Extracting Profit: Imperialism, Neoliberalism and the New Scramble for Africa by Lee Wengraf

Author:Lee Wengraf [Wengraf, Lee]
Language: eng
Format: epub, pdf
Publisher: Haymarket Books
Published: 2018-02-18T16:00:00+00:00

Chapter Six

Resource Curse or Resource Wars?

The much-vaunted rise [of Africa] seems to have stalled.

—John Ashbourne, Capital Economics1

Commodity Crash and Crisis

By late 2014, storm clouds began to appear on the rosy glow of the African boom. Two related global factors drove this development. First, a crisis of overcapacity and slowdown in China’s economy pushed down the demand for raw materials that drive industrial growth, from iron to copper to oil, all imported from Africa. Economists reported that “structural shifts in the economy, favoring expansion of the services sector rather than heavy industry (both steel and cement production are likely to have peaked in 2014), mean that 85% less energy is required to generate each unit of future economic growth than was the case in the past 25 years.”2 For the first quarter of 2016, China’s growth fell to 6.7 percent, a rate only achieved through a large infusion of lending.3 As demand fell in this powerhouse economy, primary commodity prices collapsed worldwide, with only a partial recovery since.

Second, exacerbating this crisis has been a glut in world oil production. The United States made a critical strategic shift toward the end of the first decade of the 2000s to dramatically reduce reliance on imported oil, with a turn to fracking and the “shale revolution.” US domestic oil production doubled between 2009 and 2014, while shale extraction increased eight-fold.4 The explosion in exploration, discovery, and extraction in the United States dramatically transformed the face of the oil industry. Imports dropped so steadily that by 2014, only about a quarter of the petroleum consumed by the United States was imported, the lowest level since 1985.5 In response, Saudi Arabian oil producers and OPEC heads unrolled a drastic strategy of letting prices fall to the floor to drive their competitors out of business. By mid-2016, the price of oil had dropped by about 60 percent over the previous two years.6

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