there is a government in this country, federal and otherwise, willing to take this idea and make it a reality. We may also want to realize that this idea can not be sustained by a simple pragmatic approach. Those taking on this action will need to be intellectually and emotionally engaged from beginning to end. That is, they will need to ‘believe’ in what they are doing.

    And what about us, the American people? For decades we have seen most Americans buy enormous cars and trucks for personal use. That is, in most cases we see these cars and trucks, together with smaller SUV’s, representing the majority of the American car fleet, driven by one lonely person. We may want to note that these types of vehicles have enough power under the hood to carry 10-20 people as mini and medium size buses do.
    So, how do we convince millions of Americans to give up the ‘comfort and convenience’ of their gas guzzlers? Or convince them to pay the government 5 dollars plus a gallon of gas/diesel until the transition is over?

    The authors suggest that we buy-out the fossil fuel industry while at the same time telling us that…
    “In 2015 alone, the U.S. government granted as much as $649 billion, or the equivalent of $2,028 per person living in the U.S., in subsidies to fossil fuel companies.”

    This is just in one year. How much of taxpayers’ money has the federal and state governments given to this industry during the last 3-4-5 or 8 decades? Maybe we should seriously contemplate the idea that the fossil fuel industry owes the American people tens of billions of dollars. So why do the authors suggest that we buy them out???

    We must not forget that for about a 100 years Americans have been ‘taught’ to be dependent on all forms of capitalism and to blindly believe in it. Including the present globalized, monopolized, exploitative and even murderous corporate capitalism.

    Americans, and now most of the world, have innocently(?) traded the illusion of progress, comfort and convenience for our basic human, moral and ethical values, for our own true well being and for our economic, intellectual and emotional impoverishment.

    For example, when we buy from companies like Amazon and Walmart we simple feed the hand that enslaves us physically, mentally and emotionally. Why do we do it? Do we know or even question our actions as ‘consumers’? It is important for us to realize that this is all we are in our capitalist culture and ‘democracy’, just consumers.

    In our globalized corporate capitalist culture Homo Sapiens carry no head but instead a dollar sign on his/her shoulders.

    All our past and present governments together with the private sector have been doing is feed us myths and illusions while making us work almost double the time we did 60 years ago. And even a blue collar worker with a high school degree and some extra training could sustain a family of four including a house, a good pension, good public schools for the children, etc. Something that today a couple with college degrees can not achieve without both working full time and many times one of them holding a second job.

    So, we not only need to convince the government to take on this enterprise but also the American people.


    PS. How about beginning small? How about writing a proposal to the NM government to do just what the authors of the paper recommend? I would be very interested to hear their response. I would like to know which senator and representative is willing to support it and who trashes it. I think it may be a good beginning.

  3. Hi Paul, Yesterday’s Retake on KSFR was great (Greg Mello). I’ve been thinking lately that it would be so much better if KSFR would give you a 60-minute segment for the program. Franz and I would often like to hear the rest of the interview, but it’s not always convenient – we sometimes even forget to listen! – to have to access the program at a later point in time. Let us know if we should write to KSFR ourselves about it. We are donors to the station.

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