Petroleum politics
Encyclopedia
Diplomacy
Diplomacy is the art and practice of conducting negotiations between representatives of groups or states...
since the rise of the petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
industry in the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
in the early 20th century. As competition grows for an increasingly scarce but vital resource, the strategic calculations of major and minor countries alike place more prominent emphasis on the pumping, refining, transport and use of petroleum products.
Quota agreements
The Achnacarry Agreement or "As-Is Agreement" was an early attempt to restrict petroleum production, signed in ScotlandScotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
on 17 September 1928. The discovery of the East Texas Oil Field
East Texas oil field
The East Texas Oil Field is a large oil and gas field in east Texas. Covering and parts of five counties, and having 30,340 historic and active oil wells, it is the largest oil field in the United States outside of Alaska, both in extent and in total volume of oil recovered since its discovery in...
in the 1930s led to a boom in production that caused prices to fall, leading the Railroad Commission of Texas
Railroad Commission of Texas
The Railroad Commission of Texas is the state agency that regulates the oil and gas industry, gas utilities, pipeline safety, safety in the liquefied petroleum gas industry, and surface coal and uranium mining .Established by the Texas Legislature in 1891, it is the state's oldest regulatory...
to control production. The Commission retained de facto control of the market until the rise of OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
in the 1970s.
The Anglo-American Petroleum Agreement
Anglo-American Petroleum Agreement
The Anglo-American Petroleum Agreement was a failed attempt by the British and American governments to establish a lasting agreement to manage international petroleum supply and demand...
of 1944 tried to extend these restrictions internationally but was opposed by the industry in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and so Franklin Roosevelt withdrew from the deal.
Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
was the first country to move towards the establishment of OPEC by approaching Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
, Gabon
Gabon
Gabon , officially the Gabonese Republic is a state in west central Africa sharing borders with Equatorial Guinea to the northwest, Cameroon to the north, and with the Republic of the Congo curving around the east and south. The Gulf of Guinea, an arm of the Atlantic Ocean is to the west...
, Libya
Libya
Libya is an African country in the Maghreb region of North Africa bordered by the Mediterranean Sea to the north, Egypt to the east, Sudan to the southeast, Chad and Niger to the south, and Algeria and Tunisia to the west....
, Kuwait
Kuwait
The State of Kuwait is a sovereign Arab state situated in the north-east of the Arabian Peninsula in Western Asia. It is bordered by Saudi Arabia to the south at Khafji, and Iraq to the north at Basra. It lies on the north-western shore of the Persian Gulf. The name Kuwait is derived from the...
and Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
in 1949, but OPEC was not set up until 1960, when the United States forced import quotas on Venezuelan and Persian Gulf
Persian Gulf
The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...
oil in order to support the Canadian and Mexican oil industries. OPEC first wielded its power with the 1973 oil embargo
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...
against the United States and Western Europe
Western Europe
Western Europe is a loose term for the collection of countries in the western most region of the European continents, though this definition is context-dependent and carries cultural and political connotations. One definition describes Western Europe as a geographic entity—the region lying in the...
.
Peak oil
In 1956, a Shell geophysicist named M. King HubbertM. King Hubbert
Marion King Hubbert was a geoscientist who worked at the Shell research lab in Houston, Texas. He made several important contributions to geology, geophysics, and petroleum geology, most notably the Hubbert curve and Hubbert peak theory , with important political ramifications. He was often...
accurately predicted that U.S. oil production would peak in 1970.
Matthew Simmons
Matthew Simmons
Matthew Roy Simmons was founder and chairman emeritus of Simmons & Company International, and was a prominent advocate of peak oil. Simmons was motivated by the 1973 energy crisis to create an investment banking firm catering to oil companies. In his previous capacity, he served as energy...
, an energy investment banker and a former adviser to US president George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
believes that oil production in Saudi Arabia will soon peak, meaning it will not be able to supply the world's growing energy needs.
