...and Robert, I do apologize because it will not be fair to the oil companies that get kicked around in this situation, but I do believe this will be the future of the business. The existing companies will become "National" companies and work for their respective countries.
Robert, I found this concerning Scottish independence and "Scottish" oil. It is from the "World Without Oil" journal (fictional oil crisis supportted with factual info). I guess it's not only Chavez that wants to keep his own oil under his control.
In Scotland the Scottish National Party have been making lots of noises about pledging a referendum on independence on 2010 if they get control of the assembly, though the last I heard there's only about a quarter of Scots (and less than half of SNP voters) who actually want full independence - mostly they just want a better deal for Scotland. Can't blame 'em, if I were Scottish then I'd vote for 'em. However, that was before the oil crisis. In the 1970s the SNP came to people's attention with a very effective little three-word phrase - "It's Scotland's Oil". They've based their party on that ever since and the notion that an independent Scotland would be able to keep much more of its oil revenue than under the current thinking.
Scotland last made a positive cash contribution to the UK Exchequer in 1905.
Scotlands oil is currently providing 11 billion sterling a year to the UK Exchequer.
The UK provides 30 billion sterling to Scotland each year.
The Barnet formula ensures that for every pound sterling of government money spent in England, £1.25 is spent in Scotland.
Last time I looked: 11-30 = -19 billion sterling per year.
Scotlands oil will fall from its peak production in 1999 to at least half that by 2015, and probably less than 1 million bbls / day by 2018.
25% of the working population in Scotland are employed at tax payer largesse. Many in ludicrous and overpaid and pension protected jobs
Less than half the total population are actually in paid employment contributing taxes to the exchequer. About 48%
And this figure includes the public employee tit-babies
Prior to the discovery of North Sea Oil, Scotland was rapidly depopulating. Especially in the North East.
Incomers have stabilised the population decline. Which is good. Because by 2025 we will need lots of overtaxed low wage immigrants to wipe our arses while we whinge and whine in old folks homes. I am sure they will flock in to do it.
By 2025, Scotland will be an old peoples home, with the North Sea kaput, and public employees demanding impossible protections and entitlements from an ever reducing and ageing work force.
And all of the above is without Global Peak Oil or GW.
Aye. Today was a sea change in Scottish politics. But the new Masters dont even recognise Peak Oil and have sold a line about oil lasting another 30 years and the creation of a Norwegian Style Oil Endowment Fund.
The new man in charge is an Economist by the way...
So, by 2010 the new boy wants a referendum on independence and he has also said that (and this IS true) If Scotland does not like independence, we can always go and re-join the Union.
One last important little factlet:
Scotland was not forced to join the Union 300 years ago. It joined after the Darien Fiasco (Scotlands attempt at raising overseas colonies). When Scotland Joined the Union it was Bankrupt and had been suffering under a severe Christian Regime very similar to the Taliban (''why dont Scots have sex standing up? - Because somebody may think they are dancing''.)
The Union heralded Access to Capital, Access to markets, And the truly amazing and world changing Scottish enlightenment.
Scotland lost interest in the Union about the same time Britain's Empire went into decline.
I dont see today as a good day for Scotland or the UK.
As for rejoining the Union at a later date, well, 55 million English may have something to say about that.
If Scotland is lucky, it may be in a position to sell water to the English as the climate dries England out.
Ha...thanks for the "insider's" scoop on the situation. I was just using the Scottish example to illustrate that it is not only Chavez that wants to keep his resources for his own country. We will probably here many more "local" stories about the "natives" doing what they have to to keep the resource in their hands. Heck, Africa has almost daily stories along this line.
'In Saudi Arabia gasoline costs about 45 cents a gallon. In Iran it's 33 cents. Venezuelans pay less than a quarter.
These absurdly low prices are a direct result of massive government subsidies.
While these numbers are not adjusted for cost of living, it's fair to say that drivers in those countries are getting a good deal.
But it's straining government budgets. More importantly, it's not allowing the free market to do its job. Higher prices on the open market are not leading to a drop in demand, which is keeping the cost of oil high for everyone else.'
Especially note the 'not allowing the free market to do its job' - if Saudi Arabia or Iran or Venezuela decide to sell themselves their own oil at their own price (so to speak), this is unfair to Americans, as it stops the free market from working.
I believe the Iraqis, however, have made major strides in allowing the magic of the free market to work for them. Strangely, the article didn't note this success in lowering demand by raising prices in an oil producing country.
I may add, the article provides some basis to see the export land model in operation - not that it actually mentions this point, except to more or less suggest that an oil producing country should not be allowed to escape the demands of the free market by increasing their own consumption - after all, merely because it theirs doesn't mean they should be allowed to keep it selfishly for themselves. After all, Iraq doesn't.
As an American of Scottish decent I would prefer the editors to leave it. I feel a more appropriate response with
a broader positive result would be for you to engage with dialog.
