A few weeks ago I argued on Blogger News Network that there was a growing case for extensive intervention by Western Governments in the energy sector in general and in the oil industry in particular.
The candidates in the US Presidential Election all said that America must move towards energy independence and here in Western Europe, including the United Kingdom, there is a similar urgent need for the development of a comprehensive long term energy plans. The United States is currently highly dependent on oil supplies from countries which offer limited guaranties of continued reliable supply and no guarantees at all in respect of price. As the crude oil price has fallen in recent weeks OPEC has announced that it will curb production in order to try and boost prices, something that the ailing western economies need like a hole in the head – but no doubt a few Saudi palaces need their gold to be burnished so America and the rest of us will have to pay.
Whilst the OPEC producers and the no less greedy Russians (the worldâ€™s second largest producer of crude oil and largest producer of natural gas) can control supply and price this may not be the limit of their ambitions on the global energy stage. Most significantly this week we have news that Russian company Gazprom is seeking to buy 20% of the shares in Europeâ€™s fourth largest oil company the Spanish giant Repsol.Â Make no mistake this is the beginning of something significant when a mainly upstream producer like Gazprom decides that it will begin the process of augmenting its energy portfolio by buying into a private sector Western European oil company.Â Â However nominally a free enterprise company Gazprom may like to be seen to be there is no doubt that Mr Putin pulls its strings. The bid for a slab of Repsol is just the beginning of Russiaâ€™s ambitions to be an even bigger player on the world energy scene.
If Russia can afford to move into the European oil sector then the producers in the Middle East can afford to as well â€“ and they have even more resources to start an acquisition spree if they choose to. The petrodollar rich Gulf countries like Saudi Arabia and the United Arab Emirates have cash flow to spare and soon they will tire of footling around with football and Formula one teams and start to act much bigger. No one is a safe if the leaders of Saudi or of Abu Dhabi with almost unlimited energy and cash reserves between them decide that the time is ripe for a bit of shopping. ExxonMobil, Shell and BP could all be vulnerable should the Arab Kings and Sheiks decide that such an acquisition would add to their power and control of the world energy scene â€“ as it surely would.
The brilliant spoof edition of the â€œNew York Timesâ€ that was circulated last week included amongst its many â€œjust credibleâ€ stores one that said that â€œCongress has voted to place ExxonMobil, ChevronTexaco, and other major oil companies under public stewardship, with the bulk of the companiesâ€™ profits put in a public trust administered by the United Nations, and used for alternative energy research and development in order to solve the global climate crisisâ€. Many a true word is said in jest for the reasons given for the â€œnationalisationâ€ of the American oil giants are actually perfectly valid, as I argued before. . Add to this the reasonable imperative to keep these giants out of the hands of the Russians or the Gulf States and you have a compelling case!
The reality is that the private sector has failed the world in the energy sector just as mush as it has in the banking and other financial sectors. The Oil giants are not seriously investing in Renewables (why should they?). They are proceeding with new projects which are environmentally highly questionable (Tar Sands just one example). They are, as the investment banks were, paying their greedy directors obscene levels of remuneration â€“ just because they can. They do not operate primarily in the public interest but in self-interest and their specious commitments to so-called â€œCorporate Social Responsibilityâ€ are a tired old mythÂ . This sector is far too important to be left to the vagaries of the private sector and the selfishness of greedy directors (remember Enron). Time for Governments to act and take control. The â€œNew York Timesâ€ was right!Â