The Political Economy of Oil: Part II

Ecuador’s Oil Change: An Exporter’s Historic Proposal

Quito, Ecuador — On a clear day, high in this Andean capital city, the nearby volcanoes glisten in the distance under the equatorial sun. Of the five visible volcanoes, the most startling is Cotopaxi — both for its proximity and for its remarkably receding glacier. Cotopaxi has lost 30 percent of its glacier over the last several years and people are taking notice.
           
The first pronounced impacts of climate change in Ecuador are just one of a multitude of reasons why this small country, roughly the size of Colorado, is positioning itself as a new environmental leader for a world confronting climate change. Noted for its political upheavals and popular protest, Ecuador is now raising eyebrows in the international policy arena with a bold proposal aimed at achieving the seemingly impossible: leaving its oil in the ground. MORE >>

Oil: Fueling Another Debt Crisis?

One hundred dollar-a-barrel prices for oil have shaken the U.S. and global economies. But as much as rising gasoline and heating oil prices hurt U.S. consumers, the impact is far more dire in the developing world.
           
High oil prices hit poor people in impoverished, heavily indebted countries hard as individuals and families must pay more to meet their personal energy needs, and businesses must pay more to keep operating. They also batter the national economies of poor countries without oil resources; they must spend scarce foreign currency on increasingly expensive oil imports. There is growing evidence that impoverished nations are paying a large price — both in financial terms and in social and ecological costs — for the world’s addiction to oil.
           
“In sub-Saharan Africa, in particular, the oil crisis is not a vexing cost crunch,” wrote Abdoulaye Wade, president of the West African nation of Senegal, in an October 2006 column in the Washington Post. “It is an unfolding catastrophe that could set back efforts to reduce poverty and promote economic development for years.” MORE >>

The Best Congress Oil Could Buy

By Steve Kretzmann

Widely denounced as a “do-nothing” Congress, the 2005-2006 U.S. Congress did manage at least one notable accomplishment: It lavished more than $6 billion in royalty relief, tax breaks and other incentives on the oil and gas industry in the Energy Policy Act that was passed in 2005.
           
The 2007-2008 Congress is quite different in composition, but the vast array of oil industry subsidies remains untouched.
           
When Representative Nancy Pelosi, D-California, took over as Speaker of the House, she promised that in the first 100 hours of the new Congress, representatives would repeal subsidies to Big Oil.
           
The Democratic House of Representatives delivered on this promise in part, closing loopholes that let oil companies underpay royalties from drilling on federal land, and allocating the earnings to support for alternative energy.
           
But the measure was not able to win sufficient support in the Senate, and the energy bill passed by Congress at the end of 2007 left Big Oil’s package of subsidies in place. MORE >>

The Causes of Soaring Oil Prices: Industry Analyst Views

Interviews with Industry Analysts

In the scope of a year, the price of oil has doubled — and prices in the $90-a-barrel range are quickly becoming normalized. To gain insight into the state of the market — and industry watchers’ views on the state of the market — Multinational Monitor spoke with oil industry analysts. What emerged from our conversations was a general view that, thanks to surging demand from China and India, global supply-and-demand curves are shifting. Beyond that, there was some divergence of views on the state of the market and future scenarios.

We interviewed the following analysts: Kenneth Carroll, senior analyst, Johnson Rice & Company; Sarah Emerson, director, Energy Security Analysis Inc.; Phil Flynn, senior oil market analyst, Alaron Trading; Charles Maxwell, senior energy analyst, Weeden & Co.; Linda Rafield, senior oil analyst, Platts; Jeff Rubin, chief economist and chief strategist, CIBC World Markets; Adam Sieminski, chief energy economist, Deutsche Bank; Bob Tippee, editor, Oil and Gas Journal; Philip Verleger, president, PKVerleger LLC; Phil Weiss, senior analyst, Argus Research Group. MORE >>