Where IS that 'Theory of Everything' ? Here it is !
Who's to say it's "misrepresentation"? The Darien fiasco is historical fact, and Scottish demographic trends are public record. Besides, there is no value in free speech unless it includes speech you don't like.
I don't need lectures about free speech thanks. Responsible free speech is required, not a diatribe. Don't you lot usually deal with trolls quietly? If you think Mudlogger's analysis is sound then that shows two closed minds not one. I think the current state of Scotland is more nuanced than ML would allow. If Scotland is such a basket case then I wonder if that had anything to do with deindustrialisation or the use of much of our land for aristocratic 'sports'. Being tied to a neighbour so much bigger and so arrogant with it does not help. If you are English ML why don't you and your countrymen set us free and watch us drown. We don't mind. We could do with having your foot taken off our heads as we try to surface though...
As for ML's analysis, if you really think it is so transparently obvious, I should be humble and listen reverently, and then I must re-contact all those academics I used to hang out with and tell them to get down to McDonalds pronto, I hear you can always get a job there...
I have kicked around the possibility of the U.S. nationalizing the oil industry. Understand, that's not my issue. I have no problem with countries nationalizing industries. What I have a problem with is theft, which is what Chavez has done. If the U.S. ever nationalized the oil industry, I will bet that the shareholders are compensated and the U.S. doesn't just seize companies.
I think there is a fair probability that as resources deplete and the oil companies are making higher and higher profits, that the government will step in at some point, declare company business a matter of national security, and work to nationalize the assets.
Robert a good question to ask is "How much profit has the Majors made over the last 50 years?" The oil companies with help from the ruling families of Venezeula have plundered the country for years. The population of Venezuela has seen very little benifit from it's vast natural resources. My guess is from the perspective of Chavez, the oil companies have been paid very well for their investments.
The oil companies with help from the ruling families of Venezeula have plundered the country for years.
I am interested in this line of argumentation. Maybe you are correct. Do you have any numbers to support the argument? Do you have numbers for tax revenue that oil companies have paid to the Venezeulan government? I suspect your assertion is wrong, and an emotional appeal, but I would be very interested to see the numbers.
Robert I do not have numbers to support this assertion. However I worked and spent a fair amount of time in Venezuela. A subject often discussed was "why is Venezuela third world, with it's fabulous wealth of natural resources?" Also I believe up until Chavez, the Majors paid a very small pecentage of revenue in tax. I will do a little research and see if I can locate "numbers"
In the 1990s, capital-poor Venezuela lured Western oil companies into the country with generous terms -- a 34% tax on income and a 1% royalty on oil production. As crude-oil prices soared, the companies' investments in Venezuela turned into gushers of cash.
So, Venezuela did not have the money to develop their resources, and they offered attractive terms for foreign investors to come in and develop the reserves. And they invested billions to do this.
"The Venezuelan production, when you compare it to the rest of the operations of these companies, is significantly more profitable," says Fadel Gheit, senior energy analyst at Oppenheimer & Co. He estimates that ConocoPhillips was clearing a profit of $22 on each barrel produced, more than 50% higher than its per-barrel profit in the Gulf of Mexico.
To grab more of that profit for itself, the Venezuela government broke existing contracts.
So, the companies risked billions, the risk paid off, and Chavez tore up the contracts.
Mr. Gheit, the Oppenheimer analyst, says Venezuela's response to the oil companies' windfall profits wasn't unreasonable from Mr. Chavez's point of view. "This is like drafting a kid to the major league and he's making $100,000 a year. All of a sudden, he is hitting 50 home runs. Guess what, he wants to renegotiate his contract and under the circumstances, one can understand the way Chavez feels."
Except that you haven’t invested billions in the kid only to have him demand to renegotiate. That’s what people can’t seem to understand. Chavez has the right to nationalize. But projects were done based on the terms offered. What he should do is compensate companies for the investments they made, and he is refusing to do that. And this isn’t just an issue with U.S. companies. He is doing it to other countries as well. So, if I am China I am very reluctant to trust a guy who has no qualms about tearing up existing contracts.
Personally, I hope my company gets the heck out of Venezuela and never returns. Chavez can't get away with this act for too long without that influx of foreign investment. And if oil prices unexpectedly plunge (something I certainly don't expect) he is going to be in financial trouble. As it is, he is fostering expectations of support that can't be continued if he chases out the foreign capital.
Robert, you seem to forget that this is round No. 2 of nationalization in Venezuela. They kicked the oil companies out in the 70s, invited them back in the 90s, and the majors jumped right back in. I am quite sure that the corporations were pretty sure that they could easily get kicked out again, and set up contracts to ensure that they made lots of money real fast in anticipation of just this event.
I am also sure that if Venezuela privitizes again in 10 years, the foreign investors will be more than happy to jump right back in. They always are.
