There has been a fascinating debate developing in the environmental movement – particularly in The Ecologist – over the meaning and effect of the oil price collapse.

Most recently, environmental consultant Paul Mobbs declared that “environmentalists should be cheering on OPEC!” for increasing production and lowering prices, thereby driving the ‘unconventional’ production (like tar sands mining) out of the threshold of economic viability. Unfortunately, the debate seldom zooms out at some of the broader conditions that caused the collapse.

Mobbs’s enthusiastic support of oil production in Saudi Arabia manifests a powerful rebuttal to Steve Melia’s dispatch on the troubled thesis of peak oil.

Whereas Melia claims we must continue to resist fossil fuels for the sake of the environment through civil disobedience not unlike the vital anti-roads movement of the 1980s, Mobbs seems to believe that “keeping the oil in the ground” will be counterproductive to the short-term goals of environmentalists.

Symptoms of a wider economic malaise?

To shore up his hypothesis, Mobbs argues against Melia’s claim that low prices are a challenge to the peak oil hypothesis of gradually increasing prices. The ecological metabolism of peak oil is responsible for the oil price crash, since the increased production of oil stems from high-cost and low-yield production, such as tar sands, which is being undercut by Saudi oil, causing oil prices to decline.

But, Mobbs ventures, this is not a sign of the supply and demand of oil. Instead, it is a complex phenomenon that involves the stagnation of the whole economy. Mobbs cites the declining prices of other commodities as evidence.

Mobbs does not provide a clarification by referencing recent economic events, which hinders his argument. After the housing market crash of 2007, investors from more prosperous financial centers of the world shifted capital to land speculation and resource extraction in the Global South.

This ‘spacial fix‘, to use geographer David Harvey’s term, remains part of an economic program called ‘credit easing’, through which junk loans are backed by land grabs. The so-called ‘fracking revolution’ in the Bakken Shale plays an important role in the US’s own attempts to emerge from the recession.

Busting the global resource grab

According to the US Energy Information Administration’s (EIA) Adam Sieminsky, “just six tight gas plays taken together account for nearly 90 percent of domestic oil production growth and virtually all domestic natural gas production growth in the last 2 years.”

Bakken is 67% of oil growth, and Marcellus is 75% of gas growth. Bakken is relatively low-cost, high yield, while Marcellus has proven far more problematic for investors in the area (due in large part to the sheer amount of speculation happening).

But therein lies the rub: a financialization bubble bursts, leaving resource extraction to mop up the mess, but the glut of oil production is facing diminishing markets abroad. Between 2008-2015, production will have expanded by 3 million b/d, while US demand will have fallen by 1.5 million b/d.

With Saudi Arabia refusing to maintain the high prices by decreasing its own production, choosing instead to “ride out the oil price slump” as the NY Times put it, the relative growth of production against demand has caused low prices.

As oil prices decline, the prices of other commodities decline, because oil factors into every level of the supply chain, from the manufacture of the machines to work a mine or a tractor to the running of the machines themselves to the manufacture of the commodity to the transport of the commodity to market, and virtually all transports in between.

Due to the oil prices, food prices, for instance, are predicted to drop 10-15%, according to Arab News. Furthermore, along with the sharp rise of oil production since 2008, the extraction of tin, copper, and virtually any other commodity has risen as well.

Gluts have appeared across the board, while demand has declined-a phenomenon that has caused tremendous problems in supply chains for countries like China and Brazil.

In the North Atlantic, on the one hand, the banks have refused to invest in small businesses and homeowners, and on the other hand, working people have less confidence in the economy and their political representatives. Hence the Fed and the ECB have been unable to switch back from extractionist positions of ‘credit easement’ to their earlier financial policies.

Geopolitical games – or coincidence?

There are at least three spins that one could put on the oil price collapse and its implications. The one preferred by industrial actors around the world expounds the low price as a natural fix, which will decrease production, increase consumption, and eventually drive the price back to a higher equilibrium.

The challenge here would be, as Mobbs indicates, maintaining high-cost, unconventional projects at a price equilibrium, but that is a matter of eventuality, since the conventional crude is running out.

The second spin is that collapse of oil prices marks a natural boom-bust cycle of extractivist oligarchs who push supply beyond demand, only to have markets contract into a perfect situation for further speculation.

The final spin, of course, is more closely related to the attempts made by the BRICS countries to shift away from petrodollars and dollar hegemony while cutting oil and gas networks throughout Asia without regard for the interests of NATO.

This final proposal marks a gap in Mobbs’s thesis: namely that it is OPEC that is responsible for the price decline. Instead, it is largely Saudi Arabia, with Venezuela taking a brutal hit to the balance books, and scrambling to prop up prices.

As The Telegraph noted, lower prices is bringing about a possible new era, which is ushered in not by OPEC, itself, but by an inter-OPEC crisis marking the crucial geopolitical rift that the oil price collapse plays into.

For its part, The Economist‘s blog, Buttonwood’s notebook, has put up a cheeky graph identifying the “Red Army signal“ showing how every price collapse in oil has come directly after a Russian foreign intervention: most recently, the intervention in Crimea, the 2008 invasion of Georgia, and the 1979 invasion of Afghanistan before it, which prompted Saudi Arabia to increase oil production and saturate the market.

This is the “cunning of history”, and the US’s connections to the House of Saud stands as reason enough for The Economist‘s bloggers to gloat. What is left between the lines is what Vijay Prashad calls “dispossession by manipulation.”

Opposing interests clash on Middle East battlefields

All the above proposals may, in fact, have some degree of truth, but the crucial focus should not necessarily be Russia or Venezuela or even Iran, but the battlefields on which their interests collide.

The oil price collapse is hindering Iraq’s ability to fight the menace of IS that remains ensconced in its third largest city, Mosul, while retaining the social services necessary to maintain a tenuous order.

Supporting the Kurds seems to have been the US’s most successful attempt thus far in confronting IS in Northern Syria and Iraq, but the presence of Kurdish HPG guerillas in Iraqi Kurdistan, who are also connected to the Kurdish YPG/YPJ self-defense forces fighting IS in Northern Syria, rankles the Turkish government to no end.

Turkey does not want to see its southern territories turned into an autonomous Kurdistan tied to the Kurdish Regional Government in Iraq. In fact, the Turkish state seems more willing to help IS than the Kurds. If the Kurds are unable to fight down IS, oil prices will rise once again, which seems to be in the interests of oil producers.

An old Kurdish proverb states, “A head that is to be cut off cannot be ransomed” – and it applies here: IS serves a purpose, if not a devious one. Although the EIA posits that oil spot prices will continue to decline until 2018, prices may settle to a bottom later this year, only to increase once again because of regional discord.

And having sent Russia, Iran, and Venezuela a cruel message, along with Iraq and the Kurds, the North Atlantic oil companies may return to their traditional profits and risky, unconventional projects against the will of environmentalists like Mobbs who see the current price collapse as a prospect for greener pastures.

Alexander Reid Ross is a contributing moderator of the Earth First! Newswire and works for Bark. He is the editor of ‘Grabbing Back: Essays Against the Global Land Grab’ (AK Press 2014) and a contributor to Life During Wartime (AK Press 2013).