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Originally posted by George Smiley I don't really think you can say that only the private sector has the ability to exploit oil resources!

that's not what i said. certainly a country could have the ability to exploit its own resources, however, my understanding is that venezuelan production faciltities were developed by western companies because the government couldn't do it alone.

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Originally posted by George Smiley Well "owned by the people" is a concept. But it's a concept that might not be as well understood in America as it might be elsewhere. It means the state operates an industry and revenues made off it contribute to the states budget (which in turn is spent for the benefit of the people). It's like our NHS. Everybody contributes to it and everybody receives the benefits of it. It's paid for by the people for the people! (BTW, our oil industry is not nationalised as it was privatised during the Thatcher years)

i understand nationalization. apparently all alaskan oil reserves are owned by the state, and the companies must make royalty payments to the state for the each barrel that is extracted from the ground. the oil income is then paid to the citizens.


my bad about the nationalization of UK oil. i guess i was misinformed.

I was going to mention Alaska. At least there is guaranteed income distribution, though I'm not sure it's that their reserves are nationalized, rather it sounds like the citizens get a royalty distribution from the state equivalent of an MLP. i.e. it's not the oil revenues that get distributed, rather it is the income generated from the transportation of that oil through the pipeline that gets distributed (essentially they distribute toll collections to the citizens).

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Energy See also: Natural gas in Alaska Alaska oil reserves peaked in 1978 and have declined 60% thereafter Alaska has vast energy resources. Major oil and gas reserves are found in the Alaska North Slope (ANS) and Cook Inlet basins. According to the Energy Information Administration, Alaska ranks second in the nation in crude oil production. Prudhoe Bay on Alaska’s North Slope is the highest yielding oil field in the United States and on North America, typically producing about 400,000 barrels per day (64,000 m³/d). The Trans-Alaska Pipeline can pump up to 2.1 million barrels (330,000 m3) of crude oil per day, more than any other crude oil pipeline in the United States. Additionally, substantial coal deposits are found in Alaska’s bituminous, sub-bituminous, and lignite coal basins. Alaska also offers some of the highest hydroelectric power potential in the country from its numerous rivers. Large swaths of the Alaskan coastline offer wind and geothermal energy potential as well.[38] Alaska oil production peaked in 1988 and has declined 65% thereafter Alaska's economy depends heavily on increasingly expensive diesel fuel for heating, transportation, electric power and light. Though wind and hydroelectric power are abundant and underutilized, proposals for state-wide energy systems (e.g. with special low-cost electric interties) were judged uneconomical (at the time of the report, 2001) due to low (<$0.50/Gal) fuel prices, long distances and low population.[39] The cost of a gallon of gas in urban Alaska today is usually $0.30-$0.60 higher than the national average; prices in rural areas are generally significantly higher but vary widely depending on transportation costs, seasonal usage peaks, nearby petroleum development infrastructure and many other factors. Alaska accounts for 1/5 (20%) of domestically produced United States oil production. Prudhoe Bay (North America's largest oil field) alone accounts for 8% of the United States domestic oil production. [edit] Permanent Fund The Alaska Permanent Fund is a legislatively controlled appropriation established in 1976 to manage a surplus in state petroleum revenues from the recently constructed Trans-Alaska Pipeline System. From its initial principal of $734,000, the fund has grown to $40 billion as a result of oil royalties and capital investment programs.[40] Starting in 1982, dividends from the fund's annual growth have been paid out each year to eligible Alaskans, ranging from $331.29 in 1984 to $1963.86 in 2000. Every year, the state legislature takes out 8 percent from the earnings, puts 3 percent back into the principal for inflation proofing, and the remaining 5 percent is distributed to all qualifying Alaskans. To qualify for the Alaska State Permanent Fund one must have lived in the state for a minimum of 12 months, and maintain constant residency.[41]

http://en.wikipedia.org/wiki/Alaska

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Originally posted by Shakka I was going to mention Alaska... http://en.wikipedia.org/wiki/Alaska

Alaskan citizens actually receive a cheque in the post for the oil pipe toll? That's pretty good to be fair! When I talk about citizens owning and enjoying the benefits from nationalised industries I don't actually mean they get money directly, rather the money raised from such industries is used to pay for other services (health, transport, police, etc, etc)

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Originally posted by George Smiley Alaskan citizens actually receive a cheque in the post for the oil pipe toll? That's pretty good to be fair! When I talk about citizens owning and enjoying the benefits from nationalised industries I don't actually mean they get money directly, rather the money raised from such industries is used to pay for other services (health, transport, police, etc, etc)

i see nothing wrong with either case (giving the royalty income to citizens, or using it to fund social services). I think alaska actually devised a very ingeneous way to benefit its citizens from the oil production.

