Historical Materialism 29.4 (2021) 70–113
brill.com/hima
The Commodities Fetish? Financialisation and
Finance Capital in the US Oil Industry
Adam Hanieh
Professor, Institute of Arab and Islamic Studies, University of Exeter, Exeter,
United Kingdom
A.Hanieh@exeter.ac.uk
Abstract
This article explores the financialisation of the world’s most important commodity,
oil. It argues that much of the literature on the financialisation of commodities tends
to adopt a dualistic approach to financial markets and physical producers, where
financial and non-financial activities are assumed to be externally-related and counterposed to one another. The article locates the roots of this analytical separation in
a mistaken acceptance of the fetish character of interest-bearing capital (IBC) – a
view that the exchange of loanable sums of capital represents a relationship between
money-capitalists rather than a relationship to the moment of production. Against
such dichotomous readings, the article argues that the financialisation of oil needs to
be understood as part of the reworking of ownership and control across the oil commodity circuit, expressed through the combined centralisation and concentration of
capital over the money, productive and commercial moments. This argument is demonstrated through an original empirical investigation of the US oil industry, including
20 years of weekly trading data on the New York Mercantile Exchange (NYMEX) and a
detailed study of more than 160 oil and energy-related firms in the US. By mapping the
structural weight and connections between different capitalist actors involved in accumulation across the oil sector, we gain a better understanding of the ultimate dynamics (and beneficiaries) of the carbon economy.
Keywords
financialisation – oil – finance capital – climate change
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Introduction
The last two decades have seen considerable debate around the concept of
financialisation, a term that first originated in Marxist works but which is now
widely employed across a variety of different theoretical traditions.1 In its
most general sense, financialisation captures the clear ascendance of financial
markets, and the evident ways in which financial imperatives have come to
impose themselves over every sphere of human life.2 A frequently cited definition locates financialisation as ‘the increasing role of financial markets, financial motives, financial actors, and financial institutions in the operation of the
domestic and international economies’.3 This shift has been enabled through
the development of myriad financial instruments and techniques, most significantly those based upon the securitisation of assets and derivative contracts. Taken as whole, these new instruments have greatly expanded the size
of global financial markets and the volume of cross-border financial flows.4
Amidst this growing weight of financial markets and processes, a key focus
of debate has been the potential relationship between financialisation and
increased price volatility for various commodities.5 Discussion around this
topic initially emerged in the first decade of the current century, when an array
of new financial actors (including investment banks, hedge funds, pension
funds, and asset management firms) began to direct huge amounts of capital
into commodity futures markets – centralised exchanges where contracts to
buy and sell specified amounts of a commodity at some point in the future
are traded. The involvement of these financial actors in commodity futures
upended the traditional structure of commodity markets, particularly the hitherto dominant role of individuals and firms that were directly engaged in the
production and exchange of physical commodities.6 Commodities were said to
have become ‘financialised’ – transformed into new financial assets that could
be traded and speculated on in financial markets, with little concern towards
physical delivery. For many analysts, these speculative activities served to disconnect commodity prices from market ‘fundamentals’ (such as supply and
1 The author would like to thank the Historical Materialism editorial board, Demet Dinler,
Mazan Labban, Jeffrey R. Webber, Rafeef Ziadah, and the other anonymous reviewers of this
article for their generous engagement and critical comments on the arguments below.
2 Krippner 2005; Mader, Mertens and van der Zwan (eds.) 2020; Epstein (ed.) 2005; Martin
2002.
3 Epstein (ed.) 2005, p. 3.
4 Durand 2014.
5 McGill 2018.
6 Clapp 2015.
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demand), and were thus seen as the prime culprit in an unprecedented spike
in commodity prices that occurred across a broad range of different markets
between 2003 and 2008 – including energy, agriculture, and metals.7
Much of this work on commodity financialisation is extremely rich and
carries important real-world implications, not least for poorer countries that
may be highly dependent upon global food and energy imports. Nonetheless,
the near-exclusive focus of this literature on the question of price formation
has served to elide other fundamental questions, most notably the relationship between financialisation and the changing patterns of capital ownership
and control across the wider commodity circuit. In this respect, much of the
literature on commodity financialisation tends to adopt a dualistic approach
to financial markets and physical producers, where financial and nonfinancial activities are assumed to be externally-related and counterposed to
one another. Within this framing, a supposedly determinant financial sphere
imposes itself upon the moments of production and circulation of value; in
turn, these latter moments are treated as discrete and ancillary to processes of
financial accumulation.
In what follows, I argue that the roots of this prevailing analytical separation
of the financial and non-financial spheres lie in a mistaken acceptance of the
fetish character of interest-bearing capital (IBC) – a view that the exchange of
loanable sums of capital represents a relationship between money-capitalists
rather than a relationship to the moment of production. Against such dichotomous readings, my goal is to draw out how the financialisation of commodities
is ‘internally related’8 to the moments of production and circulation within
a unitary circuit of capital.9 Most specifically, I will show that financialisation needs to be understood as part of the reworking of capitalist power over
commodity circuits, expressed through the combined centralisation and concentration of capital over the money, productive and commercial moments.
Building upon other Marxist work, I argue that this process of class formation is embodied in the increased power of a distinct class of finance capital –
understood here as the entwined ownership and control of capital across the
commodity circuit in toto (and not in the distorted sense of ‘bank control of
industry’ that is sometimes advanced in the literature).
7 Masters 2008.
8 Ollman 2003.
9 Ollman’s explication of the concept of ‘internal relations’ is based upon Marx’s perspective
that the relations existing between objects (and concepts) should not be considered external
to the objects themselves but as part of what actually constitutes them. Any object under
study needs to be seen as ‘relations, containing in themselves, as integral elements of what
they are, those parts with which we tend to see them externally tied’ (Ollman 2003, p. 25).
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These arguments are developed below through a focus on the world’s most
important commodity – oil. In the initial part of the paper, I lay out some of
the Marxist debate around financialisation, with particular attention to the
concepts of interest-bearing capital and finance capital. I then turn to a survey of the general literature on the financialisation of commodities, including
oil. Following this theoretical framing, the second half of the paper presents
an original empirical investigation of the composition of class power across
the oil commodity circuit in the United States. This empirical analysis first
examines US oil contracts on the New York Mercantile Exchange (NYMEX),
one of the most important futures markets in the world and where futures
and options contracts for the global oil benchmark, West Texas Intermediate
(WTI), are traded. Here, I analyse 20 years of weekly trading data to show how
oil has been financialised, i.e. abstracted from its concrete use value to become
a financial asset traded by large financial institutions – including investment
banks, Asset Management Firms, and hedge funds/private equity firms. I then
present a detailed study of more than 160 oil and energy-related firms in the
US, mapping the nature of capital ownership across these firms and their relationship to oil’s financial markets. This analysis confirms that the leading drivers of the financialisation of oil are simultaneously deeply imbricated in the
entire oil value chain, from exploration and production through to pipelines,
transportation, and storage, and from services and refining and processing
through to the generation and transformation of power.
At a more general level, this argument is intended as a contribution to
strategic debates around efforts to halt anthropogenic climate change. Most
notably, by mapping the structural weight and connections between different
capitalist actors involved in accumulation across the oil sector, we gain a better understanding of the ultimate dynamics (and beneficiaries) of the carbon
economy. Banks, investment funds and other institutional holders of moneycapital are not simply passive vehicles that profit from their investments in
oil companies (and who might, therefore, be collectively ‘shamed’ into doing
otherwise).10 Rather, the complex relationship between oil’s financialisation
and its necessary production (and circulation) as a physical commodity is
reflected in the growing overlap of capital ownership across all moments of
the oil circuit. The class of finance capital that superintends this process must
10
This is not meant as a criticism of divestment campaigns as a tactic that can play a significant role in confronting and raising awareness around the different actors involved in
climate change. On the contrary, it is to argue for a more structural consideration of the
systemic role played by these financial actors within the oil circuit.
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be viewed as a leading, and systemic, driver of climate change – not simply an
accidental or contingent epiphenomenon.
2
Financialisation, Interest-Bearing Capital, and Finance Capital
Broadly speaking, the literature on financialisation encompasses three distinct
theoretical concerns. The first of these relates to the roots of financialisation
and its implications for capitalist periodisation – whether to understand financialisation as indicative of a new stage or marker of neoliberal capitalism,11 a
symptom of capitalist stagnation in an environment of monopoly and overaccumulation,12 or the outcome of declining profit rates and long-term structural crisis.13 A second focus of the literature explores the varied implications
of financialisation for social, political, and economic power. Here, contributions have investigated the role of financialisation in enabling US hegemony
and emergent patterns of geopolitical competition,14 as well as the distributional impacts of financialisation on wealth and inequality.15 Finally, a third
strand of the literature analyses how financialisation is changing institutional and behavioural patterns – including those of banks,16 households and
individuals,17 and firms.18
Work across these three themes has generated significant insights. Nonetheless, a basic problem continues to mark much of the literature: a high
degree of imprecision and ambiguity around what the term financialisation
11
12
13
14
15
16
17
18
Arrighi 1994; Boyer 2000; Lapavitsas 2013; Fine 2010a.
Bellamy Foster 2010; Ivanova 2017.
Brenner 2006; Harman 2009; Roberts 2016; Shaikh 2011.
Crotty 2005; Duménil and Lévy 2004; Panitch and Gindin 2012.
Stockhammer 2012; Zalewski and Whalen 2010; Lapavitsas 2013; Montgomerie 2009.
Dos Santos 2009.
Martin 2002; van der Zwan 2014.
Froud, Haslam, Johal and Williams 2000; Stockhammer 2004. As is evident from the works
cited in this paragraph, financialisation is very much a twenty-first century concept. One
important exception to this is Giovanni Arrighi’s influential book, The Long Twentieth
Century (1994), which presciently captured many of the themes in more recent debate.
Drawing upon Braudel and Wallerstein, Arrighi argued that world hegemons typically
experience a period of financial expansion during their phase of decline. This financial
expansion is a result of the pressures of overaccumulation, and (somewhat paradoxically)
allows the declining hegemon to realise on-going returns on investment by financing the
rise of the new hegemon. Arrighi’s argument is distinct from much of the recent financialisation literature in that it explicitly sees financial expansion as a recurrent historical
phase of capitalist development at the world scale (see Christophers 2015 for a discussion
of this point).
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actually means.19 As Fine points out, financialisation is often understood
somewhat tautologically as simply meaning ‘more’ finance20 – with little effort
given to clarifying what distinguishes financial from non-financial activities, or
to precisely locating the place of finance within the overall circuit of capital.
