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Do Environmentalists Have an Interest in Who Controls Oil Resources?
Venezuela's Opec stand is a win for climate change campaigners
Environmentalists seem to realize that they have some stake in a fight such as the Ecuador-Chevron lawsuit. That case, which Chevron has recently moved to an international arbitration panel in an attempt to avoid a multibillion penalty handed down by Ecuadorian courts, is about whether a multinational oil corporation will have to pay damages for pollution for which it is responsible. Most environmentalists figure that would be a good thing.
Pablo Fajardo, the lead Ecuadorian lawyer in indigenous peoples' case over pollution against oil company Chevron. (Photograph: Jose Jacome/EPA)
But what about fights between multinational oil giants and the governments of oil-producing states over control of resources? Do people who care about the environment and climate change have a stake in these battles? It appears that they do, but most have not yet noticed it.
In December of last year, Exxon Mobil won a judgment against the government of Venezuela for assets the government had nationalized in 2007. The award was actually a victory for the government of Venezuela: Exxon had sued for $12bn, but won only $908m. After subtracting $160m the court said was owed to Venezuela, Exxon ended up with a $748m judgment. The ruling was made by an arbitration panel of the International Chamber of Commerce (ICC). On 15 February, Venezuela paid Exxon $250m and announced that the case was settled.
Some background: the dispute arose out of the Venezuelan government's decision to take a majority stake in oil extraction, in accordance with its law. In 2005, it entered into negotiations with foreign oil companies to purchase enough of their assets in order to achieve a majority stake. Almost all the negotiations, with dozens of companies, were successful – with only Exxon and ConocoPhillips going to arbitration (Conoco is still negotiating).
Exxon adopted a strategy of trying to make an example of Venezuela, so that no other government would try to mess with it. Exxon went to European courts to freeze $12bn of Venezuelan assets, but this was reversed within a matter of weeks. They also went to arbitration at the ICC, and at the World Bank's arbitration panel, ICSID (the latter case still pending). But the ICC gave Exxon much less than the Venezuelan government had reportedly offered it in negotiations.
The decision was noted with intense interests among oil industry specialists – and was seen by developing country governments as an important victory for the developing world – but didn't get much attention in the mass media. This is a big precedent – and, of course, there are other countries that will continue to have disputes with oil companies over control of resources.
Why should environmentalists care? Well, for those of us who would like to slow the accumulation of greenhouse gases in the atmosphere, we would like to keep more oil in the ground. That is one reason why most environmentalists would support a carbon tax, which would raise the price of carbon emissions. The main reason that Venezuela insisted on a majority share in these oil projects is that it wants to control production. Venezuela is a member of Opec, and abides by the organization's quotas. If you want to reduce climate disruption, then you have a big interest in whether governments that want to reduce oil production are able to do so.
A higher price of oil due to reduced production by oil-producing countries reduces oil consumption in the same way that a carbon tax does. It also encourages the development of non-fossil fuel alternatives, including solar and wind technologies, which become more economically feasible at higher oil prices. (Of course, higher prices do also encourage non-Opec countries to produce more oil, and Opec members to cheat on the cartel, and a carbon tax would not have that same effect; but this would be an argument for a stronger and more inclusive Opec.)
On the other side, our adversaries have always had the goal of flooding the world with cheap oil, which would greatly accelerate global warming. Before Hugo Chávez was elected in Venezuela, the national oil company (PDVSA) shared that goal with Washington. But as soon as he was elected, Chávez successfully pushed Opec to reduce production, moving oil prices off their deep low point of $11 a barrel in 1998. The US State Department, in a 2002 report (pdf), admitted that the US government "provided training, institution-building, and other support to individuals and organizations understood to be actively involved" in the military coup that briefly overthrew Venezuela's elected government that year. That same report also stated that one of the main reasons for Washington's "displeasure" with Chávez was "his involvement in the affairs of the Venezuelan oil company and the potential impact of that on oil prices".
Of course, it is not politically popular for anyone to appear pro-Opec in the rich, oil-consuming countries. But most environmentalists are willing to support policies, such as a carbon tax, that are not necessarily going to win elections this year. So they should also recognize that they have an immediate stake in the producing states' struggle with multinational companies over control of fossil fuel and other natural resources.
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6 Comments so far
Show AllThere far more at play here then meets the eye. The entire war in the Middle East against Syria, Ian Libya and Iraq and Afghanistan is driven in part by a desire to control these resources.