I find it interesting that they are also nationalizing Sidor, the steel company. I was involved in the privitization 10 years ago.
"...the rebels have attacked oil installations, seeking to deprive the Sudan government of the wherewithal to pursue a civil war that has killed more than 2 million people and displaced 4 million from their homes over the past two decades. But the Chinese laborers are protected: They work under the vigilant gaze of Sudanese government troops armed largely with Chinese-made weapons -- a partnership of the world's fastest-growing oil consumer with a pariah state accused of fostering genocide in its western Darfur region."
When prices are stable, contracts are stable. When prces rise, nationals feel foreigners are taking too large a share of the national treasure. Perfectly natural, happens all the time, im sure the majors expect it because it has happened many times in many places.
In the current situation majors have a simple choice - take their contracts to world court, probably win something for their assets and the something might be collectable against veneauelan us assets, eg their refinereies (which are debt free), or give up and remain in country under a new contract. The fact that all are choosing to remain implies that the new contract is better than what they might eventually collect in court. IMO, the fact that venezuela's orinocco belt holds a major share of the worlds useful reserves is influencing the majors' decisions.
Agreed, if prices fall chavez will have to change the terms, but most here are agreed that this is not likely to happen. It is hard to see how an impartial observer could possibly see chavez' actions as anything except very favorable for the venezuelan people, his grandstanding giveaways notwithstanding. There is little wonder that he is very popular, probably becoming more so even as the country drifts towards the usual totalarian form of marxism.
The steel company is something else again, imo it will not be nationalized. The banks, too, are in a better position.
Something like that might be difficult to quantify. I mean, where is the dividing line between plundering and fair compensation? I have to wonder though, has the US gov. or companies manipulated Venezuela over the years to the detriment of Venezuela? Was Venezuela taken advantage of because the US was negotiating from a stronger position? I think a lot of people, including myself, feel that this is what has been happening. I don't know how to prove it of course, but don't you think the US takes advantage of poorer countries when it's in its interests? I think that's why some people might excuse Chavez for taking over the oil industry.
Just like in Nigeria, the problem is much of the plunder is within the country, in corrupt government officals, certain local officials and wealthy corrupt business people. Oil cos could have paid 3 times the taxes and it would still primarily go to the rich. Look at PEMEX. There is no limit to the point that the powerful will enrich themselves and allow astonishing poverty for everyone else.
A bigger question is how much do the oil companies collude or enable these behaviors for their own enrichment, how much are they directly involved in. How often do they willingly turn a blind eye to local destruction, exploitation and abuse of the poor in pursuit of their aims. Bribes and kickbacks, directed contracts, etc when done with authorities who consider themselves to be the law are sometime legally gray, but in the big picture are clearly corrupt, expolitive and harmful to people and society. It's generally pay to play, and companies will pay.
Few companies will turn their back on a big profit on the basis of ethics if it can be accomplished with a veneer of legitimacy. Again, Nigeria, Sao Tome and many other examples can be brought forward. This doesn't mean the lower level employees are bad people, but often the whole mess just stinks.
I like your questions, and would encourage you to pursue them.
re: "...This doesn't mean the lower level employees are bad people..."
In fact, we could generalize and say "nobody's bad". People are attempting to meet their needs, with the strategies they have at their disposal. (Learned, invented, "set up" in some cases...)
The question, it seems to me, is how to get into a conversation about those needs, so that people might see the wisdom in pursuing alternate strategies, and also, perhaps, learning new ones.
What I have a problem with is theft, which is what Chavez has done. If the U.S. ever nationalized the oil industry, I will bet that the shareholders are compensated and the U.S. doesn't just seize companies.
That's part of the risk in working in a country that isn't the same as your home country. When you operate in another country, you play by their rules, no matter what their rules are. If you're in a country that isn't on friendly terms with your base country, you have no leverage to help you if things go sour. The oil companies knew that nationalization was a possibility.
Your point about leverage is not correct. US companies operating overseas have been counting on the availability of US military force as a source of leverage for over a century now. In fact, the provision of such leverage is the principal reason for the existence of the US military on such a colossal scale. The idea of "force projection" is in fact all about providing US business interests just such leverage.
I have kicked around the possibility of the U.S. nationalizing the oil industry. Understand, that's not my issue. I have no problem with countries nationalizing industries. What I have a problem with is theft, which is what Chavez has done. If the U.S. ever nationalized the oil industry, I will bet that the shareholders are compensated and the U.S. doesn't just seize companies.
I think there is a fair probability that as resources deplete and the oil companies are making higher and higher profits, that the government will step in at some point, declare company business a matter of national security, and work to nationalize the assets.
I think a distinction should be made between exploration/production on the other hand and distribution/storage/retail of end products on the other. The latter really should be viewed more like a utility, kindred to NG and electricity. I would like to see all energy utilities (including liquid fuel distribution) nationalized but run as a public trust with directly elected trustees rather than government appointed ones. I believe that such an arrangements would go far toward avoiding the worst aspects of state socialism, for reasons I explain on another post today.
Exploration and production, on the other hand, are so entrepreneurial that I can't see any government doing a very good job of it - and certainly not OUR government!
I think the argument might be that the means to get it out might not exist in the future. (Bad future, in that case.)
Probably true. But IF that's the case, it's not much of an argument for mining it and burning it now. If we're going to collapse back to a lesser stage of industrialism, human misery and environmental damage will be minimized by sequestering as much of it as possible away from the detritovores. (that would be us)
If you leave too much in the ground (leave it all at once) - how do you deal with the resulting collapse?
The concept of leaving too much in the ground strikes me as humorous for some reason. Only makes sense if we have some sort of yeastlike manifest destiny, some duty to entropy.
Given the system we have, the longer you draw it out and "flare it" under the current paradigm, the worse the collapse will likely be.
What do you do with people whose incomes are, to some real degree, an artifact (or, more accurately "side-effect") of this ever-increasing flow?
They're hosed by definition on a finite planet. However, they will be less hosed if there's a bit left.
Thanks for your response. I'm thinking my word choice didn't convey my intent.
I was speaking tongue-in-cheek about "leaving too much in the ground".
What I meant was - an abrupt cessation of the flow of oil and natural gas into the industrial world as it exists as of today, would have extreme catastrophic effects. (I presume. Please correct me in detail if you see it differently.)
Thus, the issues becomes, it seems to me, several. On the analytical side, we can try to ask questions like "What percentages of decrease will have what effects?" This relates to the discussion of what different decline rate scenarios are, and what the effects would be upon the economies of the world as they exist today. Example, a 2% decline rate, 10%, etc.
On the side of attempting to look at what we might do faced with this reality, with the little bit (way too little) lead time provided by our favorites analysts here and elsewhere - we need to get busy.
Yes, I agree - to continue on without change means we use up our only means to construct different infrastructure and different extraction technologies, for example, wind and solar (construction of same).
I am in favor of immediate and massive change in order to produce the "best case" scenario and/or to support positive mitigation paths.
To me, the goals and actions of this change seem somewhat obvious.
You know, the *&(#@ aside (it's easier for me), my guess is Robert will not be able to relate to what you're trying to say, unless you provide some extensive references. And a couple of examples, in some detail.
When Saddam Hussein requested U.S. Ambassador April Glaspie to explain State Department testimony in Congress about lraq's threats against Kuwait, she assured him the U.S. considered the dispute a regional concern, and it would not intervene. By these acts, the U.S. intended to lead Iraq into a provocation justifying war.
I think everyone knows that there were no WMD found in Iraq for the second go around and as well that the 'evidence' had been fabricated. I believe it was established in the Nuremberg War trials that an aggressive war was a war crime of the first order. I believe the only legitimate justification for war allowed by international law is in response to a direct attack by an aggressor.
And then there is Grenada...more along the line of a Marx bros 'Duck Soup' comedy: (Noam Chomsky)
The Russians were going to build an airbase in the nutmeg capital of the world, Grenada, if they could find it on a map, and they were going to bomb us.
after the brave cowboy barely saved us from destruction from the Grenadians by sending thousands of forces who were able to overcome a couple of middle aged construction workers http://www.democracynow.org/article.pl?sid=03/10/22/1450216
Here is Noam's site for anyone who wishes to understand, from a non-MSM viewpoint, US politics by other means.
Thanks Aniya for the opportunity of a bit of spleen venting, about how our western leaders lead, now I gotta go see how the new SA oil reserves are coming along.
Not questioning your statement about the quality of this publication as I am not familiar with LaRouche. I will take a look see and if you can elaborate it would be appreciated.
But, the idea I found interesting is that of a global fiat currency which would further the aims of corporate globalization, it does seem so plausible. Nafta(ism) is bad enough, the thought of a global currency gives me the collywobbles.
Oh dear Engineer-Poet, I thought you meant the first link to La-Roche, but did you mean the photograph of the dead incinerated person? I too would say "say it isn't so" and I do when it comes to my countries actions in Afghanistan, but it is so and if I deny it, I doubt that I am better than a Holocaust denier.
I saw the lines of fleeing Iraqi troops on television during the first episode, of These Days of Knightly Combat: Bush Part I, being strafed and bombed as if they were mere cockroaches and with about the same ability to protect themselves or fight back, it was disgusting to watch.
If you are concerned with the way our governments are acting I would go from your ... probably not worth reading to bringing something you consider worth reading here to the forum.
...and Robert, I do apologize because it will not be fair to the oil companies that get kicked around in this situation, but I do believe this will be the future of the business. The existing companies will become "National" companies and work for their respective countries.