In June 2006, former U.S. president Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
said in a speech,
"We may be at a point of peak oil production. You may see $100 a barrel oil in the next two or three years, but what still is driving this globalization is the idea that is you cannot possibly get rich, stay rich and get richer if you don’t release more greenhouse gases into the atmosphere. That was true in the industrial era; it is simply factually not true. What is true is that the old energy economy is well organized, financed and connected politically."
In a 1999 speech, Dick Cheney
Dick Cheney
Richard Bruce "Dick" Cheney served as the 46th Vice President of the United States , under George W. Bush....
, the US Vice President and former CEO of Halliburton
Halliburton
Halliburton is the world's second largest oilfield services corporation with operations in more than 70 countries. It has hundreds of subsidiaries, affiliates, branches, brands and divisions worldwide and employs over 50,000 people....
(one of the world's largest energy services corporations), said,
"By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from?....While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow."
Cheney went on to argue that the oil industry should become more active in politics:
"Oil is the only large industry whose leverage has not been all that effective in the political arena. Textiles, electronics, agriculture all seem often to be more influential. Our constituency is not only oilmen from Louisiana and Texas, but software writers in Massachusetts and specialty steel producers in Pennsylvania. I am struck that this industry is so strong technically and financially yet not as politically successful or influential as are often smaller industries. We need to earn credibility to have our views heard."
Pipeline diplomacy in Caucasus
The Baku–Tbilisi–Ceyhan pipeline was built to transport crude oil and the Baku-Tbilisi-ErzurumSouth Caucasus Pipeline
South Caucasus Pipeline is a natural gas pipeline to transport natural gas from the Shah Deniz gas field in the Azerbaijan sector of the Caspian Sea to Turkey...
pipeline was built to transport natural gas from the western side (Azerbaijani sector
Azerbaijan
Azerbaijan , officially the Republic of Azerbaijan is the largest country in the Caucasus region of Eurasia. Located at the crossroads of Western Asia and Eastern Europe, it is bounded by the Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia to the west, and Iran to...
) of the Caspian Sea
Caspian Sea
The Caspian Sea is the largest enclosed body of water on Earth by area, variously classed as the world's largest lake or a full-fledged sea. The sea has a surface area of and a volume of...
to the Mediterranean Sea
Mediterranean Sea
The Mediterranean Sea is a sea connected to the Atlantic Ocean surrounded by the Mediterranean region and almost completely enclosed by land: on the north by Anatolia and Europe, on the south by North Africa, and on the east by the Levant...
bypassing Russian pipelines and thus Russian control. Following the construction of the pipelines, the United States and the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
proposed extending them by means of the proposed Trans-Caspian Oil Pipeline
Trans-Caspian Oil Pipeline
The Trans-Caspian Oil Transport System is a proposed project to transport oil through the Caspian Sea from Kazakhstani Caspian oilfields to Baku in Azerbaijan for the further transportation to the Mediterranean or Black Sea coast. The main options under consideration are an offshore oil pipeline...
and the Trans-Caspian Gas Pipeline
Trans-Caspian Gas Pipeline
The Trans-Caspian Gas Pipeline is a proposed submarine pipeline between Türkmenbaşy in Turkmenistan, and Baku in Azerbaijan. According to some proposals it will also include a connection between the Tengiz Field in Kazakhstan, and Türkmenbaşy...
under the Caspian Sea to oil and gas fields on the eastern side (Kazakhstan
Kazakhstan
Kazakhstan , officially the Republic of Kazakhstan, is a transcontinental country in Central Asia and Eastern Europe. Ranked as the ninth largest country in the world, it is also the world's largest landlocked country; its territory of is greater than Western Europe...
and Turkmenistan
Turkmenistan
Turkmenistan , formerly also known as Turkmenia is one of the Turkic states in Central Asia. Until 1991, it was a constituent republic of the Soviet Union, the Turkmen Soviet Socialist Republic . Turkmenistan is one of the six independent Turkic states...
sectors) of the Caspian Sea. In 2007, Russia signed agreements with Turkmenistan and Kazakhstan to connect their oil and gas fields to the Russian pipeline system effectively killing the undersea route.