From a personal investment standpoint, provided you have visibility into the longevity of a particular reserve/pipeline, MLPs offer some phenomenal yields right now.

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Originally posted by George Smiley Alaskan citizens actually receive a cheque in the post for the oil pipe toll? That's pretty good to be fair! When I talk about citizens owning and enjoying the benefits from nationalised industries I don't actually mean they get money directly, rather the money raised from such industries is used to pay for other services (health, transport, police, etc, etc)

It's the same as Alberta here in Canada (Oil province).

They pay no provincial tax and get a $400-500 check from the government every year.

This guy fuckin' loves his citizens...not. He gives two shits about them and doesn't understand how basic economics and capital flows work.

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Chavez’s 3-Tiered Currency System May Spur Inflation By Daniel Cancel Jan. 11 (Bloomberg) -- President Hugo Chavez, struggling to stem an outflow of dollars and rein in a budget deficit, has adopted a multiple-tiered exchange-rate system that fueled corruption, food shortages and inflation in the 1980s. Shoppers in Caracas lined up over the weekend to buy imported televisions, DVDs and refrigerators on concern prices will soar after Chavez on Jan. 8 devalued the 2.15-per dollar exchange rate by as much as 50 percent. He set a rate of 2.6 for imports of items such as food and medicine, a rate of 4.3 for “non-essential” products and committed to defend the bolivar in the unregulated market, where it traded today at 6.25. The three-tiered rate system mirrors the failed policy the South American country implemented after a collapse in its biggest export, oil, led to a devaluation in 1983 that Venezuelans call “Black Friday.” Chavez, who said the weaker currency will stimulate economic growth, runs the risk of creating an inflation surge and swelling corruption, said Harvard University’s Ricardo Hausmann. “Latin America learned in the 1980s that policies like this do not work,” Hausmann, who runs Harvard’s Center for International Development, said in a phone interview. Hausmann served as planning minister in the 1990s under Carlos Andres Perez, the president who dismantled the multi-tiered rate system of the 1980s. “It’s too easy a game to steal money through a multi-tiered exchange rate. You make a bundle just on the exchange differential.” Colgate, Avon Colgate-Palmolive Co., the world’s largest toothpaste- maker, said today that Venezuela’s devaluation will result in charges of 4 cents to 6 cents a share per quarter this year. Avon Products Inc. had its earnings estimate cut by BMO Capital Markets, which said the New York-based cosmetics maker was one of many U.S. consumer companies “ill prepared” for the devaluation. Avon spokeswoman Jennifer Vargas said in an interview the company is “looking closely” at the situation. On the 25th anniversary of Black Friday in 2008, Chavez’s Information Ministry called the 1980s currency system “famously corrupt” and said it was the cause of “countless irregularities.” The system helped spark $60 billion of capital outflows from the country, according to the ministry’s Web site. Chavez, whose government sets retail prices on hundreds of products and determines maximum interest rates, said comparisons between his currency policy and the 1980s system were unfounded. ‘Bourgeois’ Venezuela’s 27 percent annual inflation rate is already the highest among the 78 economies tracked by Bloomberg. Finance Minister Ali Rodriguez, who has been forecasting 2010 inflation of between 20 and 22 percent, said the devaluation may add as much as 5 percentage points to the rate while Chavez, 55, threatened yesterday to seize any stores that raise prices. “The bourgeois are already talking about how all prices are going to double,” he said on state television during his weekly “Alo Presidente” program. “People, don’t let them rob you. Denounce it and I’m capable of taking over that business.” Venezuela’s benchmark dollar bonds surged, sending yields to the lowest since September 2008, as investors speculated the devaluation will help narrow the budget deficit, reducing the government’s financing needs. The 9.25 percent bonds due in 2027 climbed to 83 cents on the dollar at 3:29 p.m. in New York from 79.2 cents on Jan. 8, according to JPMorgan Chase & Co. The yield fell 61 basis points, or 0.61 percentage point, to 11.52 percent. Narrowing Deficit The devaluation will cut the budget deficit in half by giving the government more bolivars for each dollar of export tax revenue from state oil monopoly Petroleos de Venezuela SA, said Boris Segura, an analyst with RBS Securities Inc. A 44 percent drop in international oil prices from a record high in 2008 had crimped government revenue The deficit will equal 3.2 percent of gross domestic product this year, rather than the 7.4 percent of GDP it would have equaled without a devaluation, according to RBS forecasts. The revenue windfall will help Chavez boost spending 30 percent ahead of congressional elections in September, Segura said. Since the last devaluation in March 2005, accumulated inflation has totaled 165 percent, according to Goldman Sachs Group Inc. Chavez, who calls his economic program “21st Century Socialism,” said the new 4.3-per-dollar exchange will curb imports and reduce the economy’s dependence on oil. Venezuela, South America’s biggest oil producer, imported $11 billion of food last year, equal to about 25 percent of all imports, said Planning and Development Minister Jorge Giordani. 