In this respect, Christophers has commented that the concept lies ‘somewhere
in between’ the extremes of ‘powerful and innovative theory … and superficial
and redundant label’, claiming that it has made an ‘at best, debatable’ specific
theoretical contribution to social science.21 Christophers and others22 underline here the large array of different meanings attached to financialisation that
have generated a set of associated empirical and methodological challenges:
which indicators to use in measuring financialisation, what time frames to
consider in comparing different case studies, and how to distinguish the trajectories of financialisation across various parts of the world market.23
Given these well-founded critiques, how might financialisation be better understood in an analytical sense – i.e. in ways that can avoid the tautological and overly-descriptive (and therefore redundant) definitions so
often encountered in the literature? In this regard, one of the more robust
theoretical accounts is that offered by Ben Fine, who tethers his understanding of finance and financialisation to a conceptualisation of value24 and its
movement through the wider circuit of capital – most explicitly through his
use of Marx’s category of interest-bearing capital (IBC).25 Following Marx,
Fine understands IBC as surplus capital – capital drawn from idle money or
‘hoards’ – that is lent by money-capitalists to other capitalists for the purposes
of producing profit. This loanable capital may be put to use in the exploitation of living labour, thereby generating surplus value, a part of which the
lender of IBC then appropriates in the phenomenal form of interest. IBC may
also be lent to other economic agents (e.g. merchants, governments, landowners, workers) for activities that are not productive of surplus value26 –
19
20
21
22
23
24
25
26
Christophers 2015.
Christophers and Fine 2020, p. 21.
Christophers 2015, p. 187.
Stockhammer 2004; Christophers 2015; Davis 2017; Christophers and Fine 2020.
Hanieh 2016; Rethel 2010.
For a recent discussion on Marxian value theory and financialisation, see Christophers
and Fine 2020. In this discussion, Christophers notes that if we are to understand financialisation, then how ‘we think value theory remains indispensable … [it] cannot be
dodged’ (Christophers and Fine 2020, pp. 25–6). Fine presents a defence of the classical
Marxist view of finance as unproductive of value, while Christophers remains unsatisfied
with this perspective (see also Christophers 2018).
Fine 2010a, 2010b, 2013; Christophers and Fine 2020.
Harvey 1982, p. 257.
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nonetheless, the ultimate source of the interest appropriated by the lender
remains the total surplus value produced at a societal level.
As with all his conceptual categories, Marx grounded his understanding of
IBC in its historical genesis (see, in particular, Capital Volume III and Theories
of Surplus Value), arguing that IBC’s ‘antiquated form’ was usurer’s capital and
‘its twin brother, merchant’s capital’, which existed as ‘antediluvian forms of
capital … long preced[ing] the capitalist mode of production and … found in
the most diverse economic formations of society’.27 With the development of
capitalism, interest-bearing capital moves from being a separate sphere (i.e.
usurers or merchant’s capital) to being one that is incorporated – ‘subjugated’
is how Marx frequently refers to this process – within the sphere of value
production.
According to Fine, IBC today sits ‘at the heart of financialization … in that
IBC has expanded enormously both intensively (within existing activities)
and extensively (to new areas of applications) over the past three decades’.28
Financialised capitalism, in other words, is defined by the unprecedented
enlargement of IBC throughout all spheres of human activity, such that it now
mediates all capitalist social relations – including those between capitals, as
well as those between capital and labour.29 The huge expansion of financial
markets – facilitated by the proliferation of new financial instruments that link
past, present and future – is a direct form of appearance of this envelopment
of all aspects of social life by IBC. As Fine notes, this understanding of financialisation helps move the discussion beyond the ‘amorphous and unstructured definition arising from Epstein30 in which financialization is seen simply
as more of finance and its effects’.31
Within this account of financialisation, there are two key features of IBC
that deserve emphasis. The first of these is that IBC is not directly productive
of surplus value – although it may expand the possibility for value production (through its role in intensifying productivity or speeding up the turnovertime of capital within the productive sphere). In turn, when the owner of IBC
advances a sum of money to another capitalist, they gain ownership rights
over value that is yet to be produced. Marx described these drawing rights as
‘fictitious capital’, ownership titles (such as shares, bonds, etc.) that represent
a claim on ‘a future stream of revenues generated by an asset, and which can
27
28
29
30
31
Marx 1959, p. 593, cited in McNeill 2021, pp. 281–2.
Christophers and Fine 2020, p. 23.
McNally 2009, p. 56.
Epstein (ed.) 2005.
Christophers and Fine 2020, p. 21.
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be bought and sold independently of the asset itself’.32 This is ‘value created
in exchange ahead of the production and realization of (surplus) value’.33 And
because fictitious capital represents a title of ownership to future value, it has
a price that can be traded ‘in anticipation of the actual production and realization of value in the future’.34 As a consequence of stagnant profit rates and
the persistent overaccumulation of capital, the volume of fictitious capital has
expanded to unprecedented levels35 and has become ‘the object of incessant
trading in globalised financial markets … lodged in very powerful financial
conglomerates possessing the capacity to dictate their policies to governments
through a variety of economic channels and political institutions’.36
A second key feature of IBC flows from this first observation. While IBC does
not directly produce value, but rather appropriates part of the total surplus
value, this act of appropriation appears to us as if value has been generated by
the productive capitalist in exchange with the lender of IBC (M – M′). Marx
describes this form of appearance as a fetish – or relation ‘turned upside down
in the consciousness of men’37 – because it seems to us that the lender of IBC
only has relations with other capitalists and not with the wage-worker, yet ultimately the source of the value appropriated by the money-capitalist is actually
found in the labour – capital relation.38 In other words, we mistake the form of
appearance that the value-relation takes in our consciousness (surplus money
begetting more money through the process of exchange) for the relation
itself.39 In this respect, Marx is insistent on repeatedly drawing attention to IBC
32
33
34
35
36
37
38
39
McNeill 2021, p. 283.
Labban 2010, p. 545.
Labban 2010, p. 545; see also Harvey 1982.
Durand 2014.
Chesnais 2016, p. 37.
Marx 1971, p. 476.
See McNeill 2021, Chapter 5, for an illuminating discussion of this point. Elsewhere, Marx
writes: ‘One portion of profit, as opposed to the other, separates itself entirely from the
relationship of capital as such and appears as arising not out of the function of exploiting wage-labour, but out of the wage-labour of the capitalist himself. In contrast thereto,
interest then seems to be independent both of the labourer’s wage-labour and the capitalist’s own labour, and to arise from capital as its own independent source. If capital
originally appeared on the surface of circulation as a fetishism of capital, as a valuecreating value, so it now appears again in the form of interest-bearing capital, as in its
most estranged and characteristic form.’ (Marx 1959, p. 829, cited in McNeill 2021.)
Sayer 1987. I draw this argument from Sayer 1987, which presents a highly perceptive
account of ideological forms and the process of abstraction. See Banaji 2010 for an analogous argument around the relation between wages and the concept of unfree labour.
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as a fetish, describing it inter alia as the ‘pure fetish form’,40 ‘the consummate
automatic fetish’,41 the ‘mystification of capital in its most extreme form’,42 ‘the
most extreme inversion and materialisation of production relations’,43 and
‘the complete objectification, inversion, and derangement of capital … a Moloch
demanding the whole world as a sacrifice belonging to it of right’.44
Much of the discussion around commodity financialisation is marked precisely by an uncritical internalisation of this kind of fetishism. Specifically,
there is a tendency to take the ideological forms that reality takes – a sharp
discontinuity between finance and the so-called ‘real’ economy – as reality
itself, instead of recognising financial accumulation as a specific moment of
the circuit of capital (represented in the exchange of IBC) that is distinct but
nonetheless internally-related45 to the labour – capital relation. Analytically
and methodologically, this fetish translates into a kind of dualism, which
treats financial markets as a disconnected and autonomous site of accumulation, rather than focusing attention on the mutually-constituted relationships
between financial markets and the circulation and production of physical
commodities.
A critique of this fetish can provide significant insight into a theme that has
not been adequately explored in the wider literature on commodities: the relationship between financialisation and processes of capitalist class formation. By
approaching the fetish as an ‘inversion’ of reality, we can see financialisation as
not simply an expansion of IBC in the form of fictitious capital through vastly
widened financial markets, but as actually representing the tendential combination of the financial, productive, and commercial circuits within closely
linked ownership structures. In other words, at the level of class composition, financialisation embodies a closer imbrication of the financial and nonfinancial spheres – despite the formal appearance otherwise – and the growing
together of these different moments of accumulation under the hegemony of
what is best described as ‘finance capital’.46 The latter term is used here advisedly, to indicate the increasingly integrated and monopolised control over
different moments of the circuit of capital by a tightly linked class of capital
owners (not at all in the frequently misconstrued sense of ‘the domination of
40
41
42
43
44
45
46
Marx 1959, p. 393.
Marx 1971, p. 455.
Marx 1971, p. 494.
Marx 1971, p. 462.
Marx 1971, p. 456; italics in original.
Ollman 2003.
Harvey 1982; Serfati 2011; Chesnais 2016.
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banks over industry’).47 As François Chesnais notes, finance capital represents
the ‘simultaneous and combined centralisation/concentration of money capital, industrial capital, and merchant or commercial capital’,48 regardless of the
different institutional paths this might take globally. Rejecting any firm division between the productive, financial, and commercial spheres – in effect,
refusing to take the fetish as reality – is not simply a matter for contemporary capitalism. As Jairus Banaji demonstrates so convincingly,49 the growing
together of different types of capital (e.g. merchant and industrial capitals)
within single ownership structures was precisely the path taken in the actual
historical development of capitalism. Indeed, as cited above, this is in accordance with Marx’s own comments on the early historical genesis of IBC as usurers’ capital.
3
The Financialisation of Oil
Given this general theoretical framework, it is now possible to turn more concretely to the financialisation of oil. As noted earlier, a massive influx of new
financial flows entered global commodity markets through the first decade of
the 2000s, with one study estimating a 45-fold increase in these flows between
2001 and 2011, reaching $450 billion in 2011.50 These investments predominantly
came from an array of new financial actors not traditionally known for their
involvement in commodities, and who had been permitted to enter the commodity business following the de-regulation of commodity markets in the early
2000s. This was a moment of intense change in US financial markets – and a
47
48
49
50
As is well-known, the term finance capital originates in the classic work of Rudolf
Hilferding (1981) who suggested the domination of banks over industry as a defining and
universal feature of advanced capitalism (subsequently adopted by Lenin as part of his
theorisation of imperialism). There is no space here to provide a full genealogy of the term
(see Overbeek 1980; Harvey 1982; Lapavitsas 2009), but contemporary notions of finance
capital have moved away from simply equating finance capital with banks or financial
corporations. Instead, a focus is placed on the increasingly unified control over different
moments of the circuits of capital, articulated through the ‘contradiction-laden flow of
interest-bearing capital’ (Harvey 1982, p. 317). Harvey terms this a ‘process view of finance
capital’ (Harvey 1982, p. 283). Krippner 2005, for example, discusses this in relation to the
US; Chesnais 2016 for US, Britain, France, Germany; Serfati 2011 analyses transnational
corporations through the lens of finance capital; Hanieh 2019 looks at finance capital and
Islamic banking in the Gulf states of the Middle East.
Chesnais 2016, p. 8; italics in original.
Banaji 2010, 2020.
Bicchetti and Maystre 2012, p. 4.
