Crude World by Peter Maass

Author:Peter Maass [Maass, Peter]
Language: eng
Format: epub
Tags: General, Social Science
ISBN: 9780307273192
Publisher: Vintage
Published: 2009-09-22T00:00:00+00:00

Big Oil is getting the reward it deserves: after more than a century of power and indecency, it is shrinking.

Until the 1970s, Western companies controlled most of the world’s oil and gas. Today, thanks to nationalism and nationalization, Western firms control less than 15 percent of world reserves, and their grip erodes further every day. The bulk is now in the hands of state-controlled companies like Saudi Aramco, Gazprom, Petróleos de Venezuela, National Iranian Oil Company and China National Petroleum Corporation. Exxon, the largest oil company in America, does not even rank in the top ten globally in terms of the oil and gas reserves it controls. State-owned firms, known as “national oil companies,” now set the rules; once-mighty Western companies are being turned into contractors rather than owners. Unfortunately, this is not necessarily an improvement.

With noble exceptions in Norway, Saudi Arabia and Brazil, state-controlled energy companies, though not obliged to follow the fiduciary logic of Dodge v. Ford Motor Co., tend to do as much or more harm than their profit-seeking counterparts on the New York Stock Exchange. The dirtiest oil facilities I have seen were run by state-owned Petroecuador, a toxic example of how a poor government cuts corners on environmental and worker safety. Even Petróleos de Venezuela, run by Hugo Chávez’s leftist regime, has an unenviable environmental record, because much of its revenues go into the government’s social programs, some of which are useful, others of which are wastes of money. Angola’s state-controlled oil company, Sonangol, has been used as a piggy bank by corrupt officials.

The ethical practices of Exxon and Chevron might even look good when compared with those of Russia’s Gazprom or China’s CNPC, which have become major global players in just the last decade. Although it’s hard to imagine the energy business becoming more competitive, politicized or secretive, that’s happening as global power is defined by control of energy reserves. The U.S. government prohibits American firms from operating in Sudan, whose regime is responsible for genocide in Darfur, but China is delighted to send its companies there. Sudan’s oil is now extracted mainly by Chinese firms that are not restricted by laws like the Foreign Corrupt Practices Act. Although Western firms were hardly transparent about their operations, state-controlled companies tend to be far more opaque. If the profit motive led to unethical behavior by Western firms, imperatives of national glory (or national survival) can be worse incentives for state-controlled ones.

It is comforting to think of history as progress, of life getting better, maybe not every year but over the course of time. If that were so, the future would be dominated by oil and gas companies that shun bribery, that genuinely care about the communities and countries they operate in, that refuse to deal with dictators and thieves. Yet the threat is that the future will belong to state-controlled corporations whose behavior may make us nostalgic for the trifling days of cheating on royalties in West Texas.

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