2003 Restrictions Venezuela’s current account surplus, the broadest measure of a country’s trade in goods and services, narrowed to $12.4 billion in 2009 from $37.4 billion last year as oil prices plunged from a record $147.27 a barrel in July 2008. Chavez -- who first won office in 1998, six years after trying to topple Perez’s government in a failed coup -- imposed currency restrictions in 2003 as a nationwide oil workers strike throttled exports. An unregulated, parallel currency market emerged to meet demand from Venezuelans unable to get government authorization to buy dollars at the official exchange rate. The bolivar sank 3.5 percent today to a four-month low of 6.48 in the unregulated market. It will likely continue weakening unless the central bank fulfills Chavez’s pledge to “heavily intervene” in the market, said Alberto Cardenas, strategy manager at BancTrust & Co. in Caracas. ‘Failed Everywhere’ Venezuela will begin auctioning dollars in coming days to bring the parallel market rate close to the 4.3 rate for non- essential items, El Mundo newspaper reported today, citing government officials it didn’t identify. The central bank will also use the auction mechanism to sell debt from PDVSA, as the state oil company is known, and other government institutions, according to the newspaper. Spokespeople at the Finance Ministry and the central bank declined to comment on the report. While the devaluation will ease the government’s financing needs, stagflation may worsen, said Segura. He raised his inflation forecast for this year to 40 percent from 28 percent. He predicts the economy will shrink 6 percent in the first quarter after contracting an estimated 2.9 percent last year. “We’ve tried this in the past and it failed everywhere,” Segura said in a telephone interview from Stamford, Connecticut. ‘Caracazo’ Riots In 1983, President Luis Herrera Campins devalued the bolivar and established a multi-tiered exchange system, known as Recadi, after oil prices plunged. Inflation soared to 40 percent in 1987 from 7 percent in 1983 as capital flight led Herrera Campins’s successor, Jaime Lusinchi, to devalue the currency further. By the time Perez replaced Lusinchi in early 1989, the system had collapsed -- the country was running out of foreign reserves and food shortages were mounting. Perez eliminated the multi-tiered system, unifying the currency at the free-market rate, and lifted price controls. Consumer prices soared 21 percent in one month alone, leading to the “Caracazo” riots that killed hundreds and spurred Chavez, then an Army officer, to accelerate his coup plans. Segura said Latin America’s debt defaults and recessions in the “Lost Decade” of the 1980s were caused in part by these government controls over markets. The risk “is corruption and bureaucracy,” Segura said. “You’re going to have exporters under-invoicing exports, importers over-invoicing imports. I’m thinking about Latin America in the 1980s and it was a mess.” For Related News and Information: Venezuela economic snapshot: ESNP VZ Venezuela government bonds: VENZ DES Venezuelan economy: TNI VENZ ECO BN Venezuelan elections: TNI VENZ ELECT President Hugo Chavez: BIO HUGO CHAVEZ Venezuela international reserves: VNRS GP Venezuelan annual inflation: VNVPIYOY HCP Venezuelan annual growth graph: VNGGYOY GP Stories on the Venezuelan bolivar: VEF CN BN Venezuela oil news: STNI VENEZOIL --With assistance from Michael Patterson in Houston and Andrew Dunn in New York. Editors: Joshua Goodman, David Papadopoulos, Laura Zelenko

What a nutcase...He cuts the value of his currency in half then threatens to jail businessmen who raise prices.. I'd love to see a mass exodus of every private company from that country. Let him have exactly what his principles are demanding. Let the world see what socialism produces in the absence of willing victims.

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Originally posted by Capitalizt What a nutcase...He cuts the value of his currency in half then threatens to jail businessmen who raise prices.. I'd love to see a mass exodus of every private company from that country. Let him have exactly what his principles are demanding. Let the world see what socialism produces in the absence of willing victims.

It's not socialism, he's simply doing it wrong.

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Originally posted by Krypton It's not socialism, he's simply doing it wrong.

There's no way to do it right..because it is wrong in theory.

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Originally posted by Capitalizt There's no way to do it right..because it is wrong in theory.

Obviously, a balance between individual freedom and social responsibility is the right way to go. Chavez is going too far in one direction.

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