China has completed the Kazakhstan–China oil pipeline from the Kazakhstan oil fields to the Chinese Alashankou-Dushanzi Crude Oil Pipeline in China. China is also working on the Kazakhstan-China gas pipeline from the Kazakhstan gas fields to the Chinese West-East Gas Pipeline
West-East Gas Pipeline
The West–East Gas Pipeline is a long pipeline, which runs from Lunnan in Xinjiang to Shanghai. The pipeline passes through 66 counties in the 10 provinces in China. Natural gas transported by the pipeline is used for electricity production in the Yangtze River Delta area...
in China.
Iran
Discovery of oil in 1908 at Masjed Soleiman in IranIran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
initiated the quest for oil in the Middle East. The Anglo-Iranian Oil Company (AIOC) was founded in 1909.
In 1951, Iran nationalized its oil fields initiating the Abadan Crisis
Abadan Crisis
The Abadan Crisis occurred from 1951 to 1954, after Iran nationalised the Iranian assets of the Anglo-Iranian Oil Company and expelled Western companies from oil refineries in the city of Abadan .-Prelude:...
. The United States of America and Great Britain thus punished Iran by arranging coup against its democratically elected prime minister, Mosaddeq, and brought the former Shah's son, a dictator, to power. In 1953 the US and GB arranged the arrest of the Prime Minister Mosaddeq.
Iran exports oil to China and Russia. See also: Iranian Oil Subsidies
Iraq
Iraq holds the world's second-largest proven oil reserves, with increasing exploration expected to enlarge them beyond 200 Goilbbl of "high-grade crude, extraordinarily cheap to produce." Organizations such as the Global Policy ForumGlobal Policy Forum
Global Policy Forum or GPF, founded in 1993, is an organization seeking to promote accountability of international organizations such as the United Nations and strengthen international law....
(GPF) have asserted that Iraq's oil is "the central feature of the political landscape" there, and that as a result of the 2003 invasion
2003 invasion of Iraq
The 2003 invasion of Iraq , was the start of the conflict known as the Iraq War, or Operation Iraqi Freedom, in which a combined force of troops from the United States, the United Kingdom, Australia and Poland invaded Iraq and toppled the regime of Saddam Hussein in 21 days of major combat operations...
,"'friendly' companies expect to gain most of the lucrative oil deals that will be worth hundreds of billions of dollars in profits in the coming decades." According to GPF, U.S. influence over the 2005 Constitution of Iraq
Constitution of Iraq
The Constitution of Iraq is Iraq's fundamental law.-History:Iraq's first constitution, which established a constitutional monarchy, entered into force under the auspices of a British military occupation in 1925 and remained in effect until the 1958 revolution established a republic...
has made sure it "contains language that guarantees a major role for foreign companies."
Nigeria
Petroleum in NigeriaPetroleum in Nigeria
The petroleum industry in Nigeria is the largest industry and main generator of GDP in the West African nation which is also the continent's most populous...
was discovered in 1955 at Oloibiri
Oloibiri
Oloibiri is a small community in Ogbia LGA located in Bayelsa State, in the eastern Niger Delta region of Nigeria. Oloibiri is a historic town to the oil and gas industry in Nigeria...
in the Niger Delta.
High oil prices were the driving force behind Nigeria
Nigeria
Nigeria , officially the Federal Republic of Nigeria, is a federal constitutional republic comprising 36 states and its Federal Capital Territory, Abuja. The country is located in West Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in...
