Wednesday, May 28, 2008


If you spend it (money), you'll find it (oil), pace peak oil theorists. Take Petrobras, "the third biggest company in the Americas by market value, surpassing American outfit Microsoft, and the world’s sixth biggest based on the same criterion":
. . . Petrobras is ramping up its deep-water drilling capacity at a furious pace. This week, the company, which has already leased about 80% of the world fleet of vessels capable of drilling in deep water, announced plans to lease 40 more drilling vessels and semi-submersible oil platforms starting in 2017. Petrobras also has announced that it will hire 14,000 more workers and set up a new management division for drilling through salt. (John Lyons and David Luhnow, "New Find Fuels Speculation Brazil Will Be a Power in Oil," Wall Street Journal, 23 May 2008, B1)
If maximizing oil investment and future oil output were the goal, a pro-capitalist1 state enterprise of a nation whose economy is not dependent on oil export, like Petrobras (32% state-owned), combining the advantages of state and capital, would likely find it easier to achieve it than both oil majors (which would rather spend profits on stock buybacks than exploration and development) and the national oil companies of such populist oil states as Iran and Venezuela (which tend to massively subsidize domestic energy consumption and often employ more workers than strict business calculations would allow).

If the US power elite were motivated by the fear of oil demand outstripping oil supply, one of the smart capitalist things to do would be to create their own national oil company on the model of Petrobras, rather than engaging in the imperialism of fools that is their Middle East policy.

1 Excited by a spate of big oil finds, Brazil, too, may be soon following the path of resource nationalism, however: Bernd Radowitz, "Oil Finds Reportedly Prompt Brazil to Consider Changing Energy-sector Rules," MarketWatch, 18 April 2008.

No comments: