Tuesday, April 08, 2008

The Big Oil President

I hear this canard at my office a lot about how Bush and Cheney are in cahoots with BIG OIL, and these oil execs are makin’ a killer of a profit from ripping us off every time we put gas in our vehicles. I usually just walk away without talking to them and mutter to myself “pffft if only we had a BIG OIL President.”

The real story is that for over seven years there has been a BIG OIL president, only this is not the POTUS. No, the BIG OIL president has been Vladimir Putin, President of Russia. I let Google be my friend again, and I found a table of oil production throughout the world. I especially noticed a pattern of the US and Russia from 1992 to 2000, and from 2001 through 2005. Sorry, I could not find data later than 2005.


For every year except a slight uptick in 1997 both the US and Russia were in decline in oil production.

Now let’s take a look at the data from 2001 thru 2005


For every year in this time frame US is in significant decline in oil production and Russia is significantly increasing oil production.

I found a recent article with the headline “Exploration Drilling in Russia Increased over Twenty Percent in 2007.”

An article in November of 2007 is a very interesting read keeping in mind what has occurred since the article was written.

Thanks to energy and the new Russian brand of “state capitalism” it supports, Putin has returned his country—not long ago considered the invalid at Europe’s doorstep—to center stage. Vast energy resources have also allowed Putin to set about making genuine governmental reforms, root out corruption, and pour money into social services.

And all of it—his despotism and benevolence alike—has left him wildly popular. While George W. Bush endures approval ratings of about 30 percent as his presidency sputters to a close, approval ratings for Putin, who is due to step down in March, hover around 70 percent.

Please do not misunderstand me. I do not approve of or applaud the ruthless authoritarian tactics that Pres. Putin employs. I actually think that had American exceptionalism been given a chance we could have increased the US energy resources as much as Russia has without suppressing the media and dissenters.

An interesting part of the November article is describing how the Russian guys, ex-soviet managers, look at the environmental regulations and concerns. There is a lot of new oil production occurring on Sakhalin Island just north of Japan by Exxon/Mobil. The article mentions how one of these Russian guys walked into their office one day and he said to the manager
If we were doing this, it would be done by now. The problem is you’re trying to do it legally.

The article also mentions how the Kremlin used concerns about the environment.

Environmental groups had been on Sakhalin Energy’s case since it began operating in the late 1990s, but the Russian government mostly ignored them. Then in 2006, after negotiations to give Gazprom a minority stake in Sakhalin II fell apart, Russian authorities began citing Sakhalin Energy for alleged violations. One example: Excessive logging of the pipeline corridor and poor terracing of its perimeter were creating severe erosion problems all along the pipeline route. And international environmental groups, the World Wildlife Fund among them, complained bitterly that Sakhalin Energy’s construction activities in Aniva Bay, including an undersea pipeline, had disrupted fish and whale populations. Using such charges as leverage, Russian authorities revoked permits and demanded work stoppages. According to a Sakhalin Energy employee, Yuzhno-Sakhalinsk police set up shop outside the company’s headquarters and checked work visas. Shell was threatened with a $50 billion lawsuit.

It was from the Kremlin, everyone suspects, that an offer came: Sell majority control of Sakhalin II to Gazprom and the trouble will cease. So that’s exactly what Shell did. It handed over half its shares to Gazprom, which also acquired half the shares of Shell’s Japanese partners, Mitsubishi and Mitsui & Co., giving Gazprom 50 percent of Sakhalin Energy plus one share.

Obviously the disruption of fish and whale populations was not quite the principle to Kremlin that it is to the World Wildlife Fund folks. I think the prospects for having a BIG OIL POTUS are bleak at the present time, and there is plenty of blame to go around for why this is the case. I just look in the mirror if I am only interested in blame. Still I have got to hope that one day enough Americans will be mugged by reality, and reject the politically correct meme that all of us Americans must suffer hardships to promote tourism and a better world for whales and fishes.

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