’s economic growth in 2005. The country’s real gross domestic product (GDP) grew approximately 4.5 percent in 2005 and was expected to grow by 6.2 percent in 2006. The Nigerian economy is heavily dependent on the oil sector, which accounts for 95 percent of government revenues. Even with the substantial oil wealth, Nigeria ranks as one of the poorest countries in the world, with a $1,000 per capita income and more than 70 percent of the population living in poverty. In October 2005, the 15-member Paris Club announced that it would cancel 60 percent of the debt owed by Nigeria. However, Nigeria must still pay $12.4 billion in arrears amongst meeting other conditions. In March 2006, phase two of the Paris Club agreement will include an additional 34 percent debt cancellation, while Nigeria will be responsible for paying back any remaining eligible debts to the lending nations. The International Monetary Fund (IMF), which recently praised the Nigerian government for adopting tighter fiscal policies, will be allowed to monitor Nigeria without having to disburse loans to the country.
Saudi Arabia
Saudi ArabiaSaudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
is an oil-based economy with strong government controls over major economic activities. It possesses both the world's largest known oil reserves, which are 25% of the world's proven reserves, and produces the largest amount of the world's oil. As of 2005, Ghawar field
Ghawar Field
Ghawar is an oil field in Saudi Arabia. It is located in Al-Ahssa, Saudi Arabia. Measuring , it is by far the largest conventional oil field in the world. The field is entirely owned and operated by Saudi Aramco, the nationalized Saudi oil company...
accounts for about half of Saudi Arabia's total oil production capacity.
Saudi Arabia ranks as the largest exporter of petroleum, and plays a leading role in OPEC, its decisions to raise or cut production almost immediately impact world oil prices. It is perhaps the best example of a contemporary energy superpower, in terms of having power and influence on the global stage (due to its energy reserves and production of not just oil, but natural gas as well). Saudi Arabia is often referred to as the world's only "oil superpower".
United States
In 1998, about 40% of the energy consumed by the United States came from Oil. The United States, with about 5% of the world's population, is responsible for 25% of the world's oil consumption while only having 3% of the world's proven oil reserves. As of 2004, the U.S. had 21 Goilbbl of proven oil reserves and consumes 20.6 million bpd.Venezuela
According to the Oil and Gas Journal (OGJ), VenezuelaVenezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
has 77.2 Goilbbl of proven conventional oil reserves, the largest of any country in the Western Hemisphere. In addition it has non-conventional oil deposits similar in size to Canada's - at 1200 Goilbbl approximately equal to the world's reserves of conventional oil. About 267 Goilbbl of this may be producible at current prices using current technology. Venezuela's Orinoco tar sands are less viscous than Canada's Athabasca oil sands
Athabasca Oil Sands
The Athabasca oil sands are large deposits of bitumen, or extremely heavy crude oil, located in northeastern Alberta, Canada - roughly centred on the boomtown of Fort McMurray...
– meaning they can be produced by more conventional means, but are buried deeper – meaning they cannot be extracted by surface mining
Surface mining
Surface mining , is a type of mining in which soil and rock overlying the mineral deposit are removed...
. In an attempt to have these extra heavy oil reserves recognized by the international community, Venezuela has moved to add them to its conventional reserves to give nearly 350 Goilbbl of total oil reserves. This would give it the largest oil reserves in the world, even ahead of Saudi Arabia.
Venezuela nationalized its oil industry in 1975-1976, creating Petróleos de Venezuela S.A. (PdVSA)
Petróleos de Venezuela S.A.
Petróleos de Venezuela, S.A. is the Venezuelan state-owned petroleum company. It has activities in exploration, production, refining and exporting oil, as well as exploration and production of natural gas...
, the country's state-run oil and natural gas company. Along with being Venezuela's largest employer, PdVSA accounts for about one-third of the country’s GDP, 50 percent of the government’s revenue and 80 percent of Venezuela’s exports earnings. In recent years, under the influence of President Chavez, the Venezuelan government has reduced PdVSA’s previous autonomy and amended the rules regulating the country’s hydrocarbons sector.
