Nationalizing Oil

[Pops]

You are getting around to something else I was pondering, which is the interim step of regulated utilities in general. The railroads were a big factor in the rise of regulated utilities as the Progressives started putting the screws to the "Robber Barons" like Crocker, Stanford and all those boys.

There are lots of good arguments for free market solutions but the Trust Busters instituted strong regulation on everything from rail to busses to trucking to Ma Bell because their monopolies could set prices and service schedules with little regard to consumers - there were no alternatives to their product.

Just as my farmhouse wasn't economical to run a wire to in the 50's without the REA, perhaps it's also unprofitable to run a wire out to a wind farm in Kansas or some other alternative that otherwise would be viable.

In the days before deregulation in the 1980's regulated electric utilities were responsible for maintaining and expanding the power grid as necessary. When the utilities were broken up, the transmission providers were caught in a squeeze, the money is made in producing and selling power, transmission not so much.

I know the gov isn't always the most efficient, buying from Enron turned out to not be too efficient either.


http://en.wikipedia.org/wiki/California ... ity_crisis
http://www.oe.energy.gov/1371.htm

[Plantagenet]

Stay on topic, please.

[Plantagenet]

Its pretty easy to find fault with private oil companies etc. I'm still not clear on what the benefits are of privatizing them.

Look at Mexico----they nationalized years ago and created PEMEX, and it has't worked out all that great for them...

[Pops]

The point is basically that production is mostly nationalized now and and bi lateral and political agendas will increasingly determine who gets oil n the future. The free market will not be free and perhaps not a market either if most production is spoken for ahead of time.

I don't know if it will be "better" or not, I'm just throwing it up to see what others think.

[efarmer]

You don't nationalize the corporate oil players Plant, the government sets price limits to neuter speculation and the private oil companies then decide if they wish to drill and produce at the set pricing or not. The government will have to boost the price to where it makes it possible for drillers to pursue the hard to get at oil, but the market speculator will be frozen out of the deal unless they wish to operate in a narrow and low profit little window, knowing dirt cheap is long gone and sky high will only be reached from depletion rather than cheerleaders at the casino.

If someone hollers tilt, you simply tell them that when the free market delivers it's substitute product since supply and demand has broken for petroleum, Uncle Sugar will take the collar off the dog and let him go and run with the pack again.

[Plantagenet]

You don't nationalize the corporate oil players Plant, the government sets price limits to neuter speculation and the private oil companies then decide if they wish to drill and produce at the set pricing or not. The government will have to boost the price to where it makes it possible for drillers to pursue the hard to get at oil, but the market speculator will be frozen out of the deal unless they wish to operate in a narrow and low profit little window...

Having the US government set oil prices won't work in a global market. If the market price of oil is above the government price level set in the USA, then OPEC and other foreign oil producers will simply sell to China and India and Germany and France and any other country who is willing to pay the market price and the US economy will be starved of foreign oil and will grind to a stop.

[efarmer]

True Plant, it would have to be international in addition to national. But I believe it will be.
When it comes to the point where the oil producing nations and the oil importing nations clearly see that a round or two of wanton speculation for profiteers will result in wars in the transit routes or the producers, the consensus will be to form a regulatory pricing system to forestall geopolitical chaos and trim the ability for scalping by games in New York or any other major trading center.
It is to me inevitable. At that point I would not want to be speculating expensive petroleum with a mouth full of leverage. Will there be warning to wind it down or will they let the banksters get out
but leave the suckers hanging with a mouth full of leverage is the question.

Peak oil and peak resources is the point of peak free market speculation where accounting has to balance windfall profit for speculators against the national cost of civil unrest and resource war.

[Pops]

I thought I'd take a look at the countries that export petroleum (not just crude) to the US to see if I can come to a conclusion on their likelihood of moving toward a more political approach to marketing oil instead of simply putting it on the "free market."

Where Nationalized = "Yes" I've tried to indicate whether the state oil company is increasing (+) or decreasing (-) their roll in production activity - at least from what I can gather from the EIA website as a start. I've noted especially countries with new bi-lateral agreements.

I'll keep working on this to make it more complete. I'm not a detail guy and this isn't really my type of work, so any suggestion, correction or outright plagiarism to do a better job is welcome.

JVs are Joint Ventures, PSA are Production Sharing Agreements.



