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Energy crisis - the culprit is national oil companies & socialism

by Jerome a Paris Tue Aug 22nd, 2006 at 06:16:24 AM EST

As was pointed out by starvid a few days ago, a new front on the energy wars has been opened, with an attack on national oil companies in oil producing countries, and the socialist policies these countries dare follow, at our cost. In addition to the Newsweek article starvid quoted, the Economist joined the parade at about the same time (wity a leading editorial and a long article), which makes one wonder who sent out the original press release/"research" on the topic... Anyway, here's a quick debunking of the most blatant lies.


Note: I'm using alternatively the 3 above-linked sources.

Saudi Aramco's proved reserves alone could keep the world supplied for several decades. But it is only exploiting ten of its 80 or so fields, so will be able to pump at the present rate for about 70 years even if it never discovers another drop of oil.

The last sentence says that SA can supply around one tenth of world demand for the next 70 years, a direct contradiction to the first sentence. Which one is true?

And saying that it exploits only 10 of its 80 fields is definitely misleading when these are, by far, the 10 biggest ones...

Saudi Arabia has remained remarkably stable since nationalisation. The crown has changed hands only twice in the past 30 years; the same is true of the oil ministry. Political stability, in turn, has led to consistent policymaking. The government of Saudi Arabia has stuck to the same broad strategy for decades. It wants Aramco to maintain its position as the world's biggest producer and to use the resulting pricing power to ensure that the oil price stays high enough to keep the country solvent—but not so high as to turn consumers off oil altogether. That guidance has allowed Aramco to draw up long-term investment plans and to raise the capital to implement them.

Even Saudi Aramco, widely regarded as the most transparent of state-owned oil firms, is not entirely forthcoming about the size of its wells, fueling speculation about the sustainability of the world's oil supplies.

Saudi Aramco is pretty much the only NOC to have nice things written about it... Saudi Aramco.... Un-fuckin-believable. "Political stability" is the new black... er the new "institution-building", ... er, the new "democracy"...

And Saudi Aramco the most transparent? Who on earth are they kidding? More than SEC-filing PDVSA or Pemex? More than partly-floated and reserve-audited Gazprom or Rosneft? No reserves information in more than 25 years. Claims about production increases that never materialise?

You have to ask: are they really that ignorant or are they actually corrupt? (journalists, I mean)

Unfuckin-believable...

But of course they are back in the vaguely racist bag of incompetence...

like most state-owned firms, they are prone to over-staffing, underinvestment, political interference and corruption.

Many big state oil companies are equally slow to adopt the latest technologies, designed to suck crude out of the cracks and folds of aging shafts.

So many skilled oilmen have left Iran since the 1979 revolution that President Mahmoud Ahmadinejad was hard pressed to find even one clearly acceptable candidate to become Energy minister last year.

Stupid, incompetent "savages", right? See starvid's diary for a better debunking of that point. I'd like to note that it's better to blame Iran's oil ministry shenanigans to flight from the regime rather than to the cluelessness of the President faced with an independent-minded parliament more focused on competence...

Underinvestment is the most widespread problem of all. Indonesia has become a net importer of oil, despite big reserves, thanks to the failure of state-run Pertamina to develop new fields. The fact that NOCs are sitting on the vast majority of the world's oil but pumping only about half of global output suggests a systematic failure to invest.

From the largest (Aramco) to the smallest (the Libya National Oil Co.) the Seven Sovereigns face no shareholder pressure to maximize short-term profit and are husbanding their oil—pumping 4 percent of their proven reserves each year, half as much as the big multinationals.

The most common theme of all these articles. Production declines are due only to government interference, bureaucratic incompetence and a failure to invest. The fact that resources may be nurtured or considered as strategic assets (as is done by the governments of Norway and the Netherlands, for instance) is anathema. The fact that the objective is not short term profit is anathema. The fact that the objective is not to lower prices for the Western consumer is a scandal.

And they dare spend the money on - gasp - socialist programs...

Often the Seven Sovereigns are used as cash cows to bankroll social programs, not to reinvest in oil supply. Most state oil companies are obliged to send their revenue directly to the Finance Ministry. Venezuelan President Hugo Chávez, for example, is famous for using oil money to fund his socialist agenda, but the practice is now quite common, from Iran to Russia.