Robert, I found this concerning Scottish independence and "Scottish" oil. It is from the "World Without Oil" journal (fictional oil crisis supportted with factual info). I guess it's not only Chavez that wants to keep his own oil under his control.
"It's Scotland's oil"
http://megawatt-seller.livejournal.com/1516.html
http://en.wikipedia.org/wiki/It's_Scotland's_oil
Some inconvenient facts:
Scotland last made a positive cash contribution to the UK Exchequer in 1905.
Scotlands oil is currently providing 11 billion sterling a year to the UK Exchequer.
The UK provides 30 billion sterling to Scotland each year.
The Barnet formula ensures that for every pound sterling of government money spent in England, £1.25 is spent in Scotland.
Last time I looked: 11-30 = -19 billion sterling per year.
Scotlands oil will fall from its peak production in 1999 to at least half that by 2015, and probably less than 1 million bbls / day by 2018.
25% of the working population in Scotland are employed at tax payer largesse. Many in ludicrous and overpaid and pension protected jobs
Less than half the total population are actually in paid employment contributing taxes to the exchequer. About 48%
And this figure includes the public employee tit-babies
Prior to the discovery of North Sea Oil, Scotland was rapidly depopulating. Especially in the North East.
Incomers have stabilised the population decline. Which is good. Because by 2025 we will need lots of overtaxed low wage immigrants to wipe our arses while we whinge and whine in old folks homes. I am sure they will flock in to do it.
By 2025, Scotland will be an old peoples home, with the North Sea kaput, and public employees demanding impossible protections and entitlements from an ever reducing and ageing work force.
And all of the above is without Global Peak Oil or GW.
Aye. Today was a sea change in Scottish politics. But the new Masters dont even recognise Peak Oil and have sold a line about oil lasting another 30 years and the creation of a Norwegian Style Oil Endowment Fund.
The new man in charge is an Economist by the way...
So, by 2010 the new boy wants a referendum on independence and he has also said that (and this IS true) If Scotland does not like independence, we can always go and re-join the Union.
One last important little factlet:
Scotland was not forced to join the Union 300 years ago. It joined after the Darien Fiasco (Scotlands attempt at raising overseas colonies). When Scotland Joined the Union it was Bankrupt and had been suffering under a severe Christian Regime very similar to the Taliban (''why dont Scots have sex standing up? - Because somebody may think they are dancing''.)
The Union heralded Access to Capital, Access to markets, And the truly amazing and world changing Scottish enlightenment.
Scotland lost interest in the Union about the same time Britain's Empire went into decline.
I dont see today as a good day for Scotland or the UK.
As for rejoining the Union at a later date, well, 55 million English may have something to say about that.
If Scotland is lucky, it may be in a position to sell water to the English as the climate dries England out.
Ha...thanks for the "insider's" scoop on the situation. I was just using the Scottish example to illustrate that it is not only Chavez that wants to keep his resources for his own country. We will probably here many more "local" stories about the "natives" doing what they have to to keep the resource in their hands. Heck, Africa has almost daily stories along this line.
'In Saudi Arabia gasoline costs about 45 cents a gallon. In Iran it's 33 cents. Venezuelans pay less than a quarter.
These absurdly low prices are a direct result of massive government subsidies.
While these numbers are not adjusted for cost of living, it's fair to say that drivers in those countries are getting a good deal.
But it's straining government budgets. More importantly, it's not allowing the free market to do its job. Higher prices on the open market are not leading to a drop in demand, which is keeping the cost of oil high for everyone else.'
http://money.cnn.com/2007/05/04/news/economy/gas_demand/index.htm?cnn=ye...
Especially note the 'not allowing the free market to do its job' - if Saudi Arabia or Iran or Venezuela decide to sell themselves their own oil at their own price (so to speak), this is unfair to Americans, as it stops the free market from working.
I believe the Iraqis, however, have made major strides in allowing the magic of the free market to work for them. Strangely, the article didn't note this success in lowering demand by raising prices in an oil producing country.
I may add, the article provides some basis to see the export land model in operation - not that it actually mentions this point, except to more or less suggest that an oil producing country should not be allowed to escape the demands of the free market by increasing their own consumption - after all, merely because it theirs doesn't mean they should be allowed to keep it selfishly for themselves. After all, Iraq doesn't.
As a Scot I am not happy with this blatant misrepresentation of my country...would the editors please remove this?
As an American of Scottish decent I would prefer the editors to leave it. I feel a more appropriate response with
a broader positive result would be for you to engage with dialog.
Where IS that 'Theory of Everything' ?
Here it is !
Who's to say it's "misrepresentation"? The Darien fiasco is historical fact, and Scottish demographic trends are public record. Besides, there is no value in free speech unless it includes speech you don't like.