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salient reminder that law is always the midwife of market innovation – with
a raft of new regulations (notably the Commodity Futures Modernization Act
of 2000) opening US commodity markets to global investors and allowing
large investment banks and other financial institutions to trade in commodity derivatives with little regulatory oversight.51 Derivative contracts traded on
commodity futures markets consequently grew sevenfold in volume between
2000 and 2010.52
Oil is the largest, most liquid, and most interconnected of these futures
markets.53 Oil futures enable traders to fix a price for selling (or purchasing) a
set quantity of oil (specified in barrels) at a particular future date. Such derivatives can be bought and sold on a range of futures markets, the most prominent of which are the NYMEX (where the North American oil benchmark, West
Texas Intermediate (WTI), is traded) and the Intercontinental Exchange (ICE),
where Brent Oil futures can be bought and sold. Although the oil contracts
traded on NYMEX and ICE contain commitments to deliver physical oil at
some point in the future, close to 100% of these contracts are never physically delivered. Instead, these are paper transactions, with traders ‘offsetting’
their positions by buying or selling the equal and opposite trade towards the
end of the contract expiry period.54 These contracts are useful to oil producers (or consumers) who seek to guarantee a particular price for their sale (or
purchase) of oil in future months.55 But as with any futures market, these contracts also allow traders who do not own or want any physical barrels to trade
in ‘paper barrels’ – with the hope that the future price of these barrels will
appreciate.56
51
52
53
54
55
56
Omarova 2013; Conlon 2018.
UNCTAD 2011, p. 15.
Alquist and Kilian 2007; Büyükşahin, Haigh, Harris, Overdahl and Robe 2008; Tang and
Xiong 2010.
This kind of offsetting trade is necessary for NYMEX WTI Futures because physical delivery of oil is obligatory at the expiration of contract. In contrast, ICE Brent Oil futures
contain an option for cash settlement rather than physical delivery.
For example, an oil producer might sell a futures contract for 1000 barrels per day for
October 2020 at $50 per barrel. When October arrives, the actual price of oil per barrel is
compared to $50, with the producer paying the counterparty (who bought the contract)
the difference if the price is higher than $50, or receiving the difference from the counterparty if the price is less than $50. If the NYMEX price ends up as $40 for October, then
the producer will sell their physical oil for that lower price, but will also receive $10 ‘on
paper’ from the counterparty to the hedge. The end result is that the producer is paid the
equivalent of $50 per barrel.
The theoretical possibility of delivery, however, is important – as this provides a link
between prices in the futures market and those in the spot (physical) market. If a contract
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Through the early 2000s, billions of dollars were directed into oil futures
by financial firms and other institutional investors (such as hedge funds) who
looked to the highly profitable opportunities presented by this trade in paper
barrels. At the most general level, the ‘financialisation of oil’ refers specifically
to these kinds of investments – activity in oil futures that is ‘driven purely
by financial interests through the large-scale entry of financial investors’.57
According to one well-known former hedge fund manager, Michael Masters,
the total increase in demand for ‘paper barrels’ in the oil futures market
between 2003 and 2008 reached 848 million barrels, a figure that was roughly
equivalent to the increase in physical demand for oil from China.58 Although
this was a generalised phenomenon experienced across the food, metals, and
agricultural sectors, the influx of financial flows into oil futures far surpassed
that of other commodities – for the large financial firms who drove these flows,
oil had become a distinct financial asset within a portfolio of wider investment
strategies.
Significantly, however, this deepening financialisation of oil occurred alongside an unprecedented spike in the price of oil, which rose from $32 per barrel
in 2003 to a peak of $147 in mid-2008. Because of the particular way that oil
prices are actually set – essentially the ‘spot’ or physical price is closely linked
to the price of a paper barrel in the futures market59 – the increased financial
flows into oil futures were seen by many as a key explanation for this dramatic
rise in prices. Indeed, the US Congress launched an investigation into this
57
58
59
for delivery in October matures, for example, then the amount paid for this oil on delivery
must be equal to the October spot price.
Staritz, Newman, Tröster and Plank 2018, p. 4.
Masters 2008. Masters also claimed that speculators had stockpiled ‘via the futures market, the equivalent of 1.1 billion barrels of petroleum, effectively adding eight times as
much oil to their own stockpile as the United States has added to the Strategic Petroleum
Reserve over the last five years’ (Masters 2008).
For most of the twentieth century, oil was mostly traded using long-term contracts in
which prices were set (or ‘administered’) by oil majors or large oil-producing countries
(see Fattouh 2011). With the establishment of the NYMEX WTI contract in 1983 (and the
Brent oil contract in the same year), trade in oil increasingly shifted towards a marketbased pricing system reliant on the futures market. As a leading energy industry expert
puts it: ‘What must be recognised is that futures … evolved in many cases from conduits
providing access to physical supplies into platforms performing functions of price discovery and information processing. Spot prices are often influenced by the futures markets,
with causality being reversed compared to what is implied by conventional wisdom. A
trader buying a physical cargo of oil sometimes does not realise that they become an
unwilling participant in the derivative markets through the reverse link between forward
and spot prices. This means that the traditional distinction between the physical and
derivative traders becomes fuzzy.’ (Kaminski 2012, p. 8.)
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relationship in 2008, which saw several Senate hearings and testimonies from
a range of high profile industry experts. Importantly, over this period, oil sat
at the centre of a broader boom in commodity prices with the nominal prices
of metals increasing by 230%, the price of food doubling, and those of fertilizers increasing fourfold.60 For many poorer countries dependent on food and
energy imports, these rising prices had profoundly negative implications.61
The large econometrics literature exploring the link between financialisation and the price of oil has mostly centred upon the issue of speculation, and
is plagued by a range of methodological problems stemming from its neoclassical assumptions.62 These problems include the conceptual categories used (e.g.
how to separate ‘speculation’ from legitimate ‘risk management’),63 difficulties
in differentiating economic actors (e.g. data that cannot distinguish between
actors who are both speculators and producers at the same time),64 and issues
of endogeneity (e.g. how to model expectations around the so-called ‘fundamentals’ of supply and demand, when these expectations affect both physical
and financial traders).65 Largely as a result of these inherent methodological
limitations, the mainstream economics literature is completely unsatisfactory.
Indeed, one recent meta-study surveying the findings of 100 empirical studies
concluded that the number of those where speculation was found to have a
statistically positive impact on commodity markets was about equivalent to
the number where it was found to have a statistically negative impact.66
60
61
62
63
64
65
66
Baffes and Haniotis 2010.
Of course, for major commodity exporters, such as the Gulf Arab states, this price boom
provided an enormous financial windfall that significantly impacted their place in global
and regional economies (Hanieh 2018).
See Adams, Collot and Kartsakli 2020 and Fattouh, Kilian and Mahadeva 2013 for summaries of this literature.
For a discussion of this issue, see McGill 2018, who notes: ‘It is … extremely difficult to
articulate a definition of speculation that is not in some way tautological or at least
redundant.’ (p. 10.)
As Jennifer Clapp has pointed out in relation to agricultural commodity markets, it is very
difficult to distinguish between hedging or financial speculation undertaken by commodity trading firms (Clapp 2015).
A larger issue here is the mistaken assumption that prices should correspond to ‘fundamentals’ in the absence of speculation. As Marx himself noted, the price-form itself necessarily deviates from supply and demand in order to be adequate to ‘a mode of production
whose laws can only assert themselves as blindly operating averages between constant
irregularities’ (Marx 1990, p. 196). I am indebted to Demet Dinler for this observation.
Haase, Zimmermann and Zimmermann 2016. The paper measured the impact of speculation on six variables: price, returns, risk, premiums, spreads, volatility, and spill-over.
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Moving beyond the narrow focus on speculation – as Anna Zalik perceptively comments, all ‘[f]uture pricing is by definition speculative’67 – there is
strong evidence that increased financial activity in commodity futures has a
significant impact on price volatility in conjunction with other supply and
demand factors.68 There is an intuitive logic to this – following the deregulation of commodity markets the spot prices of most commodities became
referenced to future prices, and today both producers and traders make decisions based upon these ‘benchmark’ prices.69 Indeed, in the case of oil, the
price announced daily for WTI and Brent is a direct quote of what a ‘paper
barrel’ costs on the futures market (not, as is widely but mistakenly thought,
the actual price of a physical barrel of oil). In light of this, a large range of studies across different commodities and geographies has confirmed the ways in
which price formation is now connected to the volume and volatility of financial activity in futures markets.70
In comparison to this extensive literature on the question of price dynamics –
and echoing the critique made in the preceding section – the impact of financialisation on other moments of the commodity circuit remains relatively
underexplored.71 There is, as Staritz et al. note,72 a ‘perception of commodity
derivatives as investment vehicles disconnected from physical markets and
real-world processes of commodities production and trading’.73 Nonetheless,
there is an emerging body of work that analyses how the financialisation of
commodities has accentuated the power of large traders and financial firms –
and weakened the position of labour – across the value chain. This can manifest itself in the subordination of smaller firms, frequently located in the Global
South, to financial imperatives set by futures markets in the North. In this manner, financialisation not only squeezes conditions of labour across the entire
67
68
69
70
71
72
73
Zalik 2010, p. 554.
Nissanke 2011.
Ederer, Heumesser and Staritz 2016, p. 463.
Clapp and Helleiner 2012; Tang and Xiong 2010; Newman 2009; Bargawi and Newman
2017; Basak and Pavlova 2016; Ederer, Heumesser and Staritz 2016; Staritz, Newman,
Tröster and Plank 2018.
McGill 2018; Staritz, Newman, Tröster and Plank 2018.
Staritz, Newman, Tröster and Plank 2018.
They also note that while Global Commodity Chain (GCC) and other related approaches
have examined the role of lead firms in disciplining and extracting value across the value
chain, this literature has ‘largely neglected the role of finance and financial markets in
shaping the structure and functioning of commodity chains and the outcomes for different actors in commodity sectors’ (Staritz, Newman, Tröster and Plank 2018, p. 2).
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value chain,74 it can also widen class differentiation75 and expose smaller producers and traders to increased volatility and risk.76 Furthermore, for countries
that are heavily reliant upon particular commodity exports – as Zambia77 and
Chile are with copper78 – financial markets can create significant pressures to
restructure tax laws and weaken various social and environmental regulations.
There has been little examination of these broader issues in the literature
on oil, which, as McGill notes,79 largely continues to treat financialisation as
a purely financial phenomenon restricted to the futures market, rather than a
process whose effects are deeply connected to the dynamics of production and
trading. The one significant exception to this is the work of Mazan Labban,80
whose understanding of financialisation pivots around the category of fictitious capital. For Labban, oil futures markets ultimately need to be understood
as sites in which fictitious capitals – titles to future yet-to-be realised value –
can be bought and sold.81 With greater amounts of oil ‘traded in financial
markets than in spot markets … major oil companies have increasingly turned
towards financial markets for shorter term returns on their investments’.82
As a result, the financialisation of oil has transfigured how prices are formed,
moving away from price determination based on the availability of physical
supplies of oil towards prices that reflect the trading of fictitious capitals in
financial markets.83 There is thus no direct causal relation between the price of
oil and levels of investment in the physical supply of oil. Importantly, however,
Labban is at pains to stress that this does not mean that the effect of physical
production and trading of oil has disappeared or is no longer important. Oil is
traded in both physical and financial markets simultaneously,84 and thus the ‘oil
market’ is composed of two internally-related abstractions – ‘a physical commodity circulating in physical (and financial) markets and its representation as a financial asset [or fictitious capital, AH] circulating in financial (and
74
75
76
77
78
79
80
81
82
83
84
Labban 2014.