In the 1990s, Venezuela opened its upstream oil sector to private investment. This collection of policies, called apertura, facilitated the creation of 32 operating service agreements (OSA) with 22 separate foreign oil companies, including international oil majors like Chevron, BP, Total, and Repsol-YPF.
Estimates of Venezuelan oil production vary. Venezuela claims its oil production is over 3 Moilbbl/d, but oil industry analysts and the U.S. Energy Information Administration believe it to be much lower. In addition to other reporting irregularities, much of its production is extra-heavy oil, which may or may not be included with conventional oil in the various production estimates. The U.S. Energy Information Agency estimated Venezuela's oil production in December 2006 was only 2.5 Moilbbl/d, a 24% decline from its peak of 3.3 million in 1997.
Hugo Chávez
Hugo Chávez
Hugo Rafael Chávez Frías is the 56th and current President of Venezuela, having held that position since 1999. He was formerly the leader of the Fifth Republic Movement political party from its foundation in 1997 until 2007, when he became the leader of the United Socialist Party of Venezuela...
, the President of Venezuela sharply diverged from previous administrations' economic policies, terminating their practice of extensively privatizing
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
Venezuela's state-owned holdings, such as the oil sector. Chávez also worked to reduce Venezuelan oil extraction in the hopes of garnering elevated oil prices and, at least theoretically, elevated total oil revenues, thereby boosting Venezuela's severely deflated foreign exchange reserves. He extensively lobbied other OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
countries to cut their production rates as well. As a result of these actions, Chávez became known as a "price hawk" in his dealings with the oil industry and OPEC. Chávez also attempted a comprehensive renegotiation of 60-year-old royalty payment agreements with oil giants Philips Petroleum and ExxonMobil
ExxonMobil
Exxon Mobil Corporation or ExxonMobil, is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, and was formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas...
. These agreements had allowed the corporations to pay in taxes as little as 1% of the tens of billions of dollars in revenues they were earning from the Venezuelan oil they were extracting. Afterwards, a frustrated Chávez stated his intention to complete the nationalization of Venezuela's oil resources. Although unsuccessful in his attempts to renegotiate with the oil corporations, Chávez succeeded in improving both the fairness and efficiency of Venezuela's formerly lax tax collection and auditing
Financial audit
A financial audit, or more accurately, an audit of financial statements, is the verification of the financial statements of a legal entity, with a view to express an audit opinion...
system, especially for major corporations and landholders.
Recently, Venezuela has pushed the creation of regional oil initiatives for the Caribbean (Petrocaribe)
Petrocaribe
Petrocaribe S. A. is a Caribbean oil alliance with Venezuela to purchase oil on conditions of preferential payment. The alliance was launched in June 2005. The payment system allows for a few nations to buy oil on market value but only a certain amount is needed up front; the remainder can be paid...
, the Andean region (Petroandino), and South America (Petrosur), and Latin America (Petroamerica). The initiatives include assistance for oil developments, investments in refining capacity, and preferential oil pricing. The most developed of these three is the Petrocaribe initiative, with 13 nations signing a preliminary agreement in 2005. Under Petrocaribe, Venezuela will offer crude oil and petroleum products to Caribbean nations under preferential terms and prices, with Jamaica as the first nation to sign on in August 2005.
Politics of Oil Nationalization
The politics of oil nationalization has involved Western governments using coups and covert actions to prevent foreign regimes from taking control of Western run oil companies in these respective countries. Enrique MosconiEnrique Mosconi
Enrique Carlos Alberto Mosconi was an Argentine military engineer, who is best known as the pioneer and organizer of petroleum surveyance and exploitation in Argentina....
, the director of the Argentine state owned oil company Yacimientos Petrolíferos Fiscales
Yacimientos Petrolíferos Fiscales
Yacimientos Petrolíferos Fiscales is an Argentine oil company.Founded in 1922 under President Hipólito Yrigoyen's administration, it was privatized in 1993 by Carlos Menem, and bought by the Spanish firm Repsol; the resulting merger in 1999 produced Repsol YPF...