I don't need lectures about free speech thanks. Responsible free speech is required, not a diatribe. Don't you lot usually deal with trolls quietly? If you think Mudlogger's analysis is sound then that shows two closed minds not one. I think the current state of Scotland is more nuanced than ML would allow. If Scotland is such a basket case then I wonder if that had anything to do with deindustrialisation or the use of much of our land for aristocratic 'sports'. Being tied to a neighbour so much bigger and so arrogant with it does not help. If you are English ML why don't you and your countrymen set us free and watch us drown. We don't mind. We could do with having your foot taken off our heads as we try to surface though...
As for ML's analysis, if you really think it is so transparently obvious, I should be humble and listen reverently, and then I must re-contact all those academics I used to hang out with and tell them to get down to McDonalds pronto, I hear you can always get a job there...
At least the English do not deny the Scots right to exist, as many Americans have on this forum and elsewhere to New Orleans.
Best Hopes,
Alan
I have kicked around the possibility of the U.S. nationalizing the oil industry. Understand, that's not my issue. I have no problem with countries nationalizing industries. What I have a problem with is theft, which is what Chavez has done. If the U.S. ever nationalized the oil industry, I will bet that the shareholders are compensated and the U.S. doesn't just seize companies.
I think there is a fair probability that as resources deplete and the oil companies are making higher and higher profits, that the government will step in at some point, declare company business a matter of national security, and work to nationalize the assets.
Robert a good question to ask is "How much profit has the Majors made over the last 50 years?" The oil companies with help from the ruling families of Venezeula have plundered the country for years. The population of Venezuela has seen very little benifit from it's vast natural resources. My guess is from the perspective of Chavez, the oil companies have been paid very well for their investments.
The oil companies with help from the ruling families of Venezeula have plundered the country for years.
I am interested in this line of argumentation. Maybe you are correct. Do you have any numbers to support the argument? Do you have numbers for tax revenue that oil companies have paid to the Venezeulan government? I suspect your assertion is wrong, and an emotional appeal, but I would be very interested to see the numbers.
Robert I do not have numbers to support this assertion. However I worked and spent a fair amount of time in Venezuela. A subject often discussed was "why is Venezuela third world, with it's fabulous wealth of natural resources?" Also I believe up until Chavez, the Majors paid a very small pecentage of revenue in tax. I will do a little research and see if I can locate "numbers"
Here's a place to start.
Venezuela
Rigzone has anhttp://www.rigzone.com/news/article.asp?a_id=43731 article and some of the percentages paid in Venezuela.
The article you linked to - Oil Companies May See An Ebb In Profit Gusher - summarizes both sides of this debate. Here are some excerpts:
So, Venezuela did not have the money to develop their resources, and they offered attractive terms for foreign investors to come in and develop the reserves. And they invested billions to do this.
So, the companies risked billions, the risk paid off, and Chavez tore up the contracts.
Except that you haven’t invested billions in the kid only to have him demand to renegotiate. That’s what people can’t seem to understand. Chavez has the right to nationalize. But projects were done based on the terms offered. What he should do is compensate companies for the investments they made, and he is refusing to do that. And this isn’t just an issue with U.S. companies. He is doing it to other countries as well. So, if I am China I am very reluctant to trust a guy who has no qualms about tearing up existing contracts.
Personally, I hope my company gets the heck out of Venezuela and never returns. Chavez can't get away with this act for too long without that influx of foreign investment. And if oil prices unexpectedly plunge (something I certainly don't expect) he is going to be in financial trouble. As it is, he is fostering expectations of support that can't be continued if he chases out the foreign capital.
Robert, you seem to forget that this is round No. 2 of nationalization in Venezuela. They kicked the oil companies out in the 70s, invited them back in the 90s, and the majors jumped right back in. I am quite sure that the corporations were pretty sure that they could easily get kicked out again, and set up contracts to ensure that they made lots of money real fast in anticipation of just this event.
I am also sure that if Venezuela privitizes again in 10 years, the foreign investors will be more than happy to jump right back in. They always are.
I find it interesting that they are also nationalizing Sidor, the steel company. I was involved in the privitization 10 years ago.
Hi Robert,
Thanks for the discussion.
Re: "So, if I am China I am very reluctant to trust a guy who has no qualms about tearing up existing contracts."
This would make sense, in a certain framework. I'm not sure China sees it that way, though. Perhaps the opposite, in fact.
http://www.hrw.org/reports/2003/sudan1103/26.htm
http://www.washingtonpost.com/wp-dyn/articles/A21143-2004Dec22.html
"...the rebels have attacked oil installations, seeking to deprive the Sudan government of the wherewithal to pursue a civil war that has killed more than 2 million people and displaced 4 million from their homes over the past two decades. But the Chinese laborers are protected: They work under the vigilant gaze of Sudanese government troops armed largely with Chinese-made weapons -- a partnership of the world's fastest-growing oil consumer with a pariah state accused of fostering genocide in its western Darfur region."