Right.

Blame someone else. There is enough oil. If only these damn foreigners didn't conduct anti-short-termist, oil-withholding policies and didn't use the money for pointless socialist policies instead of letting it return to its natural home, the pockets of Western shareholders, all would be fine.

Right.

Display:
Brown people. You just can't depend on them. Maybe if they had white officers.
by Colman (colman at eurotrib.com) on Tue Aug 22nd, 2006 at 07:26:42 AM EST
It's brown people who do not listen who are the problem. Those that do listen are okay.

More than half of the Economist article is a hit piece on Chavez...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Aug 22nd, 2006 at 08:15:36 AM EST
[ Parent ]
Lines are being drawn for resource wars, and I wouldn't put it past Bush and company to [yet again] attempt to remove Chavez before 2008. The idea that Chavez is evil needs to be planted in the minds of people who influence public opinion.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Tue Aug 22nd, 2006 at 08:34:41 AM EST
[ Parent ]
I would bet on action there more than I would for Iran.

you are the media you consume.

by MillMan (millguy at gmail) on Tue Aug 22nd, 2006 at 12:28:55 PM EST
[ Parent ]
The fact that the objective is not to lower prices for the Western consumer is a scandal.

Here's that little thorn in their side.  That and the fact that we aren't allowed to profit from the oil production in brown skinned or "socialist" countries.

Like all racism, it's economic.  Would we (the West, America, whoever is moaning here) moan so loudly if we were making nice bucks off of, getting cheap oil from, running the freaking countries where all the oil is?  Seriously doubt it.  We generally don't pay much attention to savages in corrupt countries until they have something we want and they won't give it to us.  (Us being companies, as Chavez did try to give the US people cheap or free gas...)

Btw, I keep thinking about something I heard, an American commentator saying that by Russia not giving Ukraine such cheap oil, they could teach them to use it more responsibly and conserve their energy instead of waste it.  I like this kind of thinking...  

Those who can make you believe absurdities can make you commit atrocities. -Voltaire

by p------- on Tue Aug 22nd, 2006 at 08:22:54 AM EST
[ Parent ]
In The Economist (and the FT, and the WSJ) we basically have a way to listen in on  what Adma Smith called the "combination of the masters", and it ain't pretty...
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
Newsweek and The Economist also serve to communicate their consensus to the broader population as if it were sound analysis. The Economist should be renamed The Pseudoeconomists, by analogy with pseudo-science which is the peddling of bullshit counched in scientific jargon.

Nothing is 'mere'. — Richard P. Feynman
by Migeru (migeru at eurotrib dot com) on Tue Aug 22nd, 2006 at 08:27:03 AM EST
[ Parent ]
crossposted on dKos for your kind support.
http://www.dailykos.com/story/2006/8/22/893/78719

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Aug 22nd, 2006 at 08:16:11 AM EST
  1. What we haven't got, needs "liberalising" so "competition" can bring prices down where we want them.

  2. What we've got, needs IP protection, monopoly/oligopoly situations, and big security to keep prices up where we want them.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Aug 22nd, 2006 at 10:20:53 AM EST
are they really that ignorant or are they actually corrupt? (journalists, I mean)

Can there be any doubt that these guys are sold-out propagandists?

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Aug 22nd, 2006 at 10:25:02 AM EST
There is no doubt.

Share. Share resources, share delight, share burdens, share the healing. If we only could realize that sharing will bring us back from mass suicide.
by Isis on Tue Aug 22nd, 2006 at 11:11:28 PM EST
[ Parent ]
proof?
by got lost on Wed Aug 23rd, 2006 at 07:30:34 AM EST
[ Parent ]
The fact that resources may be nurtured or considered as strategic assets (as is done by the governments of Norway and the Netherlands, for instance) is anathema.

Actually, Worldview is doing a show on Norway's use of oil revenues today...  Check it out, it's on at noon my time (US, Central).

Oh, on a related note, I find this is handy when conversing on-line with people around the world: World Clock.

Those who can make you believe absurdities can make you commit atrocities. -Voltaire

by p------- on Tue Aug 22nd, 2006 at 11:56:24 AM EST
But the reality is that in a decade or more, CO2 levels will be so high that commodities like coal, oil, and natural gas, ethanol, etc., will become obsolete and lose value because of the destruction of the global climate, landmasses and oceans due to global warming generated by CO2-induced infrared radiation.

