Privatising Oil Companies
I have mixed thoughts about privatisation. My economically liberal side thinks that private companies run businesses more efficiently and create competition, and thus reduce the price of goods. My more sceptical side acknowledges the fact that companies can be downright bastardly in their business runnings. Needless to say, a tough decision.
Additionally, I'd like to think that oil prices don't affect my lifestyle since I don't own a car but alas, there are no farms in close proximity to inner city Melbourne. This in mind, The Economists points out an interesting fact:
When activists, journalists and others speak of “Big Oil”, you know exactly what they mean: companies such as Exxon Mobil, Chevron, BP and Royal Dutch Shell.
Yet Big Oil is pretty small next to the industry's true giants: the national oil companies (NOCs) owned or controlled by the governments of oil-rich countries, which manage over 90% of the world's oil, depending on how you count. Of the 20 biggest oil firms, in terms of reserves of oil and gas, 16 are NOCs. Saudi Aramco, the biggest, has more than ten times the reserves that Exxon does.
NOCs are sheerly amazing in size. Exxon-Mobil recently broke a record for making a billion US dollars per day. Imagine how much NOCs rake in. No wonder oil-rich Norway (owner of Statoil) declined to be in the EU.
The Economist (naturally as it is an economically liberal publication) believes the solution is privatisation of NOCs:
NOCs produce less oil, more expensively, than they should. That is bad for consumers, of course, in so far as it pushes up the price of oil. But it is also bad for oil-producing countries, which could be squeezing more profit from each barrel if their NOCs were more efficient. Moreover, there are several NOCs not bound by OPEC quotas, such as Mexico's Pemex and Russia's Rosneft, which would love to boost production to take advantage of the current high price, but are struggling to do so.
I say down with the oil cartel OPEC, and down with state-owned oil companies.
Additionally, I'd like to think that oil prices don't affect my lifestyle since I don't own a car but alas, there are no farms in close proximity to inner city Melbourne. This in mind, The Economists points out an interesting fact:
When activists, journalists and others speak of “Big Oil”, you know exactly what they mean: companies such as Exxon Mobil, Chevron, BP and Royal Dutch Shell.
Yet Big Oil is pretty small next to the industry's true giants: the national oil companies (NOCs) owned or controlled by the governments of oil-rich countries, which manage over 90% of the world's oil, depending on how you count. Of the 20 biggest oil firms, in terms of reserves of oil and gas, 16 are NOCs. Saudi Aramco, the biggest, has more than ten times the reserves that Exxon does.
NOCs are sheerly amazing in size. Exxon-Mobil recently broke a record for making a billion US dollars per day. Imagine how much NOCs rake in. No wonder oil-rich Norway (owner of Statoil) declined to be in the EU.
The Economist (naturally as it is an economically liberal publication) believes the solution is privatisation of NOCs:
NOCs produce less oil, more expensively, than they should. That is bad for consumers, of course, in so far as it pushes up the price of oil. But it is also bad for oil-producing countries, which could be squeezing more profit from each barrel if their NOCs were more efficient. Moreover, there are several NOCs not bound by OPEC quotas, such as Mexico's Pemex and Russia's Rosneft, which would love to boost production to take advantage of the current high price, but are struggling to do so.
I say down with the oil cartel OPEC, and down with state-owned oil companies.
posted by Engels at 1:49 pm
8 Comments:
Yep, Venezuala is a prime culprit for this.
It should be noted that the US Oil Monopoly, Standard Oil, was broken up yonks ago, forming Exxon, Chevron, etc.
Standard oil? Is that the child of the Rockefellers?
Venezuela cheekily gives cheap petrol to those in need in the US, I thought.
And then Saudi Arabia produces terrorists who are pissed off at the West.
The Economist ignores Ricardo in general, or just this article? Enlighten us.
Ignoring the spammer briefly....
Yeah, Standard Oil was Rockerfeller's baby.
And, yep, the amount of oil revenue wasted by Arab governments on terrorism is phenomenal.
PS Venezuela had to nationalise petrol stations because the government-mandated price for petrol ended up sending the private operator broke.
Now, you have to queue up for petrol in some places.
I believe nick is referring to David Ricardo.
I'm not sure if Ricardian equivalence is what he's referring to, but I believe Ricardo proposed it, and ended up rejecting it for whatever reason.
Good old David E. Rockefeller.
I figured it was David Ricardo - the man behind comparative advantage, I believe.
Nick has lost me on the rent issues. Then again, he does study economics.
True enough. Too much to say on a humble blog like this.
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