Marvin Gandall wrote:
The article's real beef about nationalized oil is that there is inherent political pressure on state oil companies to direct their revenues to social programs and other state spending rather than to exploration and the development of new supply which would hold oil prices in check.
it's notable that they don't have a beef about state oil companies that direct oil rents to programs that care for and feed domestic elites of well-paid oil administrators, oil-equity owners, and oil workers, and to investments in unneeded infrastructure (as in Vzla before Chavez). It's only when the funds are directed to helping the masses that it's a problem...
It concludes: " 'For the first time in this petroleum cycle, the national oil companies have a major responsibility for supporting world oil markets over the long term,' Mr West says. " 'The real challenge is whether the national oil companies will meet their responsibility to bring the oil to market,' he says. " It is unclear whether that responsibility is as important to those countries as meeting their needs at home. " For, as Jim Mulva, chief executive of ConocoPhillips, the US's third largest oil company, says: 'The [national oil companies'] host country may have other strategic objectives, which may limit the speed by which they develop their resources.' "
Marvin:
In other words, the complaint is that nationalized oil companies have a "responsibility", which they do not always meet, to effectively maintain the subsidization of the wealthier oil consuming counties by the poor in the oil producing ones.
it's interesting that the article misses the fact that even if these countries don't invest in exploration for and exploitation of possible new oil reserves, those reserves will still exist. Non-use now means that (if and) when Hubbert's Peak bites, there will be more oil reserves available than if we found, tapped, and used them right away. So these countries are actually doing us in the oil-consuming countries a good deed, encouraging oil prices to be lower in the future than they would be otherwise. (Why should we exploit the oil as much as possible as quickly as possible?) Higher prices _now_ also mean that people are pushed to economize on their use of oil, gas, and petrochemicals. This might help with that global warming thing. That's a good thing, another good deed, though we don't like taking that medicine. There's a fundamental problem with the view that these countries are failing to subsidize the oil-consuming countries, at least in the short run. It assumes that high oil prices are resulting from the behavior of those nasty nationalizers. It's more likely, I think, that the high prices are instead the result of high demand for oil (Chinese, Indian growth, etc.) and a lot of temporary falls in supply (Iraq, Nigeria, etc.) and the normally inelastic nature of both supply and demand [*]. If I am right, then what the nationalizers are doing is not driving prices up as much as taking advantage of the high prices (and resource rents) that would exist even without nationalization. Then, the issue is whether the rents are being used in a way that keeps core countries happy. In Vzla, they are not. [*] this refers to the fact that in the short run, the amount of oil entering the market rises less than in proportion to increases of prices and that the number of barrels of oil that's purchased does not fall as quickly as the price rises. This combination means that small disturbances in demand and/or supply imply more than proportionate changes in prices. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante.