Newman 2009.
Staritz, Newman, Tröster and Plank 2018; Bargawi and Newman 2017; Isakson 2015.
Kesselring, Leins and Schulz 2019.
Arboleda 2020.
McGill 2018, p. 647.
Labban 2010, 2014.
For Labban, financial derivatives are a clear embodiment of fictitious capital – they have
no intrinsic value but are instead tied to the difference ‘between the spot price of an
underlying asset and an agreed-upon price at an expiration date specified in the contract’
(Labban 2010, p. 545).
Labban 2010, p. 542.
Labban 2010, p. 547.
Ibid.
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physical) markets’.85 There is a different materiality and temporality encountered in both these markets, but they are linked and thus mutually-formed.
One of the significant features of this argument is that it avoids the dualism often encountered in debates around the financialisation of oil (or other
commodities). The ‘fundamentals’ of oil do matter – i.e. levels of production,
availability of supplies, downstream demand for oil products, infrastructure
bottlenecks and so forth – but they do so in their mediation through financial markets and their effects on expectations around future conditions.86 As
Labban comments:
Oil companies have not become purely financial outfits. Their profits may
have derived increasingly from financial investments and larger portions
of their income are likely to be expended on dividends to shareholders,
stock buyback (partly to compensate management), and interest and
debt reduction. But investment in production still occurs, except now it is
‘disciplined investment’, i.e. disciplined by the dictates of financial logic
and centered on the creation of ‘ever-greater shareholder value’. Indeed,
oil companies continue to invest in production and in the expansion
of reserves precisely because their ‘capitalization’, their market value,
based as it were on perception about their ability to generate profit, is
tied to the profitability of oil … Thus, even when profits seem to derive
from financial markets and investment is disciplined by the dictates of
finance, profits are fundamentally tied to the production and realization
of value from the production and trade of physical oil, in order for wealth
in the form of ‘financial claims on expected future earnings’ to materialize as profit. And this ultimately depends on the ability of oil to make the
salto mortale [‘leap of faith’]87 in the market.88
Labban’s observation here is a sharp reminder that processes of financialisation – ultimately a reflection of large quantities of surplus capital seeking
valorisation in the form of IBC – cannot be separated from the moment of
commodity production. In reality, both the financial and productive spheres
comprise internally-related moments within the broader circuit of capital,
85
86
87
88
Labban 2010, p. 542.
Labban 2010, p. 548. Indeed, one indication of this is the close attention that commodity
traders on NYMEX pay towards ‘real world’ factors such as wars, supply-side restrictions,
weather, and so forth.
Labban is referring here to the moment of realisation of value, when the commodity is
actually sold in the market place.
Labban 2010, p. 550.
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M – C … P … C′ – M′. Elsewhere, Labban comments, ‘financialization cannot
emancipate accumulation from the production (and realization) of value and
therefore it can only proceed alongside the extraction of value in the labour
process, even when that is deferred to the future’.89 As noted earlier, much of
the mainstream discussion of financialisation – and not a small proportion of
Marxist work – tends to ignore this crucial point and adopt a dualist framing
of the financial and productive moments, with the financial sphere conceived
as separate from, and in opposition to, so-called ‘real’ activities. There is, as
Powell observes,90 a tendency within this wider literature to treat financial
activities as ‘residual and speculative [which] unnecessarily dichotomizes the
relationship between industry and finance’.
Bringing these insights together with the earlier discussion of IBC and
finance capital, how might patterns of capital control and ownership – i.e.
processes of class composition – reflect these interdependencies between the
financialisation of oil and the wider oil commodity circuit? In the remainder
of this paper, I attempt to answer this question through an empirical investigation of the US oil industry. To do so, this firstly requires a closer look at
the longer-term dynamics of the oil futures market, with the principal aim of
understanding the activities that take place on this market and, most significantly, the key financial actors who are involved in the buying and selling of
futures and options contracts. I then turn to examining the relations between
these same financial actors and the production and circulation of oil (as value)
through its circuit – stretching from oilfield exploration, transport and storage,
through to the sale of petroleum products and the generation of power.
4
The Financialisation of US Oil Markets
A key indicator of the financialisation of oil is the tremendous growth in
the trade of oil futures and options, which provide a commitment to deliver
a particular quantity and quality of crude oil at some specified point in the
future.91 These contracts are bought and sold on exchanges, the two most
important of which are the New York Mercantile Exchange (NYMEX, for West
Texas Intermediate oil) and the Inter-Continental Exchange (ICE, for Brent
89
90
91
Labban 2014, p. 478.
Powell 2018.
A futures contract is an agreement to buy or sell oil at a certain price in the future. An
options contract gives the holder the right (but not the obligation) to buy or sell on the
specified date. In addition to the grade of oil, these contracts specify the volume, price,
time period, and location where the oil should be delivered.
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oil). These two exchanges are critical to the world oil market – since the prices
of WTI and Brent are the two main global ‘benchmarks’ through which the
prices of the myriad other kinds of crude oil from across the world are set and
commensurated.92
The discussion here will focus on the market for WTI, which is a light sweet
crude produced from a large number of different oil fields in the US. Unlike
sea-borne Brent, WTI crude is delivered by an extensive system of pipelines
and rail to the land-locked destination of Cushing, Oklahoma.93 Due to this
arrangement, the price of WTI can be heavily impacted by transportation bottlenecks or limited storage capacity. WTI underlies the WTI Light Sweet Crude
Oil futures and options contracts that have been listed since 1983 on the NYMEX
(a division of the CME, Chicago Mercantile Exchange), one of the most liquid
and deep financial markets in the world. NYMEX WTI contracts are dated for
delivery by calendar month (for example, June 2021) and can be traded up to
ten years in advance. WTI is the main oil benchmark for North America, with
most of the oil produced, traded, and imported into the US priced at a differential to WTI.
One reflection of the sheer growth in the NYMEX WTI market over recent
years is the prodigious expansion in the market’s average daily volume (ADV),
which measures the average number of WTI contracts that exchange hands
each day. Between 2007 and 2020, the ADV of WTI futures and options traded
on NYMEX has more than doubled, from 0.485 to 1.1 million contracts (NYMEX/
COMEX 2020 and 2008).94 Each NYMEX contract represents 1000 barrels of oil,
so the latter figure is equivalent to a daily trade of around 1.1 billion barrels of
oil. Figures such as these received significant headlines during the commodity
spike of 2003–8, with some analysts pointing out that the ‘paper barrel’ trade
was much higher than daily physical oil usage in the US – in 2020, around
70 times more paper barrels were traded each day than actually used – and
that this provided strong evidence for excessive levels of speculation in the
market.95
92
93
94
95
Oil drawn from other locations is priced at a differential to these benchmarks. These price
differentials are dependent upon various factors, including the physical differences of the
oil (such as viscosity, sulphur content, density and so forth), the cost of transportation,
and the demand for particular refined products.
Known as ‘the pipeline crossroads of the world’, the Cushing system is made up of 24
pipelines and 15 storage terminals. Over 13% of US oil is stored there, with an inbound
and outbound capacity of 6.5 million barrels per day.
NYMEX/COMEX Exchange ADV Report – Monthly Report.
While such comparisons are attention-grabbing they are nonetheless somewhat misleading. They do not account for the fact that futures contracts cover the delivery of oil over an
entire month, not a single day, and that contracts of varying maturity are bought and sold
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While market volume is one indication of the high levels of liquidity and
activity in NYMEX WTI, a more insightful measure is Open Interest (OI). Any
contract in the futures market has two sides, a buyer and seller, and is referred
to as ‘open’ until the contract either expires or the buyer takes an offset position (an opposite position in another contract to cancel out the first one). OI
refers to the number of contracts that are open or active, i.e. the number of
total contracts minus those that have been offset. Higher levels of open interest indicate that additional capital is entering the market, while decreasing
levels of open interest show that money is leaving the market – in this sense,
OI is a more revealing metric than volume for financial involvement in WTI
because it captures the quantities of new money that are flowing into oil
futures and options.96
OI data are reported by the Commodity Futures Trading Commission
(CFTC), an independent US government agency that regulates futures markets such as the NYMEX WTI. Utilising the CFTC’s Commitment of Traders
Report (CoT) – a weekly publication that records levels of OI across different
categories of traders and commodities – Figures 1 and 2 present an analysis of
Open Interest in the NYMEX WTI contract (futures and options) since 2000.
The graphs confirm the very significant increase in the size of the oil futures
market over this period, with total OI growing around 375% in the last two
decades. Particularly rapid growth is noticeable between 2003 and 2008, coincident with the commodity price spike of that period. However, total OI has
not dropped since that earlier spike, and figures for 2020 exceeded those of
2008 despite the significant impact of Covid-19 on global oil prices.
The CFTC’s CoT report divides OI into three main categories of market
participants that are shown in Figures 1 and 2. The first of these are labelled
commercial traders, firms that deal directly with physical oil, including producers (such as oil companies), oil traders (those who transport and store
oil), and end-consumers of oil or oil products (such as oil refiners or airlines).
Commercial traders use the futures and options market in order to hedge
against any potential adverse movements in prices, and, through the 1980s and
1990s, they constituted the majority of participants in the oil market. Since
96
in each day’s trading activity. Fundamentally, the problem here is a comparison between
a stock (volume of contracts) and a flow (daily usage). For a discussion of these issues,
see Ripple 2006.
For example, suppose trader A sells a contract to trader B, who, a few hours later, decides
to close their position by selling the same contract on to trader C. The volume of this
sequence would be 2 (two exchanges have taken place) but the OI would be one (only one
contract is open).
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The Commodities Fetish?
Figure 1
Open Interest in NYMEX WTI (futures and options) by Trader Category (2000–20)
Figure 2
Proportion of OI in NYMEX WTI (futures and options) by Trader Category
(2000–20)
Source: Büyükşahin, Haigh, Harris, Overdahl and Robe 2008 for
2000–8 figures; CFTC Weekly CoT Reports for subsequent years
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that time, however, the proportion of OI involving commercial traders has
dropped very significantly, from around 43% in 2000 to 18% in 2020.
