So there are these people out there, notably the Oracle of Flat, talking about how high oil prices lead countries to do all sorts of crazy things, like take stuff or invade their neighbors or build weird shit. Which is a problem, see, because except for the building of the weird shit the real world just doesn't fit the model.
Above you’ve got an example of weird shit. Ditto to the right. But what about the neighbor-invading or stuff-taking? Well, I don’t have a whole lot to say about neighbor-invading at the moment, but there is some stuff-taking in the news: the Bolivarian Republic just cancelled all its oil service contracts. That’s a form of stuff-taking, yet, as the great and immortal Onyx once said, but wait it gets worse! The government also intends to nationalize the contractors’ assets. That is stuff-taking of the purest form, which the “resource curse” models predict isn’t supposed to happen when oil prices are low. After all, the government is supposed to need the service companies to keep production up. And yet, here we are.
“Oil service companies” are at-their-simplest basically oil companies that extract petroleum for a fixed price on behalf the owner ... in Venezuela’s case, the government. With nationalization of the oil services, the government gets a threefer: the assets, the value of future payments, and the value of all unpaid bills. But it loses the companies’ ability to run and maintain the assets and opens itself up to arbitration and lawsuits. It also loses future investment. Oil companies will tolerate expropriations-that-weren’t, like the Bolivarian Republics’s so-called “nationalizations” up until now. They have less patience over the real thing. It’s a particular problem for Venezuela because its wells tend to have a half-life around three years. Without continual new investment, production will decline.
I’m not sure what Chávez’s motivation is, although I can speculate. I am sure, though, that this is another sign that the whole petropolitics idea is worth a lot less than a gallon of crude, even at current prices. Sure, it might be possible to take the political resource curse theories and mash them to fit recent events in Venezuela, but then you would wind up with a theory that predicted that governments nationalize when prices go up and they nationalize when prices go down; or that they nationalize when they don't need foreign technology and they nationalize when they do. In other words, you would get a theory that predicted that the governments of oil producing states should always nationalize at all times.
The proper word for such a theory? Worthless.
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