According to Al Gore, if just the West Antarctic and Greenland ice sheets melt, sea level will rise 20 ft (6m) and change coastlines everywhere. This will cause mass migration inland. The pressures on infrastructure will be enormous when the 40m inhabitants of greater Shanghai move inland, and, and, and, and . . . .

Go on ad nauseam speculating about oil and oil nations, but their precious commodity will become worthless someday, becoming almost entirely an undesirable fuel for generation. We'll have all the cheap plastics we could ever want, but energy generation? I speculate that CO2 will become immensely unpopular.

Share. Share resources, share delight, share burdens, share the healing. If we only could realize that sharing will bring us back from mass suicide.

by Isis on Tue Aug 22nd, 2006 at 11:10:39 PM EST
You wish. Oil is such a wonderfully useful resource that we would keep using it even if it gave us anthrax.

And Al Gore better get his facts together. Sea level rises of 6 metres are speculative and will take hundreds, if not thousands, of years to occur. And even if we burn all the oil and gas in the world it won't have any big effects on the global climate (the IPCC vastly overestimates the amount of oil and gas around).

Coal, on the other hand, is practically infinite. And coal can be turned into diesel. That's the problem.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Wed Aug 23rd, 2006 at 09:34:04 AM EST
[ Parent ]
I do understand your point, and I have learned something from your comment, but I don't think you understand the seriousness of CO2 accumulation and it's affects on the global climate.

I'm not listening to your "hundreds, if not thousands, of years to occur" as I don't see any backup, where in An Inconvenient Truth, Gore backs up his facts with research, which of course, is predictive, but nonetheless very current.

These ice sheets ARE ALREADY melting at a rate that is alarming to climatologists who have predicted much slower rates, but the facts are showing themselves to contradict their predictive models.

Share. Share resources, share delight, share burdens, share the healing. If we only could realize that sharing will bring us back from mass suicide.

by Isis on Wed Aug 23rd, 2006 at 11:33:51 AM EST
[ Parent ]
I think they are trying to calm down the market.

"See, it has nothing to do with the earth, we are just missing investments here and there.." Which means the situation can be calmed down with some more investments, no need for panic. By pointing out countries they "doing them a favour" by telling them that they might want to invest.

Due to the rhetorical talk of Bush and Blair, Im certain that they also will "take care of Iran". They will try to build up a valid pretext for the public for an attack, if the fail, they will probably try again. "The middleeast-project" is slowly gliding them out of hand. (Designed to battle the source of terror and securing oil (of course).) Anyone seeing the growing desperation of Blair and Bush?

How many of you would fight a war in a distant country if our leaders said it was for oil and control over a region ?

Not many, they will always say it's for our freedom, our lifestyle (it's a war for our values remember), our civilization, against terror , our children and for the love of an oppressed people.

Because in some context, it's more valid ,"make more sense", for your mind to fight for such a cause.

You will never ever hear a President or Premier minister beg you to stand up to fight for oil, money, control or power.

Likewise, you probably won't hear many economics tell you that "it's no point investing in these oilfields due to geographic reasons".

The most wise thing we can do as individuals is to be prepared at our level and not rely on government actions .

For me, I hope for a very slow death of the modern lifestyle  and not a free fall. I greatly enjoy my current life and will be saddened if it won't be possible anymore.  (Living in a city with walkdistance to workplace, marketplace, restaurants , pubs,and of course beer.)

I guess many prefer to live in complete denial and "take it as it comes".

Over and out,

/No Hope, No Future, No Internet (;))

by NoHopeNoFutureNoInternet on Wed Aug 23rd, 2006 at 10:49:23 AM EST
What a cheerful nickname. Welcome.

For me, I hope for a very slow death of the modern lifestyle  and not a free fall. I greatly enjoy my current life and will be saddened if it won't be possible anymore.  (Living in a city with walkdistance to workplace, marketplace, restaurants , pubs,and of course beer.)

What part of that isn't sustainable in the long run? Why?

by Colman (colman at eurotrib.com) on Wed Aug 23rd, 2006 at 10:51:29 AM EST
[ Parent ]


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