It worth noting that in order to tap the oil and gas riches of Central Asia there two rival groups pushing pipelines.
One would see these pipelines run from Central Asia into Afghanistan, down through Baluchistan in Pakistan and then to the Port of Gwadar. The US Congress recently introduced a motion that would pressure the US Government to have Pakistan Recognize the rights of the peoples in Baluchistan to self determination.
It quite obvious why the USA keeps bombing Pakistan and sending in its special forces to plant explosives. They want it destabilized so they can then go to the UN and call for an Independent Baluchistan.
A secondary spur line backed by western Interests would route this Gas through Turkey.
The Russians back a Pipeline that would instead run from Central Asia through Iran and then Iraq and then into Syria. Iraq has already been taken out yet its Government remains friendly to this plan. So now Iran and Syria need toppling. With Syria out of the equation Turkey will then see its territory in play. If folk wonder why Turkey is so eager to see Syrias governmnet go under this is the reason.
This is why the USA is now in Syria arming the rebellions and creating Civil strife and this is why all those millions of people are being slaughtered by US and NATO forces. This is why the USA arms groups that they once claimed were linked to Al Qaeda.
The entity that controls those energy resources dictates which currency they will be sold under and can control distribution to other nations. Right now Russia can easily turn off the energy to West Europe and West Europe wants to ensure they have alternatives.
And the largest polluter in the world, that US Military has its own grubby little paws in there fighting as it has ever done ,this not for "freedom and liberty" but for the control of resources and for the Corporations.
If there ever is to be open and explicit 'Rollerball' (1975 original) style worldwide corporate rule, then absolute ownership of energy resources from extraction to point-of-sale is vital. Said corporate coalition will also have absolutely no compunctions accelerating the damage from global warming, and instead see it as a business opportunity / groundwork laying for corporate feudalism (feudalism thrives in the aftermath of civilization collapse). Thus prying control of all energy resources from bad corporate and government actors is an absolute necessity to prevent a bad situation from progressing to horrible or worse.
Many have suffered from US Corporations and US political acts. Environmentalists need to be global including developing internet sites that educate about global anti-environmental actions. . We also need to be aware locally where we live especially in the selection of judges. Perhaps a branch of the occupy movement can focus on green and the environment. We need a quick response system to focus attention on specific situations needing action.
We, the people of the world, can already state that no person or government has the inherent right to drill for oil in Antarctica. The oil doesn't belong to anyone.
We have an interest in who controls the oil resources in the Arctic Ocean. Russia, wanting control of oil resources, dropped a Russian flag out of a torpedo tube of a submarine at the North Pole. The flag sank a couple of miles and presumably stuck itself into the sea bed. Russia's claim to the oil at the North Pole is tenuous, but it shows how countries are already jockeying for position.
If we lobbied, we might come to a political agreement that no one has the legal right to extract oil from international waters above the Arctic Circle. Or, at the very minimum, anyone who wants to extract such oil must pay a carbon tax on such extraction.
Next, for environmental reasons we might tighten up the legal definition of private property. Oil extraction and natural gas fracking operations regularly cross property lines underground. The current rule is that companies can drill sideways and finders keepers. To use an analogy, if I discovered copper pipes under an oil company president's house, perhaps I could mine them and sell them to a scrap dealer. My taking his copper pipes might cause problems with the purity of his water, but all of that's legal too, isn't it?
Mammon the Oligarchy is the enemy
Direct democracy
I am thinking that the replacement of the payroll tax with a carbon tax might just win elections this year and make for some good debates, although perhaps not as sexy as the contraception controversy. Less tax on labor could jumpstart jobs and more tax on carbon could cap emissions. And the carbon tax could in the words of Harry Truman “give us a hammer on them boys”–both multinational and national companies.
OPEC has historically feared our imposition of a carbon tax because of resultant revenue loss due to energy efficiency gains on our part. This fear must be decreasing as the Chinese demand for oil is increasing. Still US energy tax revenues would be increasing with a carbon tax. With higher tax-induced petroleum prices, renewable energy would become competitive without need of subsidy. A win-win for the government with more tax revenue and less need to spend it.
Meanwhile multinational companies are being forced to scrounge for unconventional petroleum such as Alberta tar sands oil. Higher carbon taxes will internalize the higher environmental costs, perhaps plug the infamous pipeline and give renewables, conservation, and economic restructuring the time to make the transition to a sunny future.