The second type of market participants shown in Figures 1 and 2 are swap
dealers.97 Swap dealers are large financial institutions that earn fees through
selling off-exchange derivatives contracts (so-called over-the-counter, or OTC,
derivatives). The customers for these OTC derivatives may be commercial
traders needing to hedge risks around oil price movements, or hedge funds
and other kinds of speculative traders looking to invest in oil beyond the standardised contracts offered on the exchange. Because swap dealers are dealing in a large number of OTC derivatives with a variety of different positions,
there can be a potential net risk to this activity.98 In order to minimise this risk,
swap dealers calculate the aggregate exposure on their off-exchange contracts
and then buy or sell the equivalent (opposite) contracts on NYMEX in order to
maintain a neutral position.99 This on-exchange activity is reflected in Figures 1
and 2, and in 2020 sat at around 30% of total OI. Since 2008, the leading swap
dealers in the oil futures market have been three large US investment banks,
JP Morgan Chase, Goldman Sachs, and Morgan Stanley.100 In 2020, these three
banks held commodity swaps with a total notional value of over $340 billion
between them, far more than any other US bank and making up around 70%
of all commodity swaps held by the ten largest financial holding companies in
the US.101
97
98
99
100
101
Up until 2009, the CoT report included swap dealers in its figures for commercial traders.
Many analysts claimed that this led to a massive overstatement of the commercial category and thus underplayed the impact of speculative activities on the oil price. Following
widespread objection to this so-called ‘swap dealer loophole’, the CFTC began to differentiate these categories from 2009 onwards. For this reason, the data points for 2000–8
are drawn from a table presented by Büyükşahin, Haigh, Harris, Overdahl and Robe 2008,
who had earlier access to granular data from the CFTC. The figures for subsequent years
are calculated by the author from the weekly CoT.
Swap dealers are financial intermediaries who attempt to match buyers and sellers as
much as possible. They will sell derivatives that are both ‘long’ (i.e. sold with the expectation of an increase in price) or ‘short’ (sold with an expectation of a decrease in price).
But if the number of long positions exceeds the number of short positions for a particular
price (or vice versa) then the swap dealer may face a loss.
In other words, it is only the residual net amount left outstanding from the buying and
selling of OTC derivatives that swap dealers need to balance through their trade on
NYMEX. For this reason, the data in Figures 1 and 2 do not actually include the majority
of swap-dealer trade in oil futures (which takes place privately and off-exchange, and is
not subject to CFTC reporting). The data thus significantly understate the overall level of
swap-dealer involvement in oil contracts.
Masters and White 2008.
These figures have been calculated by the author using FR Y-9C forms, consolidated
financial statements that must be submitted by large financial holding companies to the
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The final category of traders shown in Figures 1 and 2 is managed money. As
the name suggests, managed money encompasses those institutions that manage other people’s money and invest in oil contracts with the hope of making
a profit, i.e. institutions that are interested purely in the trade of ‘paper barrels’. Managed money traders are now the dominant actors in NYMEX WTI,
making up more than 50% of total OI in 2020 (up from 20% in 2000). A key
reason for this significant growth is the emergence of managed funds – such as
commodity index funds or Exchange Traded Funds (ETFs) – that are linked to
specific commodity indices and allocate money in commodity futures depending on the movement of those indices.102 Most commodity indexes are heavily skewed towards energy and crude oil in particular (oil, for example, makes
up more than 43% of the leading commodity index, the S&P GSCI),103 and
for this reason, the emergence of these funds has led to a significant increase
in financial flows – mediated by managed money traders – into the NYMEX
WTI market.
There are a large number of financial institutions involved in the managed
money trade.104 These include the same investment banks noted above, who,
in addition to their role as swap dealers, offer ‘services to clients for hedging
and speculative purposes, including commodity investment products [such
102
103
104
US Federal Reserve each quarter. FR Y-9C forms are publicly available from the Federal
Financial Institutions Examination Council, <https://www.ffiec.gov/NPW>.
These funds pool money from thousands of different investors and allocate this capital to
particular investments depending on the movement of an underlying index. In the case
of commodities, the most important of these indices is the S&P GSCI, which tracks 25 different commodities across the energy, metals, agriculture, and livestock sectors. A fund
tracking the S&P GSCI would make investments into these 25 commodities according
to a particular weighting that is periodically reviewed. The allocation of capital through
these funds can be passive, in other words, the distribution of investments is automatically recalibrated depending on the movement of the underlying index; or it can be active,
i.e. determined by fund managers who select investments based upon a variety of (often
proprietary) factors. These funds can entail a high degree of risk and leverage, and the
attempt to ameliorate this risk is a further reason that fund managers are active within
commodity derivative markets.
Revealingly, this index was established in 1991 by Goldman Sachs as the Goldman
Sachs Commodity Index. It was bought by Standard and Poor’s in 2007 and renamed the
S&P GSCI.
The CFTC does not provide public information on the individual financial institutions
that are involved in the swap dealing and managed money activities shown in Figures 1
and 2. However, it is possible to piece together some broad indications of who these institutions are through a variety of other sources, including academic studies, press and
industry reports, the financial statements of banks and other firms, and the formal reporting requirements of large financial holding companies to the US Federal Reserve (e.g. the
FR Y-9C form referred to in footnote 101).
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as ETFs] … they have been also active as proprietary traders speculating on
commodity prices on their own account’.105 It is difficult to provide a precise
empirical estimation of the role of investment banks in these kind of activities,
but Goldman Sachs, Morgan Stanley, and JP Morgan each reported that around
15% of their total trading revenues came from commodity derivatives in 2020
(much more than any other investment bank).106 Alongside these investment
banks, other prominent financial actors within the managed money category
include hedge funds, private equity firms, and asset management companies –
all of whom may trade oil contracts directly or manage investment funds on
behalf of a pool of other investors. Some of these actors are also involved in
‘volatility trading’ – the buying and selling of options aimed at profiting from
large movements in the price of oil.107 Additionally, they may engage in buying and selling OTC derivatives linked to oil, and thus – as major counterparties to the swap dealers noted above – indirectly act to increase the overall OI
on NYMEX.
Taken as a whole, the relative involvement of these three market participants – commercial, swap dealers, and managed money – indicates how much
the oil futures market is driven by so-called non-commercial participants
(managed money and swap dealers) who enter the market in order to trade
(and hopefully profit from) the price movements of ‘paper barrels’. The data
presented in Figures 1 and 2 confirm the considerable growth in the noncommercial categories over the last two decades, which together now represent more than 80% of total OI in oil. These trends are a striking indication
105
106
107
Heumesser and Staritz 2013, p. 23.
Calculated by author from annual financial statements. While these figures are for commodities in general, energy derivatives (mostly for crude oil) make up by far the largest component of total trade in global commodity derivatives (World Federation of
Exchanges 2020, pp. 3, 33).
Volatility traders employ a complex array of strategies that involve the simultaneous
purchase of put and call options (see Schofield 2008). Profit depends on the magnitude
and speed of changes in the price of oil contracts (in either direction) and not on the
price itself and, for this reason, instability can become desirable and extremely lucrative
(e.g. the rapid crash in the price of oil that occurred with the negative pricing of WTI
in April 2020). Due to the significant risks involved in its production and consumption
(geopolitical, environmental and others), oil has an inherent volatility, and in 2007 the
Chicago Board Option Exchange (CBOE) began publishing an index that measures oil
volatility (the Crude Oil Volatility Index, OVX). Since that time, numerous ETFs have been
launched that track the OVX. It is, however, difficult to determine the levels of volatility
trading in oil from publicly-available data, or to identify the precise actors involved in
this kind of speculation. I am indebted to one of the anonymous reviewers of this paper
for highlighting this important issue, which carries numerous intriguing implications in
need of further study.
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of oil’s financialisation, i.e. oil has become an object that is traded by financial
institutions, within financial markets, and which is abstracted from its concrete
use value as an essential element of all capitalist commodity production.
5
Mapping Finance Capital across the Oil Commodity Circuit
It is evident that a diverse set of financial actors drives this growth of noncommercial activity in oil futures. These actors include large US investment
banks as well as other kinds of financial institutions who combine asset management, hedge fund, and private equity activities. They may engage directly
in the oil futures market for their own purposes, or trade on behalf of other
clients to whom they offer hedging and investment services. The explosive
growth in the oil futures market over recent decades reflects a market that has
now become dominated by these financial actors; in this sense, the financialisation of oil appears as a phenomenon that has weakened the role and weight
of traditional commercial actors – oil producers, refiners, traders and so forth.
What happens, however, if we reject the kind of commercial/noncommercial dichotomy implicitly adopted in most studies of the financialisation of oil (and in the CFTC data utilised in the preceding section), and consider
the ways in which the large financial institutions driving the dynamics of the
oil futures market are also simultaneously embedded within other moments
of the oil commodity circuit? To this end, Table 1 (see Appendix) examines
nine US-based financial conglomerates that are leading components of the
non-commercial Open Interest captured in Figures 1 and 2 above (i.e. acting
as swap dealers or managed money). Clearly these nine firms are not the only
financial actors active on NYMEX and other commodity markets, but they are
the foremost firms of their kind in the world, and can be considered representative of the broader financial interests driving the growth in oil futures. Given
this fact, Table 1 captures the involvement of these firms in the oil commodity
circuit beyond financial markets – in other words, their direct participation in
the actual production and realisation of oil-as-value, and their integral position as both beneficiaries and drivers of the ‘real-world’ carbon economy.
The conglomerates examined in the table encompass three broad groups of
financial services. The first of these are asset management firms, large financial firms that pool surplus capital from various sources (e.g. wealthy individuals, companies, pensions, or other institutions) and direct this into equities,
bonds, or other investment instruments (including commodities such as oil).
The three firms listed in Table 1 (Vanguard, Blackrock, and State Street) are
the top-ranking asset management firms in the world and collectively control
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more than $15 trillion in assets – around one-third of the total assets held by
the top 20 asset management firms globally, and an amount exceeding China’s
GDP in 2019.108 Usually referred to as the ‘Big Three’, these firms are also among
the largest global managers of commodity index funds and Exchange Traded
Funds – in 2020, ETFs issued by these three firms were estimated to hold more
than 80% of total global ETF assets, including several directly tracking the
movement of commodity futures such as WTI.109
The second group of firms shown in Table 1 are the large investment banks,
JP Morgan, Morgan Stanley, and Goldman Sachs. As noted, these well-known
banks are major financial actors on NYMEX – as the leading swap dealers and
also as money managers and investors in their own right. More generally, these
banks offer a range of investment funds that may be passive or actively managed, and which track a diverse range of equities and bonds across different
sectors, indexes and geographies. In addition to these kinds of portfolio investments, investment banks offer a range of financial services to corporate, individual and government clients. They also typically have specialised units for
private equity, venture capital, or other kinds of direct investment into infrastructure, real estate, or private firms.
The final institutions shown in Table 1 are the three hedge funds/private
equity firms, Blackstone Group, Carlyle Group, and Riverstone Holdings. As
with asset management firms and investment banks, these firms have been
central actors driving the financialisation of oil through their managed money
activities on NYMEX futures. Indeed, many studies of oil futures markets simply describe the non-commercial category of traders (misleadingly) as ‘hedge
funds’. In addition to their hedge fund activities, the three firms listed in the
table control major private equity funds that invest in private (non-listed) firms
with the goal of maximising short-term return – often obtained through taking on high levels of debt and using the target company’s assets as collateral.
Blackstone and Carlyle are the two largest PE firms in the world, controlling
$545 billion and $223 billion of assets in 2020 respectively, while Riverstone
Holdings runs an energy-focused PE fund with $41 billion in assets.
The data in Table 1 (collated in late 2020) must be situated in the context of
a massive boom in US oil production that took place between 2009 and 2014.
With the steady rise in world oil prices over this period, the development of
so-called ‘non-conventional’ oil and gas supplies – reserves that are difficult
and more expensive to extract than conventional fossil fuels – were strongly
incentivised. Of particular relevance here is US shale, crude oil and gas held
108
109
Thinking Ahead Institute 2020, p. 44.
<https://www.etf.com/sections/etf-league-tables/etf-league-table-2020–12–15>.
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in shale or sandstone of low permeability that is extracted through fracturing the rock by pressurised liquid (hence the term ‘fracking’). High global oil
prices drove large investments into shale field development between 2009
and 2014, which led to significant improvement in extraction technologies for
these non-conventional supplies. This shale boom was also closely connected
to the deepening financialisation of the US economy following the 2008–9
global financial crash, with the pools of surplus capital generated by policy
responses to the crisis seeking valorisation in the fracking industry as IBC.110
The net result was a major increase in US domestic oil production, which tripled between 2009 and 2014, and propelled the United States into the top rank
of oil producers globally. Remarkably, the US became a net exporter of oil in
early 2011, and overtook Saudi Arabia to become the world’s largest producer
in 2013.
Given this boom in US oil production, how are the nine financial conglomerates shown in Table 1 embedded in the wider commodity circuit – specifically
through the ownership and control of firms involved in development of hydrocarbon reserves, as well as further mid- and downstream activities? In this
respect, Table 1 reveals these conglomerates’ deep involvement with over 160
leading US energy-related firms active across the entire energy value chain: the
exploration and production of oil and gas; pipelines, transportation and storage; oil and gas services (e.g. drilling, equipment, and maintenance); refining
and processing of oil and gas; and the generation and transmission of power.111
The firms analysed in Table 1 include the top publicly listed energy companies
on US stock markets, as well as more than 100 energy-related firms that are
privately owned. These companies are primarily active in the US and Canada,
although, as we shall see, many also have significant international interests.
110
111
These policies include Quantitative Easing and the on-going maintenance of ultra-low
interest rates. A significant proportion of the IBC directed into the shale industry through
this time came in the form of debt and equity investments made by private equity firms
(and, indirectly, through pension funds that invested in PE because they were unable
to generate satisfactory returns on fixed-income instruments). This produced a highlyleveraged industry that was heavily dependent upon continued inflows of IBC. Indeed,
North American shale firms involved in the exploration and production experienced a
four-fold increase in net debt between 2005 and 2015 ($50 billion in 2005 to nearly $200
billion in 2015), and one estimate claims that PE-backed firms were responsible for onethird of all US shale drilling (McLean 2018). The subsequent collapse in oil prices drove
many of these heavily indebted firms into bankruptcy, and led to a wave of industry consolidation between 2016 and 2018.
The companies represented in Table 1 also include firms involved in natural gas due to
the fact that most oil companies have interests in gas (and vice-versa). It is impossible to
separate these two components of the energy industry for analytical purposes.
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Turning first to the public investments shown in the table (i.e. portfolio investments in companies that are listed on the stock exchange): Here, it
should be noted that only ownership stakes ranked within the top 10 shareholders of each company are recorded – for this reason, the real extent of conglomerate holdings is actually much broader than indicated. In regard to these
publicly-listed companies, the most striking feature is the tremendous reach of
the Big Three asset management firms, which take the top three shareholder
positions for around one-third of all the public companies mentioned in the
table, including three of the world’s largest integrated oil and gas companies:
ExxonMobil, Chevron, and ConocoPhilips. In addition, the Big Three hold the
top shareholder spots for the largest shale producer in the US (Pioneer Natural
Resources), the three largest independent oil refiners (Marathon Petroleum,
Valero Energy, and Phillips66), the country’s largest natural gas network
(Kinder Morgan), and the top five US electric utilities (Nextera, Dominion,
Duke, Southern, and American Electric). The dominant presence of the Big
Three throughout these listed firms has led some analysts to identify them as
major culprits in climate change – one study has found that the Big Three control over 11 Gigatonnes of CO2 in oil and gas reserves through their portfolio
holdings, equivalent to around one-third of the total energy-related CO2 emissions globally in 2018.112
Alongside the Big Three, the other conglomerates shown in Table 1 also
hold significant portfolio stakes in companies across the oil commodity circuit. These holdings span the entire oil value chain, including production
and exploration activities, the operation of pipelines and transport, storage,
processing, and power generation. In most cases these are minority portfolio
investments, although some of the investments held by PE firms constitute
direct control (such as Carlyle and Riverstone’s joint 74% ownership of Liberty
Oilfield Services, the second-largest fracking provider in North America). Over
the last decade, there have been numerous examples of interlocking directorships and other close management relationships between the conglomerates
listed in Table 1 and the energy-related firms in which they are invested.113
It is important not to mistake the (mostly) minority portfolio investments
shown in the table as implying a lack of influence over long-term firm strategy
or governance. The conglomerates examined in Table 1 control a significant
112
113
InfluenceMap 2018, p. 22. When coal is added to these figures, the amount of CO2 equivalent rises to 20.27 GTonnes.
Such as Chevron (Goldman Sachs; JP Morgan; Carlyle Group; Riverstone Holdings),
ExxonMobil (JP Morgan; Goldman Sachs; Carlyle Group), BP (Goldman Sachs; Blackrock,
Riverstone), Kinder Morgan (Goldman Sachs; Carlyle; Riverstone Holdings), and Duke
Energy (Riverstone Holdings; Carlyle; Morgan Stanley).
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proportion of overall voting power within shareholder structures, which
typically exceeds that of any other bloc of shareholders.114 While this does not
characteristically translate into direct day-to-day management control, it
does provide a substantial voice inside the firm, including around the election of director positions, and has helped consolidate long-term institutional
relationships between these nine conglomerates and the energy-related firms
examined in the table. In addition to interlocking directorships, these relationships can be seen in the many cases of executives who have moved between
the boards of these firms.115 Direct influence is also demonstrated by the persistent role of these conglomerates in shaping the content of shareholder
discussions – including, most pertinently, by actively blocking attempts of climate change activists to pass resolutions around emissions targets or tighter
environmental regulations.116 Indeed, the owners and management of these
conglomerates openly expect that major strategic priorities should be developed in dialogue with them.117 As JP Morgan bluntly expressed it in a recent
prospectus presented to the New Mexico State Investment Council, the boards
of energy-related companies in which they invest ‘are an extension of the [JP
Morgan] Infrastructure Investments Group’.118
The direct involvement of these conglomerates in the oil commodity circuit
is even more apparent through their ownership of the 100+ privately-owned
energy-related firms that are also listed in the table. It should be emphasised
that the information presented in the table is in no way fully representative of
these private energy-related investments. Unlike portfolio investments, there
is no necessary public disclosure of this information, and the government filings presented by these firms do not provide adequate granular detail. Indeed,
there are numerous examples where investments in large oil firms go unmentioned in annual reports or little useful detail is provided.119 This problem is
compounded by the fact that ownership over these assets is often exercised
through conglomerate subsidiaries or special-purpose vehicles domiciled in
offshore jurisdictions. As a result, the information presented in the table is
114
115
116
117
118
119
Bebchuk and Hirst 2019; Fichtner, Heemskerk and Garcia-Bernardo 2017.
See <littlesis.org>, a research site that maps corporate and political interlocks, for examples of these relationships.
Greenfield 2019.
Fichtner, Heemskerk and Garcia-Bernardo 2017.
JP Morgan 2019, p. 29; italics added.
One example here is Morgan Stanley’s 2012 acquisition of Transmontaigne, an oil pipeline
and terminal company. Transmontaigne was the seventeenth largest private company in
the US at the time of purchase, but Morgan Stanley’s annual reports gave no substantive
details of ownership (Public Citizen 2014, p. 10).
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necessarily partial, and has been pieced together through a variety of sources,
including press and government reports, financial statements, and crossindustry studies.120
Due to the Big Three’s principal emphasis on portfolio investments, these
firms are less visible in the ownership of private firms – although it should
be noted that Vanguard has recently launched its first private equity fund (in
February 2020), a move that could significantly alter the firm’s ownership of
non-listed companies. In contrast, however, the extensive reach of the three
investment banks – JP Morgan, Goldman Sachs, and Morgan Stanley – in
privately-owned energy firms is clearly evident from the table. These banks
first became involved in the ownership, transport, and storage of commodities
following the deregulation of commodity markets in the early 2000s; a business that proved extremely profitable through the extended run in commodity
prices between 2003 and 2008.121 After the global financial crash of 2008, they
sought to expand their participation in physical commodities through acquiring the distressed assets of other failing firms.122 Today, one striking indication
of their direct role in the trade of oil, gas, and metals is the collective value of
their inventories of physical commodities, which rose from $8.9 billion in 2015
to over $21 billion in 2020.123
For these investment banks, the ownership interests shown in the table are
typically exercised through funds that take majority control of private energyrelated firms and directly participate in their management. By late 2019, for
example, JP Morgan was reporting that just a single one of its energy-related
funds controlled 464 assets across 25 countries. These assets include the second largest gas distribution company in Spain, at least eight gas-fired utility
120
121
122
123
Interestingly, one of the most useful sources of information are the various fund ‘pitches’
made by these financial conglomerates to local or municipal governments in the US.
These are typically confidential at the time of presentation, but are later published as
part of meeting minutes. They often include a detailed breakdown of fund holdings.
Omarova 2013.
Omarova 2013. In 2008, for example, JP Morgan acquired the commodities arm of its
failed rival, Bear Stearns, followed in 2009 by the purchase of Commodities Canada, a
UBS-owned company that expanded the firm’s global commodities business, Canadian
gas, crude oil, and power. In 2010, JP Morgan went on to buy RBS Sempra Commodities
from the Royal Bank of Scotland, giving it access to 30 million barrels of crude oil storage
capacity, control over a massive global business involved in the trade of oil, gas, metals
and coal, and ownership of one of the world’s largest networks of commodity warehouses.
Figures calculated from ‘Gross fair value of physical commodities held in inventory’ line
9a(2) of FR Y-9C form (see footnote 101). It should be noted there is a complex legal argument around this ownership of physical commodities. See Conlon 2018 for a good legal
overview.
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plants supplying millions of customers across Arizona, California, New Mexico
and Colorado, and 50% control over a North Sea firm supplying around onefifth of the UK’s daily natural gas needs.124 Goldman Sachs and Morgan Stanley
are similarly deeply involved in the oil commodity circuit, with interests that
include the production and transport of oil and gas, oilfield services, and power
generation.
