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Risks of rising oil nationalism
Mark Trunbull, Christian Science Monitor
It’s hard to shed a tear for Big Oil. The top five publicly traded companies racked up a record $119.5 billion profit last year – roughly the size of Ireland’s economy.
Yet these corporations are steadily losing ground to a surging group of nationally run companies – a trend that could come back to hurt oil-consuming nations such as the United States, some experts say.
The risk is that governments that run oil companies will lavish so much of their oil wealth on social programs and other priorities that efficiency and investment in new oil fields will suffer.
“We could have a problem down the road because not enough investment will be made,” says Amy Myers Jaffe, an energy expert at Rice University’s Baker Institute for Public Policy in Houston. In Venezuela, Iran, and Russia “we might see declines in production in coming years.” These countries have huge reserves and state-run energy sectors with questionable efficiency. ..
Of course, the threat posed by the rising NOCs depends on the eye of the beholder. While some US experts fret that world oil supplies won’t keep up with growing demand, oil-producing countries may well be worried about domestic unrest. So increased social spending, even from the perspective of Western consumers, may be laudable if it helps stabilize oil markets. ..
(3 Apr 2007)
Unsurprising spin coming from the neocon-lite James A Baker III Institute, helping make the case for more oil wars: if NOC’s can’t maximise oil exports the economy/democracy/global peace requires intervention. Note also the refusal to consider possibility of resources limiting production; has CSM always been this bad? -LJ
The Politics of Energy (Part 2 of Eyes Wide Shut)
James J. Puplava, Financial Sense Newsletter
…Before the attacks of September 11, 2001, the U.S. was conducting military operations in over 170 countries. Today the U.S. military reach constitutes a global military empire whose chief mission has become combating radical Islam and protecting the world’s oil supply routes. Unlike previous empires, America’s imperium is without colonies and without borders. The Cold War years constituted the “garrison era” when large, permanent U.S. military garrisons surrounded the Soviet Union.
In contrast, post-Cold War U.S. military features rapid worldwide mobility and the effective dispersion of forces. This strategy is similar to that of the Roman Empire, which built bases on foreign soil and emphasized the rapid strategic reaction of its legions to threats within the empire. Grain from Egypt was to the Romans what oil is to the United States today. Rome needed to station its legions throughout the Middle East in order to protect trade and the vital shipment of grain to feed its population. America finds itself in a similar situation today with the necessity of importing over 60% of its energy needs, which is vital to powering the American economy.
America’s imperium is born out of necessity. Since 1970 the U.S. has been unable to supply its own oil needs. As a result, it has lost control over the price of oil. Initially, the U.S. had been blessed with abundant resources. Its rich deposits of mineral and energy resources, along with its ability to produce and use these basic industrial and energy resources, allowed the U.S. to move from a backward wilderness to become the richest and most powerful nation in the world in less than 300 years.
It is minerals and energy that win wars, build factories and form the basis for an industrialized society. Nations that have these resources within their own borders are better off than those that don’t, as they are less economically vulnerable. A shift in geological resource centers brings with it a shift in global economic power. This is the reality that the United States faces: it is forced to import more raw materials in which it was once self sufficient. For the U.S. the era of high-grade energy and resource abundance is gone-thus the need to use its remaining military power in an effort to secure it.
The U.S. is not alone in this effort. With no geological or geographic frontiers to expand, nations must jostle against each other for position and control over the earth’s remaining resources. This jostling could be leading us toward military confrontation over access to energy, water, fertile soil and strategic materials such as uranium-all of which are critical for our survival. As more and more nonrenewable resources are depleted, economic problems and military confrontation become more likely. At present, the fact that we are consuming a diminishing supply of resources is for most people “out of sight and out of mind. “
From politician to citizen, our eyes are “wide shut.” Unfortunately, as we have seen in this new century, we have experienced a series of oil shocks with each subsequent shock becoming more severe. Eventually a permanent shock of greater severity is inevitable. When it arrives it will not be solved by any redistribution plans, economic planning or political posturing. Its arrival could be the consequence of the inexorable depletion of the world’s supply of crude oil. The battle over what remains is only one aspect of the politics of enrgy.
(29 March 2007)
Long article with nice use of graphics. Part of an ongoing series. -BA
Venezuela signs oil deal with China
Staff, MWC News
Venezuela has signed deals to supply oil to China as part of a drive by Hugo Chavez, the south American nation’s president, to break his dependence on energy exports to the United States.
Venezuela will double its exports to China by sending 300,000 barrels per day of crude in 2007, officials said at a signing ceremony in Caracas on Monday.
“Venezuela has always said it wants to turn itself into a secure and increasing source of oil supply to China,” Chavez said at a gathering marking the visit of Li Changchun, a member of China’s Politburo Standing Committee.
China is the world’s second biggest oil consumer. Venezuela says it pumps about 3.3 million barrels of oil per day (bpd) although analysts say the figure is about 2.7 million. It is the fifth-largest oil exporter to the United States.
Last year, the Opec nation sold only 150,000 bpd of crude to China. Chavez has said Venezuela is looking to ship one million bpd there by 2012. ..
(27 Mar 2007)
See on China Daily China, Venezuela firms to co-develop oilfields.