When prices are stable, contracts are stable. When prces rise, nationals feel foreigners are taking too large a share of the national treasure. Perfectly natural, happens all the time, im sure the majors expect it because it has happened many times in many places.
In the current situation majors have a simple choice - take their contracts to world court, probably win something for their assets and the something might be collectable against veneauelan us assets, eg their refinereies (which are debt free), or give up and remain in country under a new contract. The fact that all are choosing to remain implies that the new contract is better than what they might eventually collect in court. IMO, the fact that venezuela's orinocco belt holds a major share of the worlds useful reserves is influencing the majors' decisions.
Agreed, if prices fall chavez will have to change the terms, but most here are agreed that this is not likely to happen. It is hard to see how an impartial observer could possibly see chavez' actions as anything except very favorable for the venezuelan people, his grandstanding giveaways notwithstanding. There is little wonder that he is very popular, probably becoming more so even as the country drifts towards the usual totalarian form of marxism.
The steel company is something else again, imo it will not be nationalized. The banks, too, are in a better position.
Something like that might be difficult to quantify. I mean, where is the dividing line between plundering and fair compensation? I have to wonder though, has the US gov. or companies manipulated Venezuela over the years to the detriment of Venezuela? Was Venezuela taken advantage of because the US was negotiating from a stronger position? I think a lot of people, including myself, feel that this is what has been happening. I don't know how to prove it of course, but don't you think the US takes advantage of poorer countries when it's in its interests? I think that's why some people might excuse Chavez for taking over the oil industry.
Just like in Nigeria, the problem is much of the plunder is within the country, in corrupt government officals, certain local officials and wealthy corrupt business people. Oil cos could have paid 3 times the taxes and it would still primarily go to the rich. Look at PEMEX. There is no limit to the point that the powerful will enrich themselves and allow astonishing poverty for everyone else.
A bigger question is how much do the oil companies collude or enable these behaviors for their own enrichment, how much are they directly involved in. How often do they willingly turn a blind eye to local destruction, exploitation and abuse of the poor in pursuit of their aims. Bribes and kickbacks, directed contracts, etc when done with authorities who consider themselves to be the law are sometime legally gray, but in the big picture are clearly corrupt, expolitive and harmful to people and society. It's generally pay to play, and companies will pay.
Few companies will turn their back on a big profit on the basis of ethics if it can be accomplished with a veneer of legitimacy. Again, Nigeria, Sao Tome and many other examples can be brought forward. This doesn't mean the lower level employees are bad people, but often the whole mess just stinks.
Hi peak,
I like your questions, and would encourage you to pursue them.
re: "...This doesn't mean the lower level employees are bad people..."
In fact, we could generalize and say "nobody's bad". People are attempting to meet their needs, with the strategies they have at their disposal. (Learned, invented, "set up" in some cases...)
The question, it seems to me, is how to get into a conversation about those needs, so that people might see the wisdom in pursuing alternate strategies, and also, perhaps, learning new ones.
That's part of the risk in working in a country that isn't the same as your home country. When you operate in another country, you play by their rules, no matter what their rules are. If you're in a country that isn't on friendly terms with your base country, you have no leverage to help you if things go sour. The oil companies knew that nationalization was a possibility.
Venezuela nationalized its oil in 1976. It wasn't just a possibility, it was an actuality.
Your point about leverage is not correct. US companies operating overseas have been counting on the availability of US military force as a source of leverage for over a century now. In fact, the provision of such leverage is the principal reason for the existence of the US military on such a colossal scale. The idea of "force projection" is in fact all about providing US business interests just such leverage.
FWIW, I don't think it could ever happen. But only suggesting that you see the trend globally.
I think a distinction should be made between exploration/production on the other hand and distribution/storage/retail of end products on the other. The latter really should be viewed more like a utility, kindred to NG and electricity. I would like to see all energy utilities (including liquid fuel distribution) nationalized but run as a public trust with directly elected trustees rather than government appointed ones. I believe that such an arrangements would go far toward avoiding the worst aspects of state socialism, for reasons I explain on another post today.
Exploration and production, on the other hand, are so entrepreneurial that I can't see any government doing a very good job of it - and certainly not OUR government!
The sane thing to do would be nationalize it and leave it in the ground
There's a certain Sisyphean quality to pumping it up one place in order to pump it back underground someplace else. A reserve by any other name...
Hi greenish,
re: "...leave it in the ground."
Now, this does make sense.
I think the argument might be that the means to get it out might not exist in the future. (Bad future, in that case.)
What I'm wondering...how to use the oil we have now wisely?
Conversion to solar and wind? (While we can?)
Use less in a controlled fashion so as to prolong the arrival of "peak"?
What does a "no-growth" economy look like and how does it function?
How to get other countries and regions on board - so one is not left open to invasion?
If you leave too much in the ground (leave it all at once) - how do you deal with the resulting collapse?