(YPF, which was the first state owned oil company in the world, preceding the French Compagnie française des pétroles
Total S.A.
Total S.A. is a French multinational oil company and one of the six "Supermajor" oil companies in the world.Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing, and...
(CFP, French Company of Petroleums), created in 1924 by the conservative Raymond Poincaré
Raymond Poincaré
Raymond Poincaré was a French statesman who served as Prime Minister of France on five separate occasions and as President of France from 1913 to 1920. Poincaré was a conservative leader primarily committed to political and social stability...
), advocated oil nationalization in the late 1920s among Latin American countries. The latter was achieved in Mexico during Lázaro Cárdenas
Lázaro Cárdenas
Lázaro Cárdenas del Río was President of Mexico from 1934 to 1940.-Early life:Lázaro Cárdenas was born on May 21, 1895 in a lower-middle class family in the village of Jiquilpan, Michoacán. He supported his family from age 16 after the death of his father...
's rule, with the Expropiación petrolera
Expropiación petrolera
The Mexican oil expropriation was the expropriation of all oil reserves, facilities, and foreign oil companies in Mexico in 1938....
.
Iran and Venezuela are two important examples of foreign interventions to upset nationalization projects. In 1953, Iran's Premier Mohammed Mossadegh was overthrown by a CIA/MI6 covert action known as Operation Ajax
Operation Ajax
The 1953 Iranian coup d'état was the overthrow of the democratically elected government of Iranian Prime Minister Mohammad Mosaddegh on 19 August 1953, orchestrated by the intelligence agencies of the United Kingdom and the United States under the name TPAJAX Project...
. The goal was to prevent Mossadegh from nationalizing the Anglo-Iranian oil company which later became British Petroleum. Similarly in Venezuela, Hugo Chavez
Hugo Chávez
Hugo Rafael Chávez Frías is the 56th and current President of Venezuela, having held that position since 1999. He was formerly the leader of the Fifth Republic Movement political party from its foundation in 1997 until 2007, when he became the leader of the United Socialist Party of Venezuela...
attempted to nationalize Venezuela's oil during the early years of his presidency. Hugo Chavez rapidly reversed policy after a 2002 failed coup following a strike and heavy protests concerning his policies towards PDVSA. This coup was backed by the governments of the United States and Spain, as is documented in Tariq Ali
Tariq Ali
Tariq Ali , , is a British Pakistani military historian, novelist, journalist, filmmaker, public intellectual, political campaigner, activist, and commentator...
's book, Pirates of the Caribbean.
Politics of alternative fuels
Vinod KhoslaVinod Khosla
Vinod Khosla is an Indian-born American venture capitalist and an influential personality in Silicon Valley....
(a well known investor in IT firms and alternative energy) argues that the political interests of environmental advocates, agricultural businesses, energy security advocates (such as ex-CIA director James Woolsey) and automakers, are all aligned for the increased production of ethanol. He pointed out that from 2003 to 2006, ethanol fuel in Brazil
Ethanol fuel in Brazil
Brazil is the world's second largest producer of ethanol fuel and the world's largest exporter. Together, Brazil and the United States lead the industrial production of ethanol fuel, accounting together for 87.8% of the world's production in 2010. In 2010 Brazil produced 26.2 billion litres Brazil...
has replaced 40% of its gasoline consumption while flex fuel vehicles went from 3% of car sales to 70%. Brazilian ethanol, which is produced using sugarcane, reduces green house gases by 60-80% (20% for corn produced ethanol). Khosla also says that ethanol is about 10% cheaper per given distance. There are currently ethanol subsidies in the United States but they are all blender's credits, meaning the oil refineries receive the subsidies rather than the farmers. There are indirect subsidies due to subsidising farmers to produce corn. Vinod says after one of his presentations in Davos
Davos
Davos is a municipality in the district of Prättigau/Davos in the canton of Graubünden, Switzerland. It has a permanent population of 11,248 . Davos is located on the Landwasser River, in the Swiss Alps, between the Plessur and Albula Range...