Note: The data in the tables above exclude oil imports into the U.S. territories.
http://www.eia.doe.gov/pub/oil_gas/petr ... mport.html

notes from http://www.eia.doe.gov/emeu/cabs/index.html
*1)

As part of the energy sector reform, in April 2010, then acting president (now president) Goodluck Jonathan signed the Nigerian Content Development Bill (NCD) into law. The bill is aimed at increasing the role of Nigerian companies in all aspects of the oil and gas industry.

http://www.eia.doe.gov/emeu/cabs/Nigeria/Oil.html

*2)

Along with the Carabobo bid round, Venezuela has also embarked upon direct, bilateral deals for the development of some oil blocks. In December 2009, PdVSA and China’s CNOOC announced a memorandum of understanding (MOU) for the development of the Boyaca 3 block. The Junin area of the Orinoco has also been the subject of numerous bilateral deals, including with Petrovietnam (Junin 2), China’s CNPC (Junin 4), Italy’s Eni (Junin 5), a consortium of Russia companies (Junin 6). All of these plans are in the early stages of development, and it is unclear when oil production could begin from these areas.

http://www.eia.doe.gov/emeu/cabs/Venezuela/Oil.html

*3)

In recent years, China has agreed to provide multi-billion dollar oil-backed loans to fund infrastructure development. These loans are costly and repayment depends heavily on international oil prices but at the same time, Chinese firms are playing an important role in Angolan recovery while Angola has become one of the leading suppliers of oil to China.

http://www.eia.doe.gov/emeu/cabs/Angola/Background.html

*4)

Colombia has seen an increase in oil production in recent years following a period of steady decline. The Colombian government has enacted a series of regulatory reforms to make the sector more attractive to foreign investors. In addition, it has implemented a partial privatization of state oil company Ecopetrol in an attempt to revive its upstream oil industry.

http://www.eia.doe.gov/emeu/cabs/Colombia/Oil.html

Since 2009, Ecuador has agreed to two separate oil-backed loan agreements with China. Under these agreements, Ecuador is required to invest a share of the loaned amount in infrastructure projects involving Chinese companies and repay the loans in fixed-price crude oil shipments. In 2009, Chinese oil imports from Ecuador totaled 36,000 bbl/d, 12 percent of Ecuador’s total oil exports, an increase from the previous year’s 21,000 bbl/d.
The largest foreign-owned oil companies include Andes Petroleum, a consortium led by the Chinese National Petroleum Corporation (CNPC) and Petroriental of China.

[Pops]

Michael Klare from TomDispatch.com

At present, China obtains most of its imported oil from Saudi Arabia, Iran, Angola, Oman, Sudan, Kuwait, Russia, Kazakhstan, Libya, and Venezuela. Eager to ensure the reliability of the oil flow from these countries, Beijing has established close ties with their leaders, in some cases providing them with significant economic and military assistance. This is exactly the path once taken by Washington -- and with some of the same countries.

China’s state-controlled energy firms have also forged “strategic partnerships” with counterpart enterprises in these countries and in some cases acquired the right to develop major oil deposits as well. Especially striking has been the way Beijing has sought to undercut U.S. influence in Saudi Arabia and with other crucial Persian Gulf oil producers. In 2009, China imported more Saudi oil than the U.S. for the first time, a geopolitical shift of great significance, given the history of U.S.-Saudi relations. Although not competing with Washington when it comes to military aid, Beijing has been dispatching its top leaders to woo Riyadh, promising to support Saudi aspirations without employing the human rights or pro-democracy rhetoric usually associated with American foreign policy.

Likewise, China’s recent loan of $20 billion to the Venezuelan oil industry has boosted the status of President Hugo Chávez at a time when his domestic popularity, and so his ability to counter U.S. policies, was slipping. The Chinese have also retained friendly ties with President Omar Hassan Ahmad al-Bashir of Sudan, despite U.S. efforts to paint him as an international pariah because of his alleged role in overseeing the massacres in Darfur.

Actually the entire article is good. Go there and buy the book by Klaie.

[Pops]

I expect more of this:

To gain control over this rapid feedback loop, we need to nationalize the fossil fuel industry and bring its assets, and its resources, under social control.

The fossil fuel industry presents a clear and present danger to national security, to world security, to human civilization, and to life on earth. It even presents a clear and present danger to the lives of owners of the fossil fuel industry! As Bob Dylan once said, "For them that think death's honesty won't fall up on them naturally, life sometimes must get lonely."

http://www.opednews.com/articles/Nation ... 23-74.html

h/t Leanan

[seenmostofit]

I expect more of this:

The fossil fuel industry presents a clear and present danger to national security, to world security, to human civilization, and to life on earth.

Wow. I just wonder how many cars Nina has owned, how much and what kind of fuel she puts in them, whether or not she lives in a house using electricity, has ever taken a ride in an airplane, railroad train or boat, and if she even knows how they are all interlinked prior to making a statement which makes Stalin look like a lifelong friend to capitalists.

[sparky]

.
There is three sides to the regulation of petroleum

1- supply side , most big exporting countries treat petroleum production as a strategic asset
the usual form is national companies , all are under some licensing control
the internal market is to be supplied first ,

2- importer side , same there , all the big importing country have regulatory control
up to and including first choice for their strategic reserves

3- the trade between countries is becoming a government business
a state to state agreement to supply or give access
trade advantage are given to the supplier by the producer


an ominous trend is the very fast rise of the producers internal consumption ,
never mind total production , the critical number is the crude available for export
that's what make the price , that's what make the shortage

[ralfy]

If governments work for private corporations (and do so if they earn from tax revenues brought about sales from the latter), then nationalizing oil may not help.

[SeaGypsy]

Any serious supplier attempting full nationalization will find itself being invaded in short order. The need is too urgent for politics.