What do you do with people whose incomes are, to some real degree, an artifact (or, more accurately "side-effect") of this ever-increasing flow?
Probably true. But IF that's the case, it's not much of an argument for mining it and burning it now. If we're going to collapse back to a lesser stage of industrialism, human misery and environmental damage will be minimized by sequestering as much of it as possible away from the detritovores. (that would be us)
The concept of leaving too much in the ground strikes me as humorous for some reason. Only makes sense if we have some sort of yeastlike manifest destiny, some duty to entropy.
Given the system we have, the longer you draw it out and "flare it" under the current paradigm, the worse the collapse will likely be.
They're hosed by definition on a finite planet. However, they will be less hosed if there's a bit left.
Hi Greenish,
Thanks for your response. I'm thinking my word choice didn't convey my intent.
I was speaking tongue-in-cheek about "leaving too much in the ground".
What I meant was - an abrupt cessation of the flow of oil and natural gas into the industrial world as it exists as of today, would have extreme catastrophic effects. (I presume. Please correct me in detail if you see it differently.)
Thus, the issues becomes, it seems to me, several. On the analytical side, we can try to ask questions like "What percentages of decrease will have what effects?" This relates to the discussion of what different decline rate scenarios are, and what the effects would be upon the economies of the world as they exist today. Example, a 2% decline rate, 10%, etc.
On the side of attempting to look at what we might do faced with this reality, with the little bit (way too little) lead time provided by our favorites analysts here and elsewhere - we need to get busy.
Yes, I agree - to continue on without change means we use up our only means to construct different infrastructure and different extraction technologies, for example, wind and solar (construction of same).
I am in favor of immediate and massive change in order to produce the "best case" scenario and/or to support positive mitigation paths.
To me, the goals and actions of this change seem somewhat obvious.
I'd be happy to discuss further.
You are right once more RR, it seizes whole fucking countries.
Here's something else tasty for the right wing at heart:
http://www.larouchepub.com/pr/2007/070430lar_v_steil-cfr.html
Hi Crystal,
You know, the *&(#@ aside (it's easier for me), my guess is Robert will not be able to relate to what you're trying to say, unless you provide some extensive references. And a couple of examples, in some detail.
Could you, possibly?
Hi Aniya,
Sorry about the *&(#@ and I guess you may be right. Here is one linc, and unless you dig holocaust images, use the second link.
http://deoxy.org/wc/warcrime.htm (no this is not a practice underwater escape from a helicopter)
When Saddam Hussein requested U.S. Ambassador April Glaspie to explain State Department testimony in Congress about lraq's threats against Kuwait, she assured him the U.S. considered the dispute a regional concern, and it would not intervene. By these acts, the U.S. intended to lead Iraq into a provocation justifying war.
http://deoxy.org/wc/wc-preface.htm
I think everyone knows that there were no WMD found in Iraq for the second go around and as well that the 'evidence' had been fabricated. I believe it was established in the Nuremberg War trials that an aggressive war was a war crime of the first order. I believe the only legitimate justification for war allowed by international law is in response to a direct attack by an aggressor.
And then there is Grenada...more along the line of a Marx bros 'Duck Soup' comedy: (Noam Chomsky)
The Russians were going to build an airbase in the nutmeg capital of the world, Grenada, if they could find it on a map, and they were going to bomb us.
after the brave cowboy barely saved us from destruction from the Grenadians by sending thousands of forces who were able to overcome a couple of middle aged construction workers http://www.democracynow.org/article.pl?sid=03/10/22/1450216
Here is Noam's site for anyone who wishes to understand, from a non-MSM viewpoint, US politics by other means.
http://www.chomsky.info/
Or just go get googled by it all.
Thanks Aniya for the opportunity of a bit of spleen venting, about how our western leaders lead, now I gotta go see how the new SA oil reserves are coming along.
Anything with a LaRouche connection is untrustworthy and probably not worth reading.
Not questioning your statement about the quality of this publication as I am not familiar with LaRouche. I will take a look see and if you can elaborate it would be appreciated.
But, the idea I found interesting is that of a global fiat currency which would further the aims of corporate globalization, it does seem so plausible. Nafta(ism) is bad enough, the thought of a global currency gives me the collywobbles.
Oh dear Engineer-Poet, I thought you meant the first link to La-Roche, but did you mean the photograph of the dead incinerated person? I too would say "say it isn't so" and I do when it comes to my countries actions in Afghanistan, but it is so and if I deny it, I doubt that I am better than a Holocaust denier.
I saw the lines of fleeing Iraqi troops on television during the first episode, of These Days of Knightly Combat: Bush Part I, being strafed and bombed as if they were mere cockroaches and with about the same ability to protect themselves or fight back, it was disgusting to watch.
If you are concerned with the way our governments are acting I would go from your ... probably not worth reading to bringing something you consider worth reading here to the forum.