Likewise, PE firms hold major stakes in the private companies listed in the
table. Blackstone, for example, revealed in 2018 that half of its energy investments are in upstream oil and gas – including shale, fracking, and offshore
production – with the company controlling oil reserves across the US, Canada,
Europe and Africa.125 Blackstone is the second biggest shareholder in Cheniere
Energy, the largest producer of liquefied natural gas in the US, and Cheniere
and Blackstone jointly own and operate Sabine Pass LNG Terminal, the largest export terminal of its kind in the US.126 Carlyle is also – in essence, if not
in name – a global oil company, with direct involvement in the exploration
and production of oil and gas reserves across the US, Spain, Egypt, Gabon,
Colombia, India, the Netherlands, Germany, New Zealand and elsewhere.
Similarly, the energy-focused Riverstone Holdings has extensive ownership of
assets in upstream oil production, oil field services, as well as the tanker and
terminal business.
Taken as a whole, the information presented in Table 1 demonstrates the
remarkable degree to which control over the oil commodity circuit is concentrated and centralised in the hands of the same conglomerates that are also
driving the wider financialisation of oil. These conglomerates clearly align with
Marxist conceptions of finance capital, i.e. large firms with ownership interests
that knit together and dominate different moments of the circuit of capital,
including financial, industrial, and circulatory activities. For the vast majority
of the 160+ firms analysed in Table 1 – firms that for all essential purposes are
the energy industry in the US – capital ownership and control is overwhelming dominated by one or more of the finance capital conglomerates examined
in the table. It is almost impossible to identify any US energy-related firm
in which these conglomerates do not have significant ownership interests.
Even in segments of the oil industry that are typically viewed as small scale
124
125
126
JP Morgan 2019, p. 10.
Blackstone 2018, p. 8.
Blackstone is also heavily involved in developing and operating oil and gas pipelines,
including through ownership of Energy Transfer Partners, which controls the heavily protested Dakota Access Pipeline.
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‘mom-and-pop’ businesses – such as the individual low-producing stripper
wells that are the basis of extraction across many US oil fields – the vast majority of assets are in reality owned by large financial conglomerates such as those
examined in Table 1.
Moreover, the dominant power of these conglomerates is not exercised
solely at the level of individual firms. Table 1 reveals the significant extent to
which finance capital superintends the entire oil value-chain – from the exploration and extraction of hydrocarbons, through the transport and storage of oil
and gas, and the eventual transformation of these commodities into energy or
other forms of circulating constant capital. The pronounced vertical and horizontal integration revealed in Table 1 has very important implications for how
these conglomerates actually extract profit across the value-chain – providing,
for example, opportunities to influence market prices through controlling the
flow and storage of commodities, or gaining access to market information that
is not available to other firms involved in the sector. These opportunities are
not simply hypothetical – they have been repeatedly illustrated in practice.127
127
See Omarova 2013 for a detailed discussion of this point in relation to investment banks.
A 2014 US Senate Hearing found that: ‘Morgan Stanley’s oil storage and transport activities gave it access to information about oil shipments, storage fill rates, and pipeline
breakdowns. That information was available not only with respect to its own activities,
but also for clients using its storage and pipeline facilities … JPMorgan’s power plants
gave it insights into electricity costs, congestion areas, and power plant capabilities
and shutdowns, all of which could be used to advantage in trading activities. In each
instance, non-public market intelligence about physical commodity activities provided
an opportunity for the financial holding company to use the information to benefit its
financial trading activities.’ Outside of oil, in 2010 it was estimated that Goldman Sachs
and JPMorgan controlled half the storage capacity at the world’s largest metal exchange,
London Metals Exchange. Control over this storage while simultaneously trading those
very same commodities gave these banks immense influence over commodity prices. In
one infamous case, Goldman Sachs was accused by a US Senate investigation of manipulating the price of aluminium by deliberately creating bottlenecks in the transport of
the metal from its warehouses. They would do this by paying metal owners to aimlessly
shuttle metal between warehouses – sometimes just across the street, or from one building to another and back again – without actually moving the metal out of the storage system. According to a 2014 US Senate investigation, these ‘merry-go-round deals’ massively
lengthened delivery times and thereby increased the price of metals traded by Goldman
Sachs. Goldman Sachs denied the accusations, but in 2016 the subsidiary involved in the
alleged scam agreed to pay $10 million to the London Metals Exchange ‘without admitting or denying any alleged breaches of the exchange’s rules’ (Sanderson 2016).
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101
Conclusion
The financialisation of oil over the past two decades has been driven by a variety of different actors, including investment banks, asset and wealth management firms, hedge funds, large institutional investors, and so forth. These firms
might carry different labels, but in essence each embodies the same general
function within the overall circuit of capital: the pooling of ‘hoards’ of surplus capital, and the redirection of this capital (which takes the form of IBC)
into various economic sectors, with the goal of obtaining a claim on future
streams of value. The financialisation of oil is – as Labban and others have
correctly pointed out – a reflection of the spectacular growth in the volume of
these fictitious capitals. The enormous gap that has opened up between noncommercial and commercial Open Interest (Figures 1 and 2) is a key indicator
of this process, which ultimately reflects the power of a handful of large financial conglomerates within the oil futures market and the subsumption of real
world oil prices and production dynamics to the aspirant (but ever-uncertain)
valorisation of IBC.
This process of financialisation, however, should not be read through a
dichotomous understanding of the financial and non-financial spheres. Here,
following Marx, we need to insist on the fetish character of IBC – a moment of
surplus accumulation that seemingly originates through the simple exchange
of money between different money-capitalists, but in reality is founded upon
the actual production of value in the labour – capital relation. The financialisation of oil appears in a similar manner – as a process driven by financial actors,
neatly contained within a distinct financial sphere, and arrayed against the
supposed real-world production of oil (hence the language of ‘commercial versus non-commercial’ or ‘speculators vs. fundamentals’). But, in actuality, this
form of appearance is a mystification. Rather than the supposed marginalisation of other moments of the oil commodity circuit, the huge volumes of IBC
at play in the futures markets really express the ever-more tightly imbricated
connections between finance, on one hand, and the production and circulation of oil as a physical commodity, on the other. These other moments of the
commodity circuit have become more, not less, important as a consequence of
oil’s financialisation.
As demonstrated above, these deepening interdependencies of oil’s financial, productive, and circulatory moments have significant implications for
class composition and patterns of capital ownership and control. The drawing
together of the different moments of the oil commodity circuit is reflected in
the growing hegemony of a class of finance capitalists, which now dominates
both the oil futures markets as well as the ownership of energy-related firms.
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These are not simply financiers or bankers, and their ownership interests cannot be reduced solely to forms of rentierism or financial parasitism. Rather, this
is a class whose accumulation is deeply and directly aligned with the actual
production and circulation of the oil commodity; a class that represents –
following the understanding of finance capital articulated above – the tendential combination of the money, productive, and commodity circuits within
single ownership structures.
In this respect, when thinking about how accumulation takes place in the
oil industry – who directs the production and realisation of value, who draws
surplus value from the various transformations of the oil commodity through
each step of its circulation – it is not enough to focus simply on the large oil
majors. While firms such as ExxonMobil, BP, and Chevron appear to be driving
the physical extraction and refining of oil and oil-products, we should be careful not to mistake the institutional forms of appearance of the oil industry for
its actual content. Ultimately, the dynamics of oil production are closely tied
to the accumulation imperatives of the large finance capital groups examined
throughout this paper – a class that acts simultaneously in both the futures
markets and the day-to-day ‘real world’ of energy production, processing, and
circulation. This class of finance capital is – in effect – a leading beneficiary of
the carbon economy.
The discussion above has largely focused on the US oil industry and the
NYMEX WTI futures market. Further empirical work is needed into the dynamics of class and capital accumulation in other oil markets and how these might
replicate or diverge from the US experience. This includes Europe, where several large oil companies (e.g. BP, Shell, and Total) are based and where the other
major oil benchmark (Brent) is traded. It also includes the Middle East, home
to the world’s most important oil reserves and where massive oil firms (state
and privately-owned) are active across the entire oil commodity circuit.128
This kind of empirical research is all the more essential not simply because oil
underpins the entire system of capitalist commodity production – oil derivatives are also a critical but understudied feature of global financial power, and
future geopolitical trajectories will be in part determined by control over oil
as a financial asset and its role in underpinning forms of world money.129 It
is noteworthy, for example, that the trade of energy derivatives across Asia,
Europe and the Middle East has grown immensely in recent years – and now
128
129
Hanieh 2018.
See Hanieh 2022.
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far exceeds US financial markets such as NYMEX130 – and that China is investing considerable effort in promoting a new global oil benchmark through its
Shanghai futures market.131
Moreover, the analysis offered above has clear implications for halting and
reversing the catastrophic consequences of anthropogenic climate change.
While it is a welcome development to see recent campaigns that variously target asset managers or private equity firms in the production of fossil fuels,132
these kinds of financial investors are typically approached as some kind of
incongruous excrescence within the oil industry – firms whose proper business is outside the dirty world of oil, and who should be susceptible to reasoned shareholder pressure. The foregoing discussion, however, indicates the
problems with this perspective: oil is as much a financial business as it is a
physical commodity, and these co-constituted spheres of finance and production are superintended by a class of finance capital that is structurally located
throughout all moments of the oil circuit.
Of course, it goes without saying that this class is not simply in the business
of oil – these same finance capitalists are likewise embedded at the core of
all sectors of capital accumulation today. In this sense, the structures of class
power that characterise the oil commodity chain – from the oil field to the
futures markets – are not an anomaly within the wider capitalist economy.
Despite the fact that oil’s importance far outranks that of any other commodity, the tempo and rhythm of its valorisation is structured by the same set of
social relations – and thus the same forms of class power – as that of every
other product of capitalist society. This ordinariness of oil is crucial to emphasise, as it shows that the problem of oil is not a problem with oil – but rather
one that demands far-reaching and systemic change.
130
131
132
Commodity futures are the world’s most actively traded derivatives, making up around
20% of all derivatives traded globally in 2019, a proportion exceeding equity, currency, and
interest rate derivatives (World Federation of Exchanges 2020, p. 9). In 2019, energy derivatives (mostly for crude oil) accounted for more than 45% of the total global commodity
derivatives trade (World Federation of Exchanges 2020, pp. 3, 33), and the Asia-Pacific,
Europe and Middle East made up around 68% of this amount (World Federation of
Exchanges 2020, p. 34).
Hanieh 2022.
InfluenceMap 2018; Greenfield 2019.
