Now I want to hook up the previous discussion of the spatial and temporal aspects of our political economy to these analyses by Yves Smith and Craig Tindale, which are absolutely harrowing. You really have to read them yourself to appreciate the gravity of what we are looking at. To summarize, they are a description of the systemic risks posed by a protracted closure of the Strait of Hormuz in the course of the Iran war.
To seat further discussion, I'll briefly recap a higher-level takeaway from the previous discussion to provide a background framework: our global political economy has been predicated on the steady annihilation of time and space constraints. With perpetual revolution in powers of transportation, communication, production, etc. there is a necessity for a widening utilization of specialized materials and resources, which today translates to an uninterrupted circulation of advanced fuels, chemicals, materials, and manufactured products, which assist in the uninterrupted circulation of basic goods like food, water, and energy.
As dazzling as it is, this rapid, uninterrupted circulation obscures the existence of geographically-bounded processes clustered in distinct territories. Over longer periods of time, these territories have been spatially reorganized into their current configurations, which aren't easily replaced or moved, and take long time frames and lots of energy and investment to do so. It is from these fixed territories that all of our marvelous modern resources, materials, and products come, which keeps global circulation of products and peoples rapid and stable. Through crisis we discover the nature of these productive territories, and their disruption can cause all of this rapid motion to come to a screeching halt.
Lets turn to an aspect of Craig Tindale's central analysis to illustrate this: the cascading systemic effects of a bulk loss in circulation of even a single global resource, that of sour crude oil, due to the Strait of Hormuz closure. The implications of this single resource bottleneck are highly interconnected and dependent, but I am just going to get into one section of that analysis with some added commentary to flesh out the greater point I am trying to make, leaving the rest to your imagination.
For one thing, due to regional geological histories, different types of crude oil are found in different parts of the world. A given oil field took millions of years with an incomprehensible array of natural forces working to produce it, so whatever is there is what you get, and then that is effectively it. Some 20% of the world's crude oil currently passed through the Strait of Hormuz, a majority of it sour crude, named for its acidity and its sulfur content. This oil is extracted where it is found all over the Middle East, where it is loaded up on ships in the Persian Gulf and then shipped out through the Strait of Hormuz to the rest of the world.
Logistically this is how you get huge quantities out of this region fast at lower cost, and this is how everything was regularly working up to this point. You can transport some of this by pipeline and truck, or on existing rail, but you can't transport as much as fast or as far, and increasing any of these parameters require new intensive investments in the infrastructure to support that. Plus sour crude is more corrosive and toxic, so you need specialized equipment and infrastructure to move it safely.
There is redundancy: there are other places where sour crude is extracted, such as Venezuela, Mexico, and Canada, but again it requires time and investment to compensate for the huge loss in the Middle East, if there is even enough remaining exploitable reserve to compensate with, and then there is the matter of the difficulty of extracting the heavy crude deposits remaining from places like Canada and Venezuela, which require additional extractive technologies to process the more difficult reserves.
So this mad war has resulted in the closure of the Strait of Hormuz, which has taken a huge bite out of the sour crude supply. Which poses a longer term problem too: as Ian Welsh and others have noted, the idled shipping in the Persian gulf has led to upstream issues, such as the backing up of oil flows for Middle Eastern producers, with maxed out oil storage leading to the necessity of shutting down production at the wells, and when you shut down production on a well, it can be more difficult to get it going again, and this difficulty grows the more time passes. So you have the first order problem of less oil to go around, which is used for just about everything in a modern industrial economy, which not only drives up energy and fuel prices but really the price of everything. But then there is a second order problem that follows from this too.
As Tindale notes, regulations require that the sulfur content of sour crude be removed for it to be used in fuels and other products, and as a biproduct of that refining process, the removed sulfur makes for an indirect contribution to the majority of the world's sulfur production. With the strait closed, between the stoppage of the sour crude and LNG processing, you get an 8% loss in global sulfur production, by Tindale's estimation.
You need sulfur to produce sulfuric acid, which is a crucial component of the modern industrial economy, with applications in metals extraction, artificial fertilizers, and wastewater treatment, to casually name a few crucial functions. Notice also that sulfuric acid is also highly toxic and corrosive, requiring advanced handling infrastructure, so alternatives here are not easily invested in quickly, and so a shortage is not easily or quickly remedied.
With shortage, a strain is put on the global sulfuric acid industry, leading to a downstream strain on the mining and metals industries. Here Tindale gives a good example of the potential strain on production in the Democratic Republic of the Congo (DRC) and in Zambia, where you get to see another territorialized cluster of global industry. Resources like copper, cobalt, and nickel must be extracted on an industrial scale where they are geologically abundant, and places like the DRC and Zambia are where you find them.
Metals like copper, cobalt, and nickel are heavy, especially embedded in ore, so they aren't traveling very far before being processed for export. Indeed, the sulfur-burning acid plants are in the DRC and Zambia, close to the mining operations, The sulfuric acid is either exported or used in the region in acid-leaching processes to separate the metals from the ores, so that the metals can exported in turn.
Since the DRC and Zambia are not necessarily rich in sulfur, much of the sulfur must be imported, which is where we get the aforementioned strain on sulfuric acid production. Less sulfuric acid means a direct strain on the metals extraction process that requires it for separating metal from ore, so less copper, cobalt, and nickel are going out too.
With the income these large operations are bringing in, these already-strained regions could become more unstable, radiating that political instability outward. We could go on describing even more downstream effects: new electrical products and electricity generation being starved of metals, chipmaking starved of energy and sulfuric acid, data centers starved of chips and electricity, and etc.
These are just a few steps into one possible broken resource chain, and there are many more resources implicated in a much more complex web. Do read the analyses linked above and think them through. And we haven't even gotten into the political and financial layers connected to these resource chains. Its all tangled up.
Gee, we've come so far. Once we fought over guano islands, timberlands, silver mines, salt mines, spice trades, and what have you. Now we fight over these global supply chains of some of the strangest and most dangerous substances you can imagine, which are intricately weaved together, tightly coupled and circulating together all over the world, powering and lubricating this deadly whirling Rube Goldberg machine that has been spiriting much of our food and other resources to us from various corners of the globe, which seems to drive people insane even when its growth merely slows.
Many of the key nodes in these supply chains, where the actual territorialized production processes hum away to produce these substances, clustered in strikable nodules, cannot be easily moved or reconfigured without years of concerted effort and investment. Neither can these operations be starved for too long to remain economically viable, as their host nations are often deep in debt, requiring a constant flow of exports bringing in income.
Like the various natural ecological services we rely on - that are too complex and too long term to reproduce - these productive operations are themselves abused and driven into the ground, simultaneously in many parts of the world, as labor is squeezed and wealth polarizes and political instability grows, concurrently as increasingly intense climate and ecological events mount through the abuse of the natural world.
There are many of these productive territories, which only seem to reveal themselves to the ruling class through crisis, which becomes ever more likely as one after the other, neglected and abused, goes into crisis, weakening the others downstream, prompting additional crises.