, a Senior Saudi oil official came up to him and threatened: “If biofuels start to take off we will drop the price of oil.” Since then, Vinod has come up with a new recommendation that oil should be taxed if it drops below $40.00/barrel in order to counter price manipulation.
Ex-CIA director James Woolsey and U.S. Senator Richard Lugar are also vocal proponents of ethanol.
In 2005, Sweden announced plans to end its dependence on fossil fuels by the year 2020.
See also
- Chronology of world oil market events (1970-2005)Chronology of world oil market events (1970-2005)-1970:*January 1: U.S. Federal oil depletion allowance reduced from 27.5 to 22.0 percent.*May 3: TAP line from Saudi Arabia to the Mediterranean interrupted in Syria, creating all-time tanker rate highs from June to December....
- Energy superpowerEnergy superpowerThe term energy superpower does not have a clear definition. It has come to be used to refer to a nation that supplies large amounts of energy resources to a significant number of other states, and which therefore has the potential to influence world markets to gain a political or economic...
- Geostrategy in Central AsiaGeostrategy in Central AsiaCentral Asia has long been a geostrategic location because of its proximity to the interests of several great powers.-Strategic geography:...
- KAZENERGY Eurasian Forum
- New Great Game
- Oil reservesOil reservesThe total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is...
- Oil ShockwaveOil ShockwaveThe Oil Shockwave event was a policy wargaming scenario created by the joint effort of several energy policy think tanks, the National Commission on Energy Policy and Securing America's Future Energy. It outlined a series of hypothetical international events taking place in December 2005, all...
- Petrodollar WarfarePetrodollar warfareThe phrase petrodollar warfare refers to a hypothesis that one of the unknown, driving forces of United States foreign policy over recent decades has been the status of the United States dollar as the world's dominant reserve currency and as the currency in which oil is priced. The term was coined...
- Shanghai Cooperation Organisation
- The Great GameThe Great GameThe Great Game or Tournament of Shadows in Russia, were terms for the strategic rivalry and conflict between the British Empire and the Russian Empire for supremacy in Central Asia. The classic Great Game period is generally regarded as running approximately from the Russo-Persian Treaty of 1813...
Further reading
- Aburish, Said K. The Rise, Corruption and Coming Fall of the House of Saud. New York: St. Martin’s Press, 1994.
- Adelman, Morris A. The World Petroleum Market. Baltimore: Johns Hopkins University Press, 1972.
- _____. The Genie Out of the Bottle: World Oil Since 1970. Cambridge, Mass.: MIT Press, 1995.
- Ahmad Khan, Sarah. Nigeria : The Political Economy of Oil. New York : Oxford University Press for the Oxford Institute for Energy Studies, 1994.
- Ahrari, Mohammed E. OPEC: The Failing Giant. Lexington: University Press of Kentucky, 1986.
- Allen, Loring. OPEC Oil. Cambridge, Mass.: Oelgeschlager, Gunn and Hain, 1979.
- Alnasrawi, Abbas. “Collective Bargaining Power in OPEC.’’ Journal of World Trade Law 7 (March-April 1973): 188–207.
- ———. Arab Nationalism, Oil, and the Political Economy of Dependency. New York: Greenwood Press, 1991.
- ———. The Economy of Iraq: Oil, Wars, Destruction of Development and Prospects, 1950–2010. Westport, Conn.: Greenwood Press, 1994.
- Amuzegar, Jahangir, Managing the Oil Wealth: OPEC’s Windfalls and Pitfalls, London/New York: I.B. Tauris Publishers, 1999.
- _____. “OPEC as Omen: A Warning to the Caspian,” Foreign Affairs 77 (November/December 1998): 95-112.
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