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Annex
Table 1
Conglomerate Ownership Across Oil Commodity Circuit (US)
Financial
Conglomerate
Ownership of energy-related firms
Goldman Sachs
PUBLIC: EOG Resources (0.32%); Enterprise Products Partners (1.91%);
Energy Transfer (2.17%); Plains All American Pipeline (3.37%); Oneok
(1.24%); Cheniere Energy (2.86%); Magellan Midstream Partners
(3.83%); MPLX (1.95%); Targa Resources (3.59%); TC Pipelines (2.9%);
Nustar Energy (2.01%); DCP Midstream (0.84%); Sunoco (4.6%); PBF
Logistics (2.84%); Crestwood Equity Partners (1.83%); CrossAmerica
Partners (0.79%); Enable Midstream Partners (0.22%); Shell Midstream
Partners (1.08%); Delek Logistics (0.81%). PRIVATE: HES International
(one of Europe’s largest bulk handlers of oil and petroleum products);
Lucid II (leading independent gas gathering and processing business in
the northern Delaware Basin); BJ Services (leading provider of hydraulic
fracturing); PSS Industrial (oil field services company); Mountaineer NGL
Storage (underground natural gas storage).
PUBLIC: Diamondback Energy (1.43%); Enterprise Products Partners
(0.82%); Energy Transfer (1.0%); Plains All American Pipeline (1.44%);
Marathon Petroleum (1.85%); Magellan Midstream Partners (2.65%);
MPLX (0.85%); Nustar Energy (3.74%); Enviva Partners (1.62%); DCP
Midstream (0.83%); Sunoco (2.36%); PBF Logistics (0.96%); Western
Midstream Partners (1.04%); Enable Midstream Partners (0.71%); Shell
Midstream Partners (1.17%); BP Midstream (6.58%). PRIVATE: Catalyst
Energy Services (oilfield services); Mission Creek (largest oil producer in
Arkansas); Presidio Petroleum; Specialised Desanders (oilfield services);
Durango Midstream (oil and gas services); MG Bryan (oil equipment);
XRI Blue (oilfield services); Sterling (oilfield services); Triana Energy
(gas exploration and production); Bayonne Energy (power plant in New
Jersey); Brazos (midstream services); Red Oak Power (power plant); Ital
gas storage; Ashoka Gas (gas distribution, India); Templar Energy (oil and
gas exploration).
PUBLIC: Chevron (1.26%); Diamondback Energy (7.19%); Pioneer
Natural Resources (3.00%); Cononco Phillips (2.73%); Phillips66 (1.6%);
Plains All American Pipeline (2.33%); Marathon Petroleum (1.76%);
Kindermorgan (1.19%); MPLX (0.77%); Equitrans Midstream (3.95%);
TC Pipelines (3.05%); Nustar Energy (3.9%); Nextera Energy (1.9%); Xcel
Energy (6.82%); DCP Midstream (1.48%); PBF Logistics (1.66%); Western
Morgan Stanley
JP Morgan
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The Commodities Fetish?
Table 1
Conglomerate Ownership Across Oil Commodity Circuit (US) (cont.)
Financial
Conglomerate
Vanguard
State Street
Ownership of energy-related firms
Midstream Partners (0.99%); Crestwood Equity Partners (0.95%); Enable
Midstream Partners (0.59%); Genesis Energy (9.34%); Genesis Energy
(3.65%); Shell Midstream Partners (1.66%); Noble Midstream Partners
(1.29%); BP Midstream (4.52%); Delek Logistics (0.64%). PRIVATE:
Blackwater Midstream Corporation; Electricity Northwest; Nortegas
Energía Distribucion; Sonnedix Power Holdings; Southwest Generation
(gas-fired power plants).
PUBLIC: Chevron (8.5%); Phillips66 (10.17%); EOG Resources (7.45%);
Pioneer Natural Resources (11.17%); Occidental Petroleum (9.99%);
Diamondback Energy (11.11%); BP (2.31%); Exxon Mobil (8.35%);
ConnocoPhillips (8.41%); Abraxas Petroleum (3.41%); Adams Resources
& Energy (2.42%); Apache (8.9%); Valero Energy (10.08%); Canadian
Natural Resources Limited (3.16%); Enbridge (3.28%); Marathon
Petroleum (9.95%); Suncor (3.23%); KinderMorgan (7.47%); Oneok
(11.53%); Holly Frontier (10.24%); The Williams Companies (9.14%);
Cheniere Energy (8.47%); Southwestern Energy (11.15%); Worldfuel
Services (8.97%); TC Energy (3.29%); PBF Energy (6.39%); Ovintiv
(9.31%); Schlumberger (8.12%); Targa Resources (9.54%); Equitrans
Midstream (8.83%); Antero Midstream (6.09%); Halliburton (11.26%);
Nextera Energy (8.59%); Southern Company (8.62%); Duke Energy
(8.49%); American Electric Power (8.98%); NRG Energy (11.38%);
Xcel Energy (9.13%); Edison International (11.42%); Dominion Energy
(8.59%); Seacor Marine Holdings (4.81%); Talos Energy (2.16%);
Centennial Resources (2.9%).
PUBLIC: Chevron (6.35%); Phillips66 (5.82%); EOG Resources (5.49%);
Diamondback Energy (6.80%); Occidental Petroleum (5.46%);
Pioneer Natural Resources (5.97%); BP (1.88%); Exxon Mobil (4.80%);
ConnocoPhillips (5.12%); Apache (5.72%); Valero Energy (5.90%);
Marathon Petroleum (5.57%); Kindermorgan (4.85%); Oneok (5.5%);
Holly Frontier (6.88%); The Williams Companies (5.46%); Cheniere
Energy (2.24%); Southwestern Energy (5.83%); Worldfuel Services
(3.82%); PBF Energy (7.4%); Marathon Oil (6.54%); Ovintiv (4.01%);
Schlumberger (5.45%); Antero Midstream (1.42%); Halliburton (5.3%);
Nextera Energy (5.21%); Southern Company (5.12%); Duke Energy
(5.22%); American Electric Power (5.08%); NRG Energy (5.35%); Xcel
Energy (5.32%); Edison International (7.27%); Dominion Energy (5.36%).
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Table 1
Hanieh
Conglomerate Ownership Across Oil Commodity Circuit (US) (cont.)
Financial
Conglomerate
Ownership of energy-related firms
BlackRock
PUBLIC: Chevron (6.98%); Phillips66 (6.96%); EOG Resources (4.53%);
Pioneer Natural Resources (9.79%); Occidental Petroleum (5.80%);
Diamondback Energy (5.17%); BP (6.8%); Exxon Mobil (6.7%);
ConnocPhillips (8.05%); Abraxas Petroleum (2.00%); Adams Resources
& Energy (3.7%); Apache (6.08%); Enterprise Products Partners (0.77%);
Valero Energy (8.51%); Marathon Petroleum (11.27%); KinderMorgan
(6.7%); Oneok (8.77%); Holly Frontier (7.03%); The Williams Companies
(9.45%); Cheniere Energy (5.93%); Southwestern Energy (15.18%);
Worldfuel Services (10.3%); PBFEnergy (14.12%); Marathon Oil (6.47%);
Ovintiv (7.24%); Schlumberger (6.7%); Targa Resources (4.9%); Equitrans
Midstream (8.05%); Antero Midstream (5.05%); Halliburton (6.71%);
Nextera Energy (5.17%); Southern Company (7.0%); Duke Energy
(7.01%); American Electric Power (7.04%); NRG Energy (7.19%); Xcel
Energy (9.02%); Edison International (9.08%); Dominion Energy (7.22%);
Seacor Marine Holdings (2.08%); Talos Energy (4.89%); Centennial
Resources (1.45%). PRIVATE: Kellas Midstream (gas pipeline firm in
North Sea); Vopak Industrial Infrastructure Americas (chemical storage);
Medgaz gas pipeline; Los Ramones (pipelines in Mexico); ADNOC oil
pipelines (Abu Dhabi, UAE).
PUBLIC: Cheniere Energy (3.35%); Enterprise Products Partners (3.21%);
MPLX (6.43%); Energy Transfer (5.37%); The Williams Companies
(2.56%); Magellan Midstream Partners (4.43%); Pembina Pipeline
Corporation (2.54%); Plains All American Pipeline (4.56%); Targa
Resources (4.54%); Equitrans Midstream (3.10%); Antero Midstream
(3.48%); TC Pipelines (4.15%); Nustar Energy (1.8%); Noble Midstream
Partners (1.62%). PRIVATE: Eagleclaw Midstream; Siccar Point Energy
(North Sea oil and gas fields); PDC Energy (gas facilities in Delaware
Basin); Waterfield Midstream (water management for fracking companies); Beacon Offshore Energy (Deepwater oil and gas, Gulf of Mexico);
Rover Pipeline (pipeline across West Virginia, Eastern Ohio, Western
Pennsylvania and Canada); Tallgrass Pipelines (pipelines across Wyoming
and Kansas to Cushing); Gavilan Resources (shale company); Energy
Alloys (oil and gas services); Flacon Minerals (oil wells); Ulterra Drilling
Technologies; Targa Badlands (pipelines); Mime Petroleum; Vine Oil &
Blackstone Group
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The Commodities Fetish?
Table 1
Conglomerate Ownership Across Oil Commodity Circuit (US) (cont.)
Financial
Conglomerate
Ownership of energy-related firms
Gas; Guidon Energy (shale field development); Osum Oil Sands Corp (oil
sands in Canada); GridLiance (electricity transmission); Kosmos Energy
(oil and gas Africa); Sabine Pass LNG.
Carlyle Group
PUBLIC: Seacor Marine Holdings (4.9%); Liberty Oil Fields (37.27%);
Talos Energy (6.79%). PRIVATE: Compañía Española de Petróleos
(Spanish oil exploration and production); Altus Midstream (natural gas
processing and transmission); Emera New England Gas-Fired Generation
Facilities (power plants); Crimson Midstream (oil transportation); Lone
Star Ports (oil terminal developer); Neptune Energy (Egypt); Assala Energy
(second largest oil producer in Gabon); COG Energy (Colombia oil producer); Elgin Energy Center (power generation); LS Power (power generation); Black Sea Oil & Gas (offshore service); Magna Energy (oil and gas,
India); Clearly Petroleum; Hilcorp Energy Development; Altus Midstream;
NGP Energy; Philadelphia Energy; Discover Exploration (O&G fields in
Netherlands, Germany, New Zealand, Comoros).
Riverstone Holdings PUBLIC: Liberty Oil Fields (37.27%); Talos Energy (35.03%); Enviva
Partners (34.16%); Centennial Resources (29.98%). PRIVATE: Talen
Energy (power generation); Avant Energy (power generation, Mexico);
Rover Petroleum (oil and gas company); Ridley Terminals (Canadian
terminal operator); Converge Midstream (oil storage company); Canadian
Non-Operated Resources (oil and gas company); Carrier Energy Partners
II (oil and gas company); Birch Permian (oil exploration and production); Fieldwood Energy (oil exploration and production); Hammerhead
Resources (oil reserve acquisitions); Liberty Resources (oil reserve acquisitions); Onyx Power (power generation); Ridgebury H3 (tanker acquisitions); International Matex Tank Terminals (19 oil terminals in US and
Canada); Three Rivers Natural Resource Holdings (oil and gas company);
Lucid Energy II (gas pipeline system); Salt Fork Resources (oil and gas
company); Admiral Permian Resources (oil and gas company); Mainline
Energy Partners (oil and gas company); TrailStone Group (commodities
trader).
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