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Archive for the ‘oil’ Category

Perhaps the most remarkable candidness in the US Senate’s all-night Iraq Debate came from Washington Senator Maria Cantwell, who examined the idea that has long burned in the hearts of those who engineered the Iraq occupation — the privatization of 70% of Iraq’s oil resources. The crafters of this plan have spent over a decade coming up with reasons to justify this, even though oil production in most countries is done under the auspices of the state or quasi-statal entities. If Americans are really concerned about ending civil strife in Iraq and giving all its citizens a stake in the success of that country, perhaps it is time to abandon pressuring for a Hydrocarbon Law and the application of production-sharing agreements, or PSAs, and try a different approach. (BTW, if you are convinced PSAs are the way to go, it might be worthwhile to review the recent Russian experience of British Petroleum.)

 Current estimates of Iraq’s oil reserves are all over the map, ranging from 112Gbbl to 400Gbbl on the high end. Nevertheless, the big oil companies seem comfortable with figures north of 300 billion barrels. At an oil price of $50 a barrel that’s a treasure of $15 trillion. $30 trillion at $100 a barrel, or roughly a cool $1 million for every Iraqi citizen. Given the value of the assets at stake, it is also clear why Mr. Bush and co-president Cheney scarcely bat an eye at the mention that official Pentagon spending on the efforts in Iraq and Afghanistan now exceed $12 billion a month. That’s chump change.

While the conditions in Iraq are quite different than in Norway, there is obviously an alternative path for Iraq that so far has not received much public discussion, i.e. creation of a national stabilization fund to invest and protect national oil revenues managed with sufficiently little corruption so that covenants with Iraq’s future generations are kept. The added benefit is that, like in Norway, the money can be directed toward diversification of the economy and job creation.

The Senate’s Great Iraq Debate was a flop, but Cantwell may have inadvertantly started a discussion that will help both the people of Iraq and the US in the long term.

Update: C-Span  has the clip up now.

Later update: Suddenly it’s become okay to use the O-word right on the senate floor. Larry Craig did it, too.

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An issue arises when some fact is in dispute. Despite claims we may live in a 10,11, or even 26 dimension universe, it appears media discussion has a binary compulsion even when there may be less than two or more than two sides to an issue.

Take oil, for instance. The global economy burns about a thousand barrels a second, so access to this resource is fairly important to those who want to be economic participants . Given that the geological characteristics of oil deposits are fairly specific, estimates that we have between 1.0 and 1.5 trillion barrels of oil remaining seem fairly reasonable. At the current consumption rate, then, we have 1 to 1.5 billion seconds of oil left. With a bit over 31.5 million seconds a year, we are consuming at a rate of 31.5 billion barrels a year (which is quite in line with the oft-mentioned daily world consumption of 80-82 million barrels a day), that would put the day all the oil runs out at 31-48 years from now. So here’s how the issue usually gets debated. On one side are the peak oil folks, who argue that the end of the petroleum era will lead to a drastic cutting back on our life styles — or worse! On the other side are those who say that our hydrocarbon resources are plentiful, and even if the oil runs out there’s always coal, gas, and clathrate bound methane.

What’s missing here? Well, this debate excludes future generations. Don’t they have any vested rights in global oil wealth?

Traditional property law recognizes several possessory interests in land, including the tenancy for life or life estate. The duty of the tenant is to “maintain” the property while in possession, and thus not to commit waste, either detrimental or ameliorative. At the end of his or her life, the tenant is expected to hand over the property in about the same shape as it was given. Of course, tenants can’t exercise the same dominion and control over land that an owner of property can.  Indeed, the state may be so reluctant to step in that the most ambitious landowners among us may even abuse land so much as to create a superfund site.

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Unlike chief Seattle, who saw us as life tenants, landowners don’t have to worry that much about their environmental legacy or how they “sever” mineral, plant, and animal wealth from the land.

The oil debate may not even be a very good example of how voiceless interests get framed out of public debate. The debate over the development of Australia may be more appropriate. From the start white settlers framed the discussion based on a legal assumption that the country was a terra nullius and simply overlooked the fact that people, speaking perhaps as many as 800 languages, had been living there for the past 60,000 years. Today we often hear network slogans such as “fair and balanced” that are by definition two-dimensional. Of course, this forces both sides to bring it on, but it also reflects the infantilism pushed by modern advertisers. Instant gratification, “kidults”, and rejuvenalia, suggest a commercial motivation for pushing simplified views. Yet what adult actually sees himself or herself as a consumer, much less a kidult? Perhaps we need to be alert to moves to “frame out” voiceless interest groups, and wherever possible, point out that our reality is not 2D as it was for the residents of Flatland. What